This suggests that transition planning is becoming widespread faster than it is becoming financially grounded. Increasingly, stakeholders are looking beyond the existence of plans to the assumptions that support them, including capital allocation, operational levers and value chain dependencies. As reporting matures, attention is also shifting toward the relationship between policies, actions, targets and reported outcomes. Stakeholders increasingly expect disclosures to demonstrate how sustainability initiatives translate into measurable progress and support wider business objectives.
Transition plans are becoming standard; financially grounded transition plans are not
One of the clearest indicators of this gap is the use of phase-in options. Phase-in options are transitional provisions in ESRS that allow companies to temporarily omit or delay certain disclosure requirements – typically in the first years of reporting – easing the implementation burden. Almost 90% of companies applied phase-ins for at least some disclosures, most notably for anticipated financial effects. Most companies reporting on climate change have not yet disclosed how these risks and opportunities translate into financial outcomes. Without that link, sustainability reporting cannot fully support management decisions or capital allocation.
Companies are, however, disclosing a broader range of decarbonization actions. Energy efficiency, renewable energy procurement and value chain collaboration dominate the list. These are important and expected measures. More advanced levers, such as carbon capture, remain far less common. This suggests that many organizations are progressing through the first phase of decarbonization, while the path to deeper emissions reductions is still evolving.
Workforce reporting presents a more established baseline. All companies report ESRS S1 as material, with working conditions and equal treatment consistently covered. At the same time, disclosure remains uneven across more complex topics. Areas such as adequate wages and persons with disabilities are reported less frequently, and phase-in options are still widely used. The result is a framework that is robust at its core, but not yet complete in its depth.
A similar dynamic can be seen in business conduct. The topic is now material for almost all companies, and the number of reported risks and impacts has increased. This points to a broadening view of governance-related issues. Yet reporting remains concentrated on internal themes such as corporate culture and anti-corruption measures, while external dimensions – including political engagement and lobbying – are less frequently disclosed.
Compliance is becoming common; credibility still needs to be demonstrated
Perhaps the clearest signal of change comes from assurance. Almost all companies now obtain at least limited assurance over their sustainability statements. This marks a decisive shift from sustainability reporting as a communications exercise toward a more formal management discipline. As assurance becomes standard, expectations are rising. Data quality, documentation and methodological consistency are subject to increasing scrutiny, exposing gaps where systems and controls are still developing. This places greater emphasis on transparent methodologies, clear explanations of calculation approaches and robust governance over sustainability data. As assurance expectations increase, reporting quality is becoming as much about evidence and traceability as disclosure volume.
This is why the second year of CSRD should be seen less as a reporting milestone and more as an operating signal. The companies moving ahead are not simply producing better reports; they are building the systems, governance and cross-functional discipline required to stand behind them.
This shift is taking place in a changing regulatory landscape. Recent developments are expected to reduce the number of companies in scope, while increasing expectations for those that remain. Fewer reporters will not mean less scrutiny. Instead, the focus will move further toward auditability, decision-useful information and demonstrable outcomes.
Across the sample, a common set of characteristics is emerging among the most effective sustainability statements. They present sustainability as part of the broader business narrative rather than a standalone reporting exercise, explain materiality decisions transparently, provide decision-useful metrics and help users interpret performance over time. Together, these characteristics move reporting beyond compliance toward greater credibility, comparability and long-term relevance.
What follows from this is clear. Companies need to strengthen the link between sustainability reporting and financial reporting, ensuring that capital allocation and anticipated impacts are reflected in disclosures. They need to move beyond policies and plans toward evidence of execution. They should treat double materiality as a strategic tool, not just a compliance requirement. And they must prepare for assurance as a test of systems and controls, not simply disclosures.
The second year of CSRD shows that structured, externally assured sustainability reporting is achievable at scale. It also shows that the gap between compliance and credibility remains. Companies that invest now in data quality, governance and financially grounded transition planning will be well positioned as expectations continue to rise.
