Are companies truly changing how they do business to become more sustainable, or are they simply responding to new European regulations? Francesca Collevecchio, in one of the papers that inspired discussion at the recent conference Sustainability disclosure: red tape or strategic tool for the future of business? (SDA Bocconi in collaboration with the Institute for European Policymaking@Bocconi University – IEP@BU), shows that even among organizations already complying with the Corporate Sustainability Reporting Directive (CSRD), changes are still partial, uneven, and unbalanced. In fact, the focus is mainly on risks and negative impacts; highlighting opportunities and positive impacts is an uphill battle, particularly on the social front.

 

According to the author, this reflects a transitional phase. In other words, companies are still prioritizing risk management rather than proactively framing sustainability as a strategic lever. But if sustainability is truly to become a driver of value creation and not just a regulatory obligation, a shift in mindset is needed.

The context

With the introduction of the CSRD, the European Union has raised the bar on corporate sustainability expectations—even though there’s a risk it will rachet down again with the “simplification” measures proposed in the Omnibus package. The CSRD moves from a voluntary approach to a strict, structured legal obligation designed to make sustainability reporting practices more comparable, reliable, and meaningful.

 

The CSRD replaces the previous Non-Financial Reporting Directive (NFRD), which was often criticized as weak in substance, loosely binding, and easily manipulated for reputational purposes. The new directive instead institutes the principle of double materiality, requiring companies to report both the effects of sustainability on financial performance and the impact of their activities on the environment and society. Furthermore, the CSRD extends the reporting obligation to about 50,000 companies across Europe (compared to 11,000 under the NFRD) and introduces mandatory external assurance. But now the Omnibus proposal would again cut the number of companies required to report even below the threshold previously set by the NFRD.

 

Collevecchio’s research analyzes the sustainability reporting of a sample of companies, long considered leaders in corporate sustainability, and offers one of the first empirical assessments of documents produced under the new regulatory regime. In particular, the study examines how companies are conducting double materiality assessments by classifying Impacts, Risks, and Opportunities (IRO), and how they structure their disclosures according to the European ESRS standards.

The research

The study is based on a qualitative analysis conducted between March and April 2025 on a selected sample of ten large companies headquartered in Italy and France operating in different sectors. All were already subject to the previous NFRD; as such they are among the early adopters of the CSRD. The analysis focused on three elements:

 

• the methodologies and transparency of double materiality assessments
• the identification and classification of IRO
• the thematic coverage of reports based on ESRS standards, with particular attention to the social pillar

 

Despite the small sample size, the depth of the analysis made it possible to identify recurring patterns and salient issues in the initial implementation phase of the directive.

 

Conclusions and takeaways

The research highlights the fact that formal adoption of the CSRD does not always translate into a genuine cultural and strategic transformation. In addition, findings reveal several recurring issues:

 

• Inconsistent methodologies: Materiality assessments vary significantly between companies, as does the granularity of the IROs that are identified.
• Risk-centered focus: Negative impacts and risks tend to be emphasized, while positive impacts and opportunities are addressed generically, often without a clear link to strategy or financial outcomes.
• Incomplete standard coverage: Certain environmental topics are underrepresented (especially biodiversity and ecosystems, but also pollution and water and marine resources). Indirect social aspects, such as working conditions in the value chain or community impacts, are largely overlooked.
• Retrospective narrative bias: Reports tend to present positive impacts as targets that have already been achieved; negative impacts in contrast are hypothetical, projected into the future. This approach reinforces a reputational narrative rather than genuine accountability.

 

Ultimately, the research confirms that the social dimension (the S in ESG) is still the most difficult to report—and the limitations introduced by the Omnibus proposal risk making it even harder to collect relevant data. As one example of this, the proposal reduces the number of supply chain companies required to disclose their results. “While the environmental impact of production activities is widely recognized and, for companies, socially acceptable to highlight, the same cannot yet be said for social effects,” Collevecchio explains.

 

Companies and institutions should therefore strive to raise awareness of more neglected areas (the entire social sphere and biodiversity in the environmental field), investing in education and awareness-building.

 

READ the other articles in the series Sustainability Disclosure: Red Tape or a Strategic Tool for the Future of Business?

 

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