Guest editorial: Toward a new mandatory sustainability reporting landscape in Europe: challenges and opportunities

The last decade has brought unprecedented developments in sustainability reporting regulations in Europe, introducing significant changes to disclosure requirements and creating a turbulent and complex environment for regulators, practitioners, and researchers.The Directive 2014/95/EU, called the Non-Financial Reporting Directive (NFRD), represented the European Union (EU)'s major shift from a voluntary to a mandatory regime of sustainability reporting (La Torre et al., 2018). It required large public interest entities to disclose information on environmental, social, employee, human rights, and anti-corruption matters starting from the 2017 financial year (EU, 2014). Despite its significance, the NFRD soon attracted substantial criticism. The European Commission (EC) acknowledged that the causes of the problems included insufficiently detailed NFRD requirements, a myriad of overlapping and sometimes inconsistent private non-financial reporting frameworks and standards, as well as the lack of enforcement (EC, 2020; Zarzycka and Krasodomska, 2022; Nicolò et al., 2025). Similar concerns were also raised in academia. Several studies evidenced limited effects from the transposition of NFRD on non-financial reporting, in particular, insufficient clarity on the definition of materiality (Mio et al., 2021); the abuse of the “comply or explain” principle (Pizzi et al., 2020; Venturelli et al., 2020); the coexistence of several inconsistent reporting frameworks and the lack of specific requirements for reporting standards (La Torre et al., 2018); the excessive flexibility left to the member states to impose state-specific requirements on companies (Aureli et al., 2019) and the absence of mandatory assurance requirement (Aureli et al., 2020).To address these weaknesses, the EC initiated a revision process, which led to Directive 2022/2464EU, referred to as the Corporate Sustainability Reporting Directive (CSRD), applied for the first time in the 2024 financial year. The CSRD, closely aligned with prior recommendations from the European Financial Reporting Advisory Group (EFRAG) (Giner and Luque-Vilchez, 2022), significantly strengthened the regulatory framework. It replaced the term “non-financial reporting” with more accurate “sustainability reporting”, clarified further the concept of double materiality, broadened the scope of reporting to all large and listed companies (excluding listed micro-entities), mandated detailed and standardized disclosures to be included within the management report rather than in separate reports, and required assurance of sustainability information (Di Tullio et al., 2026; Hummel and Jobst, 2024; Nicolò et al., 2025). Another significant development regarding the CSRD is that it extends the scope of reporting requirements not only to value chains but also to non-EU companies (Pizzi and Caputo, 2026).As La Torre et al. (2018) argued, achieving consistency and comparability in sustainability disclosures across the EU required reporting standards based on regulation. To achieve this and operationalize the CSRD, the European Sustainability Reporting Standards (ESRS) were developed by EFRAG. The ESRS framework includes two cross-cutting standards -setting out general principles and governance-related disclosures- and ten topical standards covering environmental (E), social (S), and governance (G) matters (EU, 2023; Nicolò et al., 2025). These standards provide detailed, consistent, and comparable reporting requirements; however, due to their novelty and complexity, their implementation by companies is a demanding process, also influenced by their size, industry, or sustainability reporting practice before the ESRS implementation (Fedee et al., 2025; Raimo et al., 2026).Literature suggests that the CSRD implementation might contribute to a decrease in the Environmental, Social and Governance (ESG) disclosure (Mahmood et al., 2026). Similarly, Di Tullio et al. (2026) argue that it might not necessarily lead to greater transparency; instead, it could shift the focus from corporate social responsibility to legal accountability and raise questions about the effectiveness of mandatory assurance, supported and encouraged by prior studies (Krasodomska et al., 2023, 2025).The transition from NFRD to CSRD involved both psychological and functional barriers for some stakeholders (Damiano and Valenza, 2026). Moreover, it is not a cost-free endeavour, particularly for small and medium-sized enterprises (SMEs), which can be affected both directly and indirectly, as the CSRD requires reporting along value chains (Pizzi and Coronella, 2024; Di Tullio et al., 2026). SMEs are the backbone of the European Union's economy. This lack of understanding hinders SMEs from recognizing the long-term benefits of sustainability, leaving them less prepared for effective data collection and management (Krasodomska, 2025). Therefore, sustainability reporting in the SME sector is often limited (Paoloni et al., 2026), and legal and tax-related issues, sustainability reporting expertise, and accounting infrastructure are important factors that might influence its development (Albu et al., 2026). Especially, SMEs in Central and Eastern European member states might find it difficult to align with the CSRD requirements due to their limited awareness of and engagement in sustainability initiatives, partly because of insufficient communication and education (Krasodomska, 2025).Another important and challenging issue is the double materiality concept, which forms the basis for sustainability reporting under CSRD (cf. Reimsbach et al., 2020; Baumüller and Sopp, 2022; Flandrino et al., 2022; Correa-Mejıa et al., 2024; Dragomir et al., 2024). From the perspective of double materiality, a sustainability topic is considered material if it is significant from either the impact (“inside-out”) perspective, the financial (“outside-in”) perspective, or both. The double materiality assessment is a complex process, depending on many factors and requiring active stakeholder engagement (Dyczkowska and Szalacha, 2026). Companies might focus in a different way on these two perspectives (Bartolacci et al., 2026), and the consequences of double materiality adoption related to organizational changes are still relatively unexplored (Panfilo et al., 2026).It should be noted that the recent changes in the sustainability reporting landscape in Europe are not without a global context. The International Financial Reporting Standards (IFRS) Foundation has also become a key global actor in sustainability reporting, pursuing a different, investor-oriented approach (financial materiality) than the ESRS (double materiality) or Global Reporting Initiative (GRI) Standards (impact materiality). Responding to pressure from investors and other stakeholders, the IFRS Foundation established the International Sustainability Standards Board (ISSB) in 2021, with a mandate to develop standards focused on information relevant to investors and capital market participants (IFRS Foundation, 2025). It is important to note that both convergence and divergence exist between the approaches of EFRAG and ISSB, and the standard-setting process is strongly shaped by the interplay of regional and global socio-political factors (Carungu et al., 2025). The ISSB issued two standards: IFRS S1, setting general sustainability disclosure requirements and IFRS S2, focusing specifically on climate-related risks and opportunities (Heyden, 2026).The significance of the regulatory developments discussed above is beyond question, as they mark a major turning point in the evolution of corporate reporting. Against this backdrop, the objective of this special issue is to examine the challenges and opportunities arising from the introduction of mandatory sustainability reporting in Europe. The issue brings together 13 papers that address this topic from diverse perspectives, offering new insights into the implications of these regulations and their global context. Each contribution sheds light on an important aspect of the transformation taking place, and together, they enrich our understanding of how this evolving regulatory framework influences all actors involved. The individual papers are discussed in greater detail in the following section.It is important to highlight that during the publication process of this special issue, the CSRD's evolutionary path has been marked by considerable uncertainty, particularly regarding the publication of the so-called Omnibus package at the end of February 2025 (EC, 2025; Nicolò et al., 2025; Mahmood et al., 2026). Following an initial wave of enthusiasm about the potential impact of the CSRD, many stakeholders highlighted criticisms related to its high complexity (Pizzi and Caputo, 2026). The proposal to postpone the application of the CSRD requirements by other than NFRD-reporters (“stop the clock”) has already been adopted and is to be transposed into the member states' national legislation by 31 December 2025 (Council of the EU, 2025). Another proposal includes shifting the focus of reporting obligations to the largest companies. On 13 November 2025, the European Parliament adopted its negotiating position on imposing sustainability reporting requirements only to businesses employing on average over 1,750 employees and with a net annual turnover of over €450 million (European Parliament, 2025). The reform also seeks to simplify ESRS (already undergone a public consultation period), ensure that sustainability reporting requirements for large companies do not impose excessive burdens on SMEs within their value chains, and possibly eliminate the obligation to transition from limited to reasonable assurance (Di Tullio et al., 2026).As evidenced above, regulatory changes in the sustainability reporting domain are occurring rapidly and, as evidenced by the Omnibus proposal, in often unexpected directions. This creates significant challenges for companies operating in uncertain and turbulent times, introduces new tensions, risks, and opportunities, while also opening additional avenues for research within an already complex landscape. Through this special issue, we aim to provide guidance and make a meaningful contribution to this important area of research. This special issue is particularly timely because, during its development, the EU was conducting feedback rounds and consultations on changes to the CSRD and ESRS. The practice-based research presented here, combined with the participation of academics in the consultation processes, highlights a direct connection between scholarly inquiry and regulatory developments.The paper is structured as follows: Section 2 presents our review and discussion of the articles published in the special issue. In Section 3, we propose directions for future research. Section 4 outlines our concluding remarks.The thirteen articles published in this special issue adopted different methodological approaches, including: single (Dyczkowska and Szalacha, 2026) and multiple (Bartolacci et al., 2026) case studies; surveys (Albu et al., 2026); normative essays (Di Tullio et al., 2026); content analysis (Damiano and Valenza, 2026; Fedele et al., 2026; Panfilo et al., 2026; Paoloni et al., 2026; Raimo et al., 2026); thematic analysis (Carungu et al., 2025); text and sentiment analysis assisted by machine learning (Pizzi and Caputo, 2026) and natural language processing (NLP) techniques (Heyden, 2026); and regression models (Mahood et al., 2026). Some studies also combined content/sentiment analysis with inferential statistical approaches, such as t-tests (Fedele et al., 2026; Panfilo et al., 2026) and various regression models (Albu et al., 2026; Damiano and Valenza, 2026; Panfilo et al., 2026; Pizzi and Caputo, 2026; Raimo et al., 2026). Also, the geographical settings investigated by empirical papers are heterogeneous, ranging from single (e.g. Albu et al., 2026; Bartolacci et al., 2026; Dyczkowska and Szalacha, 2026; Fedele et al., 2026; Paoloni et al., 2026) and multiple EU countries (Mahmood et al., 2026; Panfilo et al., 2026; Raimo et al., 2026), to non-EU countries (Pizzi and Caputo, 2026).Against this backdrop, this paragraph offers an overview of the thirteen articles, categorised into three main thematic clusters: 1) standard-setters, stakeholders and the politics of CSRD; 2) double-materiality in action; 3) sustainability disclosure and ESRS readiness.This cluster includes five special issue papers mainly focused on the sustainability reporting regulation process from the perspective of standard-setters and stakeholders.Specifically, Carungu et al. (2025) investigated how two leading standard-setters - the EFRAG and the ISSB - have approached their journey toward defining global sustainability reporting standards, highlighting both divergences and areas of potential convergence. To this end, they conducted a detailed thematic analysis of more than 500 publicly available documents and 178 h of audio recordings from EFRAG and ISSB meetings and discussions, covering the period March 2022–September 2024. Drawing on Alvesson and Deetz's (2000) critical analysis framework, their findings show that both ISSB and EFRAG demonstrate a strong commitment to interoperability and connectivity, as well as to developing sector-specific reporting standards and a digital taxonomy for sustainability reporting comparable to XBRL. Nonetheless, inevitable tensions emerge between the two bodies. Whereas the ISSB remains primarily focused on improving investor-oriented sustainability reporting, EFRAG's objective is to address the information needs of a broader stakeholder audience. This divergence has important implications for the materiality discourse – i.e. what types of sustainability information organisations are expected to report - and for how sustainability practices are embedded internally.Heyden (2026) devoted specific attention to the ISSB's standard-setting process, examining the extent to which lobbying activities by stakeholders have affected the development of IFRS S2 climate-related disclosures. The author employed NLP techniques - such as sentiment, similarity and trigram analyses - to conduct an in-depth examination of 718 comment letters submitted by different stakeholders during the public consultation on the IFRS S2 exposure draft. The findings shed light on how standard development has been influenced by stakeholder lobbying. While companies and financial service providers tend to privilege economic arguments, expressing concerns over the administrative burden associated with the standard, nongovernmental organisations (NGOs), regulators and academic groups advocate for more stringent, climate-related disclosure requirements. Although the ISSB appears to pay greater attention to the arguments put forward by investors, a broader stakeholder involvement in global sustainability reporting remains necessary to achieve legitimacy.A similar approach was followed by Damiano and Valenza (2026), who explored the barriers associated with the transition from the NFRD to the CSRD, focusing on stakeholders' resistance. To this end, they adopted a mixed research method, including content and iterating multiple regression analysis, to scrutinise the outcomes of the public consultation by the EC in February a of (e.g. and small and on the concept and Damiano and Valenza (2026) highlighted how psychological and and functional value and barriers affected stakeholders' to transition from the NFRD to the a specific focus on Albu et al. (2026) investigated how their key actors with the regulatory from the introduction of the CSRD, in of barriers and To this end, they conducted a to both and SME and categorised and the content analysis and multiple statistical including analysis and regression The different approaches adopted by SMEs sustainability reporting associated with three a a with and a Moreover, the highlighted the of and tax-related and the of the in the followed by sustainability reporting and the of accounting Di Tullio et al. (2026) conducted a critical the - i.e. the and - the implementation of the the evidenced that the regarding the potential of the CSRD to the human and economic challenges and by SMEs in with the new regulation. while the CSRD is expected to greater mandatory disclosure it some companies to their sustainability and to and from and legal with mandatory sustainability reporting requirements not necessarily a commitment to Corporate Social which to and the of mandated assurance as a for the and of sustainability information with the that often exist between companies and about the cluster includes three special issue which focus on double materiality adoption and in different Dyczkowska and (2026) explored the application of the double materiality assessment process, understanding of the potential problems and challenges arising during its In they conducted a single case on the in an approach to related to the double materiality assessment The highlights that the assessment of impact materiality causes for the stakeholders with less It the for to different to stakeholder groups involved in the process, for to their with the sustainability under The also the complexity of the materiality of and related to sustainability particularly it to defining objective that single out the that are relevant for the Bartolacci et al. (2026) conducted a multiple case two large businesses within the scope of the CSRD to how they approach the double materiality To this end, the mainly on insights from with the sustainability of the two companies. The main findings that both companies are more focused on financial materiality than on impact materiality, an that risks and opportunities for the over its on the environment and Therefore, rather than it is to the the principle of double Bartolacci et al. (2026) also that in both companies are more to social and environmental sustainability issues, that governance actors and are particularly to global challenges and Panfilo et al. (2026) employed a approach to examine the adoption of double materiality in sustainability reporting influences To this end, the the sustainability published in by a of Europe companies and and regression models to the impact of double materiality on management findings that of the companies not double materiality in their sustainability reports, while for only of the Moreover, these the adoption of double materiality not significantly influence management cluster five special issue articles that specific attention to the content of corporate to in of CSRD and ESRS introduction and, in some the or in Fedele et al. (2026) focused on a of to their with ESRS disclosure requirements and to potential in The of a content analysis based on the with to and and while less attention is devoted to and and and Moreover, the highlights that and the Standards at the of sustainability disclosure aligned with the a similar Paoloni et al. (2026) focused on a of listed SMEs that published a sustainability report as of 2025 and the analysis to climate-related disclosure Drawing the the the of the on general that lack or to ESRS disclosure requirements. lack of of financial materiality is also In a the more approaches to with disclosure requirements, in the and et al. (2026) adopted a different the of published by a of EU companies in with ESRS disclosure requirements, as well as the impact of and environmental on this of defining a broader disclosure including from the ten topical a content analysis of the a of with to and disclosure requirements. In from regression models that companies and operating in are more to that with ESRS and (2026) adopted techniques to conduct text and sentiment analysis on published by a of over the to into and how they are the they a regression to the between three groups of and the sentiment in disclosures. The show that only a limited of the investigated disclose their the CSRD, with a substantial in the companies that do a Moreover, the involvement of the within the of influences disclosure sentiment, is associated with the only the Governance Mahmood et al. (2026) conducted a on disclosure from for a of over the period several regression models to their impact on by they a decrease in disclosure in 2024 year before the first year of CSRD Also, the regression a significant and of disclosure on published in this special issue have and and light on both the and the of the sustainability reporting In they have also several research that as starting for future with the potential to further enrich the academic in the to with the three thematic in this special issue, future research could be but not limited the following the Omnibus proposal presented by the EC has been issued in to the socio-political et al., 2025). It introduces significant changes to the and content of the obligations out in the In many it a with regulatory to and The Omnibus proposal has also raised concerns investors and other stakeholders regarding their obligations in of corporate sustainability management and light of the in the European regulatory landscape arising from the Omnibus proposal, additional avenues for future research the following directions particularly at a in the evolution of sustainability reporting in Europe. The transition from the NFRD to the CSRD, along with the introduction of the the regulatory to and comparability in corporate sustainability disclosures. as the to this issue this transformation is by a of tensions, and implementation papers in this issue show how the new regulatory framework has and changes across and both the and the of mandatory sustainability reporting, from stakeholder engagement and data to concerns about and regulatory across studies is that regulatory clarity not lead to meaningful or sustainability The journey from to accountability remains complex and key can be from this of the CSRD and ESRS not regulatory changes but also and These in particularly to their approach to sustainability, and the findings that this transition is While some and with and implementation the principle of double materiality as both a and a in the CSRD framework. The how its remains with methodological complexity and suggests that while the concept its impact on practice and is still limited and this special issue highlights the interplay between regional regulation and global standard-setting The coexistence and at between EFRAG and ISSB approaches a broader how can regulatory convergence be without on stakeholder or normative the Omnibus proposal and its potential effects new of The regulatory to be and and This for a on the politics of sustainability standard-setting and the required to in such a this academic research a this special issue scholarly engagement not only and regulatory developments but also It is expected that the further research at the of reporting and sustainability In they can both academic inquiry and the broader of and development in Europe and