Q&A with Andreas Rasche: The big shifts in sustainability reporting and how to prepare for the year ahead

In this Q&A, Dixie De Winne, Sustainability Consultant at Kōan, speaks with Professor Andreas Rasche about the state of sustainability reporting in Europe. Andreas is a Professor of Business in Society and Associate Dean of the full-time MBA programme at Copenhagen Business School, where he focuses on corporate sustainability, sustainable finance, and sustainability regulations, including the CSRD.

How would you describe the evolution of sustainability reporting standards — from voluntary frameworks like the GRI to today’s mandatory standards such as the ESRS and ISSB?

Andreas: I think the movement in general is towards more legislation. We’ve all learned a lot in the 20–25 years since GRI was developed. At the time, it was necessary because pre-GRI every company wrote whatever they wanted and it was difficult to compare anything. But GRI also showed the limits of voluntary standards. They are necessary, but if you really want a level playing field and want to capture all large and mid-sized players in an economy, you need legislation. That’s when the NFRD¹ came in as the predecessor of the CSRD.

What is your reflection on the direction of sustainability regulation in Europe, especially given the Omnibus and current changes?

Andreas: First of all, I think we are losing our ambition in Europe. We were known internationally for setting global norms — the so-called Brussels effect. But we’re losing ambition and traction on the Green Deal through these simplification packages.

The EU is not doing itself a favour by declaring sustainability reporting and due diligence the enemies of competitiveness. Removing 90% of companies from a directive is not simplification; it is deregulation. The European Commission and Parliament should adjust their language, because this is being sold as simplification when it is not.

That said, simplification on the technical level of the ESRS was necessary. We had too many data points, and the standard wasn’t well aligned. But the mistake was moving too quickly into changing the directives rather than starting with technical simplification. 

Looking ahead to next year, what should be the top priorities for companies aiming to strengthen their reporting?

Andreas: We will have legal certainty on the ESRS by the end of the year. Over the past year, many companies were in a wait-and-see mentality — waiting for regulators to finish their work and come up with a final verdict.

But next year will be different. Companies need to work out where they stand. Just believing that because you’re no longer in scope you’re free of responsibility is misleading. Companies need to reflect on where their pressure points are and then move beyond compliance.

Understand what you can do with the data that comes out of reporting. Can you use it for capital allocation? For incentivising people? For understanding your workforce better? The use cases are widespread. For me, the beyond-compliance agenda should be the key agenda of next year.

¹ NFRD (Non-Financial Reporting Directive): Adopted in 2014 and applicable from 2017 onward, the NFRD required large public-interest entities in the EU to report on key non-financial topics, including environmental, social and governance matters. It laid the foundation for the CSRD, which significantly expands and strengthens these requirements.