Corporate Sustainability Reporting and Strategic Trends

Purpose: This thesis examines the origins and development of Sustainability Reporting in Europe, culminating with the establishment of the European Sustainability Reporting Standards (ESRS) and the Corporate Sustainability Reporting Directive (CSRD). It explores their integration into corporate reporting practices and their potential impact on corporate strategy. This study aims to understand whether mandatory ESG reporting can create an ecosystem for companies to improve their sustainability performance. Design/methodology/approach: The research is conducted within the context of an internship at a Big4 Sustainability Reporting and Assurance department. A qualitative research methodology is employed, integrating immersive observation and participation, systematic document analysis of internal reports, client documentation, academic papers and regulatory texts, and semi-structured interviews with consulting professionals and industry experts to explore their experiences and perceptions. Inductive Thematic Analysis and Descriptive Coding are used to identify recurring themes and patterns from the qualitative data, providing a comprehensive understanding of the origins and development of the ESRS and the CSRD, their integration into reporting practices, and exploring their relevance for corporate strategy. Findings: The findings indicate that measuring ESG performance requires robust data collection and assessment methods with Double Materiality Assessments (DMAs) being essential for identifying and prioritizing sustainability topics by addressing both financial and impact materiality. However, the technological tools designed to support and enhance these processes are still under development. Implementing the CSRD presents significant challenges, primarily related to data quality, transparency, and resource limitations. Companies often struggle with manual data collection processes and the need for specialized sustainability personnel. Establishing effective governance structures and aligning them with strategic goals further complicates compliance efforts. Emerging trends suggest that the CSRD and ESRS are driving a shift towards integrating sustainability into core business practices. Research limitations/implications: This study's limitations include its reliance on qualitative data from a specific context. The sample size and diversity of the interview participants are limited, and the evolving nature of ESRS and CSRD means best practices are not yet fully established, as of July 2024. Additionally, potential bias from focusing on specific methodologies and the European regulatory framework might affect the findings, highlighting the need for further research with a broader scope and longer-term perspective. Practical implications: The practical implications of this research involve providing insights for companies aiming to improve their sustainability performance through effective ESG reporting. It highlights the importance of developing robust data collection systems, investing in specialized sustainability personnel, and establishing governance structures that align with strategic sustainability goals. Originality/value: By providing a detailed analysis of the ESRS and CSRD frameworks and their implications for corporate strategy, this research contributes to the growing knowledge on sustainability reporting and offers valuable insights for practitioners, policymakers, and academics in the field of ESG.