Boosting transparency or drowning in disclosure? Challenges and opportunities of the EU Corporate Sustainability Reporting Directive
Key issues
The Corporate Sustainability Reporting Directive (CSRD) recently adopted by the European Union (EU) raises the bar with respect to sustainability reporting requirements by mandating companies to disclose detailed and comparable information. This comes at a time when greenwashing concerns about corporate ‘green claims’ are proliferating.
It is unclear whether setting more stringent rules will boost corporate transparency and accountability. Greenwashing is likely to be curbed, but companies risk being submerged by disclosure requirements.
More clarity is needed on the interoperability of the new Directive with existing international sustainability standards.
Challenges in implementing the CSRD include difficulty to translate the double-materiality perspective into practice, high costs of harmonisation and lack of companies’ capability.
Notwithstanding the challenges, the Directive provides an opportunity to enhance corporates’ transparency and strengthen mandatory sustainability reporting in Europe and possibly elsewhere.
