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What the First CSRD Reports Actually Revealed: Lessons for FY2027 Preparers

Last updated · August 2, 2026

The first mandatory CSRD sustainability statements are in. Hundreds of Europe's largest companies have now published ESRS-aligned disclosures covering FY2024 - and the evidence from those reports is both encouraging and sobering.

Encouraging, because the quality of ESG disclosure genuinely improved. Sobering, because the gaps that emerged - in data infrastructure, double materiality rigour, and the treatment of opportunities - are exactly the gaps that Wave 2 companies still have time to close.

This article draws on EFRAG's "State of Play 2025" report and Datamaran's analysis of over 300 first-wave reports to extract the concrete lessons that FY2027 preparers should act on now.

What Wave 1 Was - and What It Produced

2025 marked the first mandatory reporting period under the Corporate Sustainability Reporting Directive, requiring companies to disclose sustainability information reflecting FY2024 data in line with the European Sustainability Reporting Standards. The companies in scope were large EU public-interest entities - primarily those already subject to the Non-Financial Reporting Directive (NFRD) - with more than 500 employees.

EFRAG launched its "State of Play 2025" portal, providing access to detailed results from 656 ESRS sustainability statements issued in 2025, collected between 1 January and 20 April. Separately, Datamaran released research analysing over 11,000 individual IROs from 304 companies across 21 countries and 57 industries, published in the same window.

The headline verdict from both studies: companies started publishing their first ESRS-aligned sustainability statements, increasing the amount, clarity, and insightfulness of ESG information for external stakeholders - yet the early implementation phase reveals persistent challenges, particularly when it comes to interpreting the standards, ensuring consistency, and streamlining reporting efforts.

That tension - real progress alongside real problems - is the defining characteristic of Wave 1. It is also the most useful starting point for Wave 2 companies.

What the First Reports Actually Revealed

1. The IT and Data Infrastructure Problem Is Bigger Than Expected

The single most striking finding from the first wave is how unprepared most companies' internal systems were for the task. According to EFRAG's study, 85% of companies recognise that their current IT systems are not equipped to handle the new ESG reporting requirements. This is particularly clear in supplier data collection, where traditional IT systems often fall short of reporting needs.

This is not a minor operational inconvenience. ESG data under ESRS is expected to be audit-ready - subject to limited assurance from the first reporting year. When the underlying data is collected manually, via spreadsheets and email chains, the risk of inconsistency, error, and assurance failure is high. Common hurdles include preparing for external assurance and conducting double materiality assessments, with complex data gaps - where required data may be missing, inconsistent, or manually managed - an ongoing challenge for many, often necessitating process redesign.

For FY2027 preparers, this is the clearest possible signal: the time to invest in ESG data infrastructure is now, not in the year before your first report is due.

2. Double Materiality Assessments Varied Wildly in Rigour

The double materiality assessment (DMA) is the foundation of every ESRS sustainability statement. What Wave 1 showed is that companies interpreted this requirement in very different ways - and many interpretations were thin.

Over 40% of companies still lack a robust double materiality assessment. The stakeholder engagement dimension was a particular weak point: 97% of companies involved internal stakeholders in their materiality assessments, but engagement with broader societal stakeholders remains rare. Many DMA processes lack systematic stakeholder engagement - external stakeholders, particularly affected communities and workers in the value chain, receive insufficient consultation in determining material topics.

The result is a set of materiality maps that are internally coherent but potentially blind to the impacts and risks that matter most to the people and communities a company actually affects. That is a problem for assurance, and it is a problem for credibility.

Companies identified an average of 6 out of the 10 ESRS standards as material, reflecting the broad application of the double materiality lens. But breadth without depth is not the goal. While companies identified an average of 6 out of 10 ESRS standards as material, only 14% of companies included any entity-specific IROs. Generic, sector-level IROs that could apply to any company in the industry are not what the standard demands - and they are not what assurance providers will accept.

3. The IRO Imbalance: Negative Impacts Dominated, Opportunities Were Ignored

One of the most analytically interesting findings from Datamaran's study concerns the composition of disclosed IROs. Negative impacts made up 37% of all IROs disclosed in first-wave reports, compared to just 13% categorised as opportunities - almost a 3:1 ratio. This pattern underscores a cautious interpretation of the directive's double materiality principles, with most organisations aligning to the CSRD's call for prudence in sustainability disclosures.

The instinct to lead with risks and negative impacts is understandable - it reflects legal caution and the influence of risk management frameworks. But ESRS is not a risk-only standard. The "O" in IRO stands for opportunity, and the standard explicitly requires companies to identify and disclose material sustainability-related opportunities: new markets, resource efficiencies, green financing advantages, talent attraction.

Under-reporting opportunities does two things. First, it produces a sustainability statement that is incomplete by design. Second, it misses the strategic value of the exercise - the DMA is supposed to surface where sustainability creates competitive advantage, not just where it creates liability.

For FY2027 preparers: When building your IRO long-list, run a dedicated opportunity identification workshop separate from your risk and impact sessions. Sustainability-linked revenue streams, energy cost savings from decarbonisation, and improved access to green finance are all legitimate material opportunities that belong in your statement.

4. Topic Coverage Was Uneven - and Predictably So

Climate change (E1) was addressed by 99% of companies, followed closely by own workforce (S1) at 98% and business conduct (G1) at 92%. In contrast, areas like water (E3), biodiversity (E4), and affected communities (S3) were far less represented, appearing in only 36-44% of reports.

Only 10% of companies identified all 10 topical ESRS standards as material. This is not necessarily wrong - materiality is company-specific, and not every standard will be material for every business. But the concentration of disclosures around the three "safe" topics (E1, S1, G1) raises a question: are companies genuinely concluding these topics are not material, or are they avoiding the harder work of assessing them?

Biodiversity and internal carbon pricing remain limited in disclosures. For companies in sectors with significant land use, water dependency, or supply chain exposure, this is a gap that assurance providers and investors will increasingly scrutinise.

5. Value Chain Data Remained the Hardest Problem

Scope 3 emissions and broader value chain social data were the most commonly cited data gaps in first-wave reports. The challenge is structural: companies do not control their suppliers' data, and many suppliers - particularly smaller ones - do not yet have the systems to provide it.

55% of companies disclosed a climate transition plan, though approaches and formats vary. Among those that did, Scope 3 coverage was frequently incomplete or based on spend-based estimates rather than primary supplier data - a known limitation that assurance providers flagged.

Sustainability statements varied widely in length depending on countries, from 70 to more than 200 pages on average, with financial institutions producing longer reports on average. Length variation of that magnitude reflects not just different business complexity but different interpretations of what "sufficient" disclosure means - a comparability problem that the revised ESRS aims to address.

How Wave 1 Evidence Shaped the Revised ESRS

The evidence from first-wave reports did not sit on a shelf. The findings served as a foundation for EFRAG's ongoing work to simplify the ESRS framework, in line with the mandate received from the European Commission on 7 March 2025 under the Omnibus proposals.

In March 2025, as part of the EU's Omnibus proposals, the EC mandated EFRAG to deliver technical advice for substantial simplification of the first set of ESRS. EFRAG subsequently published exposure drafts in July 2025 and submitted its final technical advice in December 2025.

The result: on 3 July 2026, the European Commission adopted a delegated act setting out revised European Sustainability Reporting Standards and a delegated act setting out voluntary reporting standards for smaller companies. The revised standards simplify and streamline sustainability reporting requirements and will apply to financial years beginning on or after 1 January 2027, with early adoption for financial year 2026 permitted once the delegated act enters into force.

The scale of simplification is significant. The revised ESRS reduce the number of mandatory datapoints by more than 60% and the total number of datapoints by more than 70%. The EC believes there will be a reduction in reporting costs of more than 30% for each reporting entity as a result of the ESRS simplification.

But simplification does not mean the core obligations have softened. The revised approach to materiality is the most significant practical change to the ESRS, as a top-down approach is now emphasised. Double materiality remains mandatory. Assurance remains mandatory. The DMA remains the foundation of everything.

The simplified ESRS is not a lower bar. Fewer datapoints means less volume, not less rigour. The DMA, transition plan, and assurance requirements are all intact. Companies that treat simplification as a reason to slow down preparation are misreading the signal.

The FY2027 Readiness Gap: Where Are You?

Wave 2 companies - those reporting for the first time on FY2027 data, with reports due in 2028 - have a genuine advantage: two years of Wave 1 evidence to learn from. The question is whether they are using it.

Six Concrete Lessons for FY2027 Preparers

The evidence from Wave 1 translates into a clear set of priorities. These are not generic best practices - they are the specific gaps that first-wave reports exposed.

1. Treat the DMA as a living document, not a one-time project. Wave 1 showed that DMAs completed in isolation, without genuine external stakeholder input, produce incomplete materiality maps. 82% of companies updated their Double Materiality Assessment in the second reporting cycle - a sign that the first-pass DMA was not considered final even by the companies that produced it. Build a process for annual review from the start.

2. Invest in ESG data infrastructure before you need it. With 85% of Wave 1 companies acknowledging their systems were inadequate, the lesson is unambiguous. There is a growing need for companies to embrace an IT transformation - EFRAG's study revealed that 85% of companies recognise their current systems aren't equipped to handle new ESG reporting requirements. Audit-ready data requires audit-ready systems. Start the procurement or build process now.

3. Build your IRO register with opportunities as a first-class category. The 3:1 ratio of negative impacts to opportunities in Wave 1 reports is a structural bias, not a reflection of reality. Dedicate explicit effort to identifying material opportunities - green finance access, resource efficiency gains, new sustainable product lines - and document them with the same rigour as risks.

4. Prioritise Scope 3 and value chain data collection. Focus on reviewing assurance findings from your limited assurance engagement and addressing any gaps, and strengthen data collection processes for your second reporting cycle, especially around Scope 3 emissions and value chain metrics. For FY2027 preparers, this means engaging key suppliers now - not in 2027.

5. Engage your assurance provider early. Wave 1 companies that engaged their auditors late found themselves retrofitting documentation to meet assurance requirements. The assurance process is not a final check - it shapes how you design your data collection and documentation from the beginning.

6. Use the revised ESRS as your planning document, not the 2023 version. ESRS (2026) has a 61% reduction in the number of mandatory datapoints compared to ESRS (2023) and is applicable for financial years beginning on or after 1 January 2027. Planning against the old standard and then migrating to the new one wastes time and creates rework. Map your material topics against the revised ESRS now.

Wave 1 IRO Distribution: What First CSRD Reports Disclosed

The Window Is Open - But It Won't Stay Open

Wave 1 companies had to figure this out under live fire. Wave 2 companies have something they did not: a detailed, evidence-based picture of what went wrong and what went right. The EFRAG State of Play portal, the Datamaran benchmarking study, and the revised ESRS itself are all products of that first-wave experience.

The companies that will produce strong FY2027 reports are the ones treating 2026 as a preparation year - not a waiting year. If still in scope, treat 2026 as a capacity-building year to prepare for mandatory reporting on FY2027 in 2028: do a lightweight double materiality assessment and data inventory to identify likely material topics, datapoints you can already evidence, and material gaps.

The evidence from Wave 1 is clear. The standards for Wave 2 are now final. The gap between knowing what to do and actually doing it is where preparation either happens or doesn't.