A golden opportunity to make the most of the corporate reporting mess

But in a recent article, Centre researcher Beatrice Crona and colleagues suggest that the current moment of institutional flux — uncomfortable as it is — may in fact be a window to fix something that was already badly broken.

As Beatrice Crona, lead author of the new article, puts it: "The reporting architecture that the EU is now rolling back was never fit for purpose to begin with, because the system was not designed to reliably capture what actually matters for the environment."

The architects of the CSRD understood this problem and introduced the concept of "double materiality" as a deliberate attempt to look in both directions: not just what environmental risks threaten the firm (outside-in), but what impacts the firm inflicts on the environment and society (inside-out). On paper, this was a genuine conceptual advance over conventional Environmental, Social, and Governance (ESG) scores, which are built almost entirely around risk to companies. But in practice, corporate sustainability reporting — including the European Sustainability Reporting Standards (ESRS) — suffers from a structural flaw: companies are allowed to self-declare which impacts they consider significant enough to report on.

"When companies are left to make that call, the gravitational pull of financial logic takes over", notes co-author Véronique Blum from the Université Grenoble des Alpes.

Impacts get flagged if they create regulatory exposure, reputational risk, or supply chain liability — but if they do not, then impacts that are critical for a stable climate and a healthy environment never make it onto the page.

Three pillars for better reporting

In their new paper published in Ambio, Centre researchers and international colleagues including Steve Polasky from University of Minnesota, argue that the current regulatory turbulence is precisely the opportunity to redesign those instruments. Their proposal rests on three pillars.

First, science — not companies — should determine what gets reported. Sustainability science can and should identify standardised, sector-specific impact disclosures grounded in evidence. Critically, these need to capture three things about a company's activities: where impacts occur (unlike carbon, nature impacts are spatially variable), what activities cause them, and how much — in absolute terms, not just efficiency ratios. Linked directly to planetary boundaries and IPBES drivers of biodiversity change, such disclosures would also connect corporate reporting to national commitments under the Kunming-Montreal Global Biodiversity Framework.

Second, disclosure on this defined set of measures must be mandatory. Precisely because self-assessment allows the most consequential impacts to disappear from view, a science-defined mandatory set is the only reliable fix. Crucially, a focused list would also reduce total reporting volume — directly addressing the administrative burden that fuelled the Omnibus backlash and the competitiveness concerns raised in the report.

Third, the data must be publicly accessible — deposited in an open repository in a transparent, consistent, and reliable format, available to investors, regulators, and researchers alike.

"A science-driven rationalisation of mandatory disclosures can reduce the corporate burden of sustainability reporting while producing information that is actually useful. Less volume, better signal. That is a case that should appeal well beyond the sustainability science community", says Beatrice Crona.

The blueprint already exists

This is not a huge leap. Standardised financial disclosures were once equally contested but now underpin an entire analytical ecosystem: credit ratings, equity research, index construction. Environmental data treated with equivalent rigour — and publicly accessible — would allow investors and regulators to assess cumulative impacts and systemic risks in ways no proprietary ESG score currently permits.

"Making the shift is not necessarily easy", says Centre researcher Giorgio Parlato, one of the co-authors. "But it is entirely feasible, because the rules are not written in stone and the window of opportunity is open."

The question is whether sustainability scientists, accountants, and policymakers can seize this golden opportunity and agree on what society actually needs to navigate into a future within planetary boundaries.