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CSRD sustainability report provides valuable insights

Listed companies are making steady progress in sustainability reporting. The first reports published under the CSRD and ESRS show how companies relate to their environment and what impacts, risks and opportunities originate from sustainability topics. This contributes to better strategic decisions and transparency for investors and society at large. The AFM supports companies by sharing three focus areas and good practices to highlight their place in the world and to take next steps in their sustainability reporting.

In short

The sustainability report shows how a company relates to the world
Relevant to investors and society at large
Relevant to executive and supervisory boards
Compliments on the first steps – 3 focus areas for the next steps
Reliable sustainability information remains crucial

The sustainability report shows how a company relates to the world

The sustainability report shows how a company relates to the world: the materiality assessment reveals the impact it has on people, the environment and society, as well as the financial effects that sustainability topics have on the company. This is valuable for both investors and society at large: it helps in making better informed decisions.

Relevant to investors and society at large

The assessment gives investors and society better insight into the company’s impact on its environment and the financial consequences for the company due to sustainability effects. Among other things, this helps investors to make better investment decisions and reduces the risk of greenwashing, since the relevant impacts, risks and opportunities are disclosed transparently.

Relevant to executive and supervisory boards

The assessment can also provide strategic insights for executive and supervisory directors: where is value at risk of being lost and where are the opportunities? This assists in making forward-looking decisions and strengthens the dialogue with investors. The CSRD and ESRS provide a structure for this, or as some companies themselves put it: ‘It helps us to understand ourselves better.’ It also contributes to a growing level playing field, with all European market participants within the scope of the CSRD increasingly reporting according to the same standards. This increases comparability and allows a fair assessment of sustainability efforts.

Compliments on the first steps – 3 focus areas for the next steps

The AFM compliments companies on their progress: information is more structured, more accessible and more visual. At the same time, we highlight three focus areas to enable companies to further strengthen their sustainability reporting:
1. Materiality assessment: explain how impacts, risks and opportunities are identified. This will make it easier to understand the choices made regarding the material topics.
2. Assessment: clarify the considerations for each sustainability topic (such as biodiversity and pollution). Explain how assessments were made. This will make the assessment more transparent and easier to follow.
3. Effects: disclose the interaction between impacts, risks and opportunities with the strategy and business model. Investors and other stakeholders want to know how sustainability risks and opportunities impact the business model. Companies that clearly demonstrate this interaction provide valuable insights for the future.

Reliable sustainability information remains crucial

The European Commission’s Omnibus proposal outlines measures to revise the scope and phasing-in of CSRD reporting requirements. Implementing the CSRD and ESRS requirements is a journey that has its uncertainties. The AFM remains committed to a growth path. The first reports provide a sound basis. By further refining the materiality assessment, companies will be able to define their role in the world even more clearly.