Corporate Sustainability Reporting Directive : An analysis on the pre-implementation phase of CSRD in relation to stakeholder engagement, institutional logic, and networks

Abstract: The European Union (EU) has proposed and adopted the Corporate Sustainability Reporting Directive (CSRD) to enhance businesses' sustainability performance across the EU. The study focuses on the pre-implementation phase of CSRD within an audit and consulting company and its perceived effects on organizational processes and structures. The aim is to provide a better understanding of the organizational impact of CSRD and gain knowledge on its effects. Availability of academic literature on the topic is limited due to the recent implementation and ongoing alterations of the CSRD. To address this gap, semi-structured interviews were conducted with members of Company X, an audit and consulting firm that is currently undergoing the pre-implementation phase of the CSRD. A conceptual framework is designed to analyze and compare three theories: Stakeholder Theory, Institutional Logic, and Network Theory. The results of this study highlight the paradigm shift from shareholder to stakeholder perspective in corporate reporting, with the inclusion of both financial and non-financial aspects (double materiality). For Company X to comply with the CSRD, they need to establish organizational processes and structures that align with the new sustainability focus, requiring a shared logic of sustainability among employees. Internal networks play a crucial role in sharing knowledge across departments to meet the information in the CSRD. Additionally, Company X should leverage external networks to access a wide range of novel information through weak ties, avoiding the limitation of ‘homophily’ and ensuring the retention of new insights. Conclusions of the study suggest the importance of stakeholder engagement, the adoption of Institutional Logics, and the utilization of internal and external networks. By navigating the complexity of CSRD and maintaining focus on the end goal of making a sustainable impact, organizations can effectively implement the directive and contribute to positive change.