On July 1, 2024, the new legislation, the Corporate Sustainability Reporting Directive (CSRD), came into effect in Sweden, meaning many companies must rethink how they report their sustainability efforts. The directive represents a significant change in how companies must disclose their impact on the environment and society, requiring increased transparency and specific data on sustainability.
From vague reporting to clear goals
The CSRD is part of EU's goal to make Europe climate-neutral by 2050. The directive aims to provide investors, authorities, and other stakeholders with a more accurate and comparable picture of companies' sustainability efforts, in order to drive the transition to a greener economy.
"This is a significant change, and many companies are feeling the pressure to understand what is required and to adapt to the new regulations," says Emelie Havemo, Assistant Professor in Industrial Management at Linköping University.
"For many companies, it's about gaining new insights into their strategic priorities and how they should proceed moving forward."
Sustainability reporting itself is not new, but the requirements have now increased significantly. Previously, companies only had to report on their own operations, but now suppliers and customers are also included. Under CSRD, companies must follow specific standards and datapoints defined by the European Sustainability Reporting Standards (ESRS). This means that it's no longer just about reporting what companies are doing, but also setting clear goals for the future – and tracking progress towards achieving them.
"Even small companies be affected, as large companies must report on their supply chain," says Johanna Sylvander, Associate Professor in Business Administration.
"This leads to greater transparency and a better ability to compare companies."
Sustainability reporting gains increased importance for investments
To achieve EU's climate goals, it is also crucial that companies take sustainability seriously and that capital flows to the companies that truly contribute to a more sustainable future. This has led to sustainability reporting gaining greater importance in the market. Investors and banks will need more accurate and comparable data to make informed decisions about which companies to invest in.
"It’s about directing capital correctly – investing in companies that operate sustainably, and not in those that harm the planet. This provides investors with better decision-making tools and can lead to a more sustainable market," explains Johanna Sylvander.
A challenge for companies – and an opportunity for the future
For companies, the CSRD implementation presents a complex process of understanding which data points are relevant to their business and starting to report them in a systematic way. They will need to consider both environmental and social factors, while being transparent about their actions and results. Companies must report specific data points, such as carbon emissions, and demonstrate how they are reducing their impact.
While some companies are already on their way to adapting to the new requirements, for others, it will be a completely new challenge.
"Companies must identify the most critical areas and start reporting on them. There could be hundreds of data points that companies need to address, depending on their impact on the world," says Johanna Sylvander.
"CSRD affects everything from large publicly listed companies to non-listed companies (see fact box). By understanding and applying the requirements, companies can not only comply with the legislation but also gain better insight into their sustainability journey and strengthen their market position."
In February 2025, the EU presented proposals for regulatory changes (the so-called Omnibus proposal), which may affect both which companies are subject to reporting requirements and the content of the reports. This also provides an opportunity for the project to explore how companies handle rapid regulatory changes.
