First, the basic facts concerning our international study: all sustainability reports end on 31 December, are reported at a consolidated level and almost all companies are listed on European stock exchanges. 72 per cent of the reports were published by companies in five European countries, Denmark having the highest number of reports with 45. Three of these countries (Germany, Spain and the Netherlands) have not yet transposed the CSRD directive into legislation. 'This shows that not all organisations are waiting for the introduction of legislation, but are proactively taking their responsibility,' says Alexander Spek, who specialises in sustainability reporting.
CSRD topics vary by sector
The topics covered in CSRD sustainability statements vary widely across sectors, although the most frequently reported topics – climate change, own employees and operations – appear in almost all reports. The least frequently reported material topics are pollution, water and marine resources and affected communities.
‘There are clear patterns across sectors,’ says Willem-Jan Dubois. ‘For example, a majority of financial services companies identify consumers and end users as material, while the majority of consumer markets and industrial and service companies consider circular economy as material.’
Sectors such as health and energy, utilities and raw materials also reported on biodiversity and ecosystems. Apart from financial services, sectors also reported on workers in the value chain. This shows that climate change, own staff and business operations are universally material, while the other topics are strongly influenced by sector impact.
CSRD analysis shows large differences in opportunities and risks
The analysis shows a large variation in the number of impacts, risks and opportunities (IROs) reported, with some companies reporting fewer than ten IROs and others more than 120. Almost every company disclosed impacts, risks or opportunities related to climate change, apart from two (a service company and a software company).
Of the companies surveyed, 185 indicated that they have a climate transition plan. Dubois: ‘It is striking that most companies see more than twice as many risks as opportunities when it comes to sustainability. Opportunities that were often disclosed were those arising from changing customer needs and preferences. This is a response to climate change, increased awareness of environmental and social issues, emerging technologies and innovation.’
Finally, many companies reported impacts on people and the environment, without corresponding business risks or opportunities. Fewer companies made entity-specific disclosures on topics such as cybersecurity and data privacy, artificial intelligence and tax-related disclosures.
Alexander Spek: ‘This shows that companies vary greatly in the detail of identified and reported IROs. And that they are inconsistent in linking sustainability impacts to business relevance. However, half of the reviewed reports contained between twenty and fifty IROs, so it is expected that this wide range will diminish over time.’
Data reliability is a challenge
The CSRD requires independent, limited assurance of sustainability statements. Some companies opted for reasonable assurance for specific sub-items of information, such as greenhouse gas emissions or own personnel data. Only one of the 250 companies opted for reasonable assurance for the full set of CSRD sustainability statements.
A small number of CSRD statements ended with an auditor’s conclusion, while many statements contained paragraphs on the concepts of ‘matter, other matter and inherent limitation’. These drew attention to the uncertainty of certain quantitative measurements, for example. ‘This highlights the ongoing challenges in the areas of data reliability, measurement uncertainty and the maturity of sustainability reporting,’ Spek explains.
The Netherlands: proactive approach to sustainability transparency
Of the 250 reports, the Netherlands published 37. Most Dutch reports were published by the industry and services sector (ten), followed by a stable number of seven reports in other sectors, including consumer markets, financial services and technology, media and telecommunications. The fewest Dutch reports were published in the energy, utilities and raw materials sector (six).
Dubois: ‘This is in line with what we see in the 250 reports from around Europe. From a stakeholder engagement perspective, a significant number of companies in the Netherlands are in contact with both internal stakeholders (36) and external stakeholders (34). This level of engagement is higher compared to the total percentages in Europe.’
Of all Dutch companies, 97 per cent (35) reported climate change as material, while all (37) companies disclosed their scope 3 emissions. This is in line with other countries, such as Germany and Spain. Furthermore, 84 per cent of Dutch companies (31) disclosed climate change transition plans, compared to 73 per cent (182) across Europe. All companies in the Netherlands reported on their own workforce.
‘Looking at the other sustainability themes within the CSRD, the Dutch reports show consistently lower reporting percentages compared to reporters as a whole,’ says Dubois. The most significant differences were observed in Water and Marine Resources with a difference of 14 per cent, Circular Economy and Consumers and End Users both seventeen per cent lower, Workers in the Value Chain with a difference of fifteen per cent and Business Conduct with the largest difference of twenty per cent. ‘Overall, this shows that the Netherlands is demonstrating strong leadership in the early stages of CSRD reporting and taking a proactive approach to sustainability transparency, albeit focused on the most material topics for the companies concerned.’
Starting point for improving CSRD statements
‘Based on the insights gained and the comparison between the Netherlands and the rest of Europe, we have mapped out the common themes and differences per sector,’ says Spek. ‘These provide companies with an excellent starting point to further improve their own CSRD sustainability statements.’
Based on these insights, companies should:
- Improve integration: integrate sustainability into the company’s core strategy to ensure that CSRD reporting supports the company’s strategic efforts and provides stakeholders with valuable insights into the company’s performance across all dimensions.
- Focus on material topics: conduct a thorough double materiality assessment to identify and report on the most relevant impacts, risks and opportunities. Incorporating feedback from external stakeholders and peer benchmarking results into the assessment improves the selection of material topics. Ensure that the topics provide a fair picture of the company, but keep the focus on what really matters.
- Improve comparability: aim for greater comparability in reporting by applying emerging best practices and industry insights.
- Embrace reporting quality: by ensuring that disclosures are complete. However, more IROs do not necessarily indicate a superior sustainability statement, as some variation is expected depending on the size and complexity of the company.
By taking these steps, companies can not only meet CSRD requirements but also demonstrate their commitment to sustainability, thereby gaining a competitive advantage and building stronger stakeholder relationships.
In search of sustainable value: the CSRD journey begins
