Navigating Compliance : Challenges and Strategies for Implementing the Corporate Sustainability Reporting Directive (CSRD)

Abstract

The Corporate Sustainability Reporting Directive (CSRD), adopted in 2023 and entering into force in 2024, represents a fundamental transformation of corporate non-financial reporting within the European Union. By introducing the principle of double materiality, mandatory assurance, and alignment with the European Sustainability Reporting Standards (ESRS), the CSRD extends reporting obligations to nearly 50,000 companies, demanding a deeper integration of sustainability into strategy, governance, and operations. Despite its ambition to enhance transparency and comparability of sustainability information, the practical implications for companies remain underexplored. This thesis investigates the challenges and opportunities arising from CSRD implementation, focusing on how companies adapt their governance structures, risk management processes, and strategic orientation in response. Using a qualitative and exploratory design, semi-structured interviews were conducted with Chief Financial Officers (CFOs), Chief Sustainability Officers (CSOs), consultants, and sustainability managers across multiple sectors, including banking, insurance, energy, and asset management. Data were analyzed thematically through coding and triangulation to identify cross-sectoral patterns. Findings reveal that the CSRD has accelerated the creation of new governance organs, promoted stronger dialogue between finance and sustainability functions, and in many cases elevated sustainability to board-level oversight. However, significant challenges persist: aligning double materiality with existing enterprise risk management frameworks, overcoming methodological immaturity in impact assessments, and addressing organizational resistance. The directive also drives environmental transformation, with companies setting more ambitious climate targets, enhancing disclosure on Scope 3 emissions, and investing in sustainable innovations. Social dimensions, such as due diligence in supply chains and integration of social KPIs, are emerging as strategic priorities but remain unevenly addressed across sectors. The study concludes that while the CSRD serves as both a compliance obligation and a catalyst for transformation, its impact is differentiated by sectoral maturity, resource capacity, and organizational culture. It highlights tensions between regulatory compliance and genuine sustainability transformation, underscoring the need for capacity-building, methodological guidance, and systemic support from policymakers. This thesis contributes to both academic debates and managerial practice by offering insights into how companies navigate compliance while seeking to embed sustainability at the core of their strategic vision.