The first year of mandatory sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD) has proven challenging for many European companies, particularly due to the complexity of sustainability-related financial information. A Deloitte benchmark study shows that most organizations are still struggling to meaningfully connect ESG data with traditional financial reporting.
The introduction of the Corporate Sustainability Reporting Directive (CSRD) marks a significant shift in how European companies are expected to disclose non-financial information. However, the first year of implementation has highlighted important gaps between regulatory requirements and companies’ current reporting capabilities.
According to the Deloitte report “Connecting the dots: ESG and Finance. Auditor’s Perspective on the European Sustainability Reporting Standards (ESRS) Reports in Central Europe”, most companies in Central Europe were only able to provide limited sustainability-related financial information in their inaugural CSRD reports. The study analyzed disclosures from 126 large companies and public-interest entities across nine countries, including Romania, covering 11 industry sectors.
ESG data remains weakly connected to financial reporting
One of the key findings of the Deloitte study is the lack of integration between sustainability data and financial information. While many companies have made progress in identifying ESG risks and policies, their ability to quantify the financial impact of these factors remains limited.
In particular, reporting on capital expenditure (CapEx) and operational expenditure (OpEx) linked to ESG actions has proven difficult. Only 42% of the analyzed reports included quantitative CapEx and OpEx data related to sustainability. Even fewer companies disclosed financial data related to workforce topics (14%) or resource use and circular economy initiatives (13%).
This highlights a structural challenge: sustainability reporting often runs in parallel with financial reporting, rather than being embedded into core financial processes and systems.
CSRD as a strategic, not just compliance, exercise
Deloitte emphasizes that CSRD reporting should not be viewed solely as a regulatory burden. Companies already reporting under International Financial Reporting Standards (IFRS) have a clear opportunity to align sustainability and financial disclosures, as financial standards increasingly require climate-related and risk-based information.
When properly connected, ESG and financial reporting can enhance risk management, improve long-term financial stability and support more informed strategic decision-making. In this sense, CSRD has the potential to become a driver of better governance rather than a box-ticking exercise.
Sustainability-linked incentives gain traction
Another notable trend identified by the study is the growing link between sustainability performance and executive remuneration. Almost half of the analyzed companies (44%) have introduced ESG-related incentives into management compensation structures.
Environmental KPIs most frequently focus on decarbonization and energy efficiency, while social indicators are commonly linked to diversity, equity and inclusion. In the governance dimension, ESG-related risk management is the most widely used performance metric.
The financial services sector stands out, with 64% of companies linking management remuneration to ESG performance. In Romania, the adoption rate is even higher, at 53%, exceeding the regional average.
What companies report — and what they overlook
Among the 12 strategic topics required under CSRD and ESRS, own workforce and climate change are by far the most commonly reported, being assessed as material by nearly all companies. By contrast, biodiversity, ecosystems and affected communities are far less frequently treated as material topics.
Although ESRS does not mandate a sector-specific reporting approach, Deloitte’s analysis shows that companies in financial services and technology and communications are the most advanced in disclosing entity-specific topics. Cybersecurity and digitalization are the most commonly reported cross-sector issues, reflecting their growing relevance for business resilience and risk management.
Lessons ahead of the second wave of CSRD reporting
Despite the challenges, the first year of CSRD implementation demonstrates that European companies are beginning to adapt. Sustainability reporting is a long-term transformation process, requiring new data flows, governance structures and closer cooperation between finance, sustainability and risk functions.
Benchmarking exercises such as Deloitte’s provide valuable guidance, allowing first-wave reporters to assess the effectiveness of their approach while offering practical insights for companies preparing for the second wave of CSRD obligations.
The key takeaway for European business leaders is clear: sustainability and financial performance can no longer be treated separately. Companies that succeed in integrating ESG into financial decision-making will be better positioned to manage risk, meet regulatory expectations and remain competitive in an increasingly sustainability-driven European economy.
Source:
- Corina Dimitriu, Audit & Assurance Partner, Deloitte Romania
- Oana Ionică, Director, Audit & Assurance, Deloitte Romania
