Navigating the CSRD framework and elevating your business

Focusing solely on traditional financial risks and opportunities is no longer enough. Growing awareness of sustainable development is placing higher demands on companies to work in a structured and strategic way with sustainability-related issues.

While the new reporting requirements may initially seem extensive, we've found that sustainability reporting, when used correctly, can be effective and create value. Through standardised reporting requirements, the CSRD contributes to greater transparency and comparability between companies, while giving investors and other stakeholders better tools to understand and assess companies' sustainability work, risks, opportunities, and impact on people and the environment.

These requirements mean that sustainability information becomes more accessible to customers, investors, financiers, business partners, suppliers, job seekers, authorities, and other stakeholders, creating better conditions for well-informed decisions. The specific disclosures required and the scope of reporting vary depending on a company's size, industry, and circumstances.

At BDO, we work closely with our customers throughout the entire process, tailoring our approach to the organisation's circumstances, level of maturity, and ambitions. For some organisations, the work is primarily about ensuring regulatory compliance and reporting readiness, while others focus on building structure, strengthening internal processes, or using reporting as a strategic tool for governance and development.

A brief overview of CSRD and ESRS

The Corporate Sustainability Reporting Directive (CSRD) is the EU's directive on sustainability reporting. It replaces the earlier Non-Financial Reporting Directive (NFRD) and introduces expanded requirements for how companies identify, manage, and report on sustainability-related matters.

The CSRD introduces the European Sustainability Reporting Standards (ESRS), which specify the disclosures companies must provide and how sustainability information should be structured and presented. The ESRS covers disclosure requirements across environmental, social, and governance-related areas and is built on the principle of double materiality. This means companies must report both how sustainability issues affect their financial position and development, and the impact their operations have on people and the environment.

The ESRS standard sets out the overarching principles for reporting, including the requirement for a double materiality assessment, which forms the basis for identifying a company's material sustainability issues and the associated reporting requirements.

Which companies in Sweden are covered by the CSRD?

Sweden implemented the Corporate Sustainability Reporting Directive (CSRD) through amendments to the Swedish Annual Accounts Act, which came into effect on July 1, 2024. For the 2025 reporting year, the rules applied to public-interest entities with more than 500 employees.

As things currently stand (2026), the main principle going forward is that mandatory CSRD reporting will primarily apply to very large companies, with the following thresholds proposed/applicable under the Omnibus reform:

Proposed/new main direction following the Omnibus reform

More than 1,000 employees
More than €450 million in net turnover

In practice, this means that a large proportion of companies that would previously have fallen within scope under the original CSRD thresholds are no longer expected to be subject to mandatory reporting.

Identifying impact across all dimensions through double materiality assessment

The EU's sustainability reporting standards, ESRS, require companies to carry out a double materiality assessment (DMA). The double materiality assessment is a central part of the work under the CSRD and ESRS framework and aims to ensure that companies identify and report the sustainability issues most relevant to their business and stakeholders. The assessment forms the basis for providing a fair, relevant, and comprehensive picture of a company's sustainability impact, risks, and opportunities.

The purpose of the double materiality assessment is to identify a company's material impacts, risks, and opportunities (IROs) related to environmental, social, and governance (ESG) issues, which must be reported in accordance with the CSRD and ESRS.

The process begins by identifying the company's actual and potential impact, both positive and negative on people and the environment in the short, medium, and long term. The analysis considers sustainability issues deemed relevant based on the company's operations, business model, or value chain. The double materiality assessment also includes an analysis of the company's business model, value chain, current situation, future development, external context, and relevant stakeholders.

A sustainability issue is considered material if it is material from an impact perspective, a financial perspective, or both. This assessment determines which sustainability areas a company should prioritise in its sustainability work and which disclosures become mandatory to report under the ESRS.

When should you conduct a Double Materiality Assessment?

If a company is subject to the reporting requirements under the CSRD, conducting a double materiality assessment is mandatory. The double materiality assessment forms the basis for identifying which sustainability issues are material to the business and must therefore be included in reporting under the ESRS.

We've found that a double materiality assessment can also be valuable in several other situations:

When starting or developing sustainability work
If a company is in an early stage of its sustainability efforts, a double materiality assessment can help identify which sustainability areas should be prioritised. The analysis can also be used to update existing strategies, goals, and action plans.
To strengthen transparency and trust
A double materiality assessment can help clarify a company's impact on people, the environment, and society, as well as how sustainability-related issues affect the business financially. This can strengthen trust among both internal and external stakeholders through greater transparency and clearer communication around sustainability work.
To strengthen board and management engagement
The analysis can also serve as a strategic tool for the board and management by highlighting the company's most material sustainability-related risks and opportunities. This includes, for example, effects on costs, future cash flows, market position, business model, and reputation.

Common challenges we see in CSRD Reporting

Working with CSRD reporting often requires integrating new types of processes, data requirements, and regulatory expectations into existing structures for governance, risk management, and reporting. For many organisations, this presents both practical and strategic challenges, particularly as the regulatory framework continues to evolve and expectations around transparency increase.

Common challenges in working with CSRD and ESRS include:

Interpreting regulatory requirements and ESRS standards
Many organisations find it challenging to interpret and apply the ESRS standards and to determine which disclosure requirements are relevant to their business. The regulatory framework is extensive and often requires new ways of working to integrate sustainability issues into existing governance and reporting.
Conducting the double materiality assessment
The double materiality assessment forms the basis for reporting under the ESRS, but it can be complex to carry out in practice. Challenges often arise in identifying and assessing a company's material impacts, risks, and opportunities, particularly in relation to the value chain and long-term perspectives.
Data collection and data quality
Many companies lack established processes and systems for collecting, quality-assuring, and monitoring sustainability data. This is especially true for information related to the value chain, climate data, and social disclosures, where access to reliable data is often limited.
Integration into corporate governance and strategy
To create long-term value, sustainability reporting needs to be integrated into a company's overall governance, risk management, and strategic planning. This often requires cross-functional collaboration, involving several parts of the organisation, including finance, sustainability, HR, procurement, and management.

CSRD & ESRS