AFM Applauds Early CSRD Reports but Calls for Sharper Focus on Materiality & Strategic Integration

Key Takeaways

• Early Progress: The first CSRD sustainability reports show promising signs of structure, accessibility, and relevance.
• More Than Compliance: These reports offer valuable insights for investors, boardrooms, and the public by showing how companies impact, and are impacted by, the world.
• Three Focus Areas: AFM urges companies to better explain materiality processes, clarify sustainability assessments, and connect impacts to business strategy.
• Room to Grow: With CSRD’s phased rollout and ongoing revisions, companies are encouraged to see reporting as an evolving process, not a one-time obligation.
• A Shift in Mindset: Done well, sustainability reporting helps companies “understand themselves better” and opens the door to more strategic, future-proof decisions.

Deep Dive

The first wave of sustainability reports published under the EU’s Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS) is starting to roll in, and while the Netherlands Authority for the Financial Markets (AFM) has offered praise for the progress made, it’s also calling for greater clarity and strategic depth in future disclosures.

Companies are starting to articulate how they relate to the world, not just in terms of financial performance, but in terms of their environmental footprint, social impact, and long-term resilience. As the AFM puts it, “sustainability reports show how a company relates to the world.”

That may sound lofty, but there’s something refreshingly grounded about the approach many firms are taking. They’re not just ticking boxes. They’re trying to understand, and explain, where value could be lost (or gained) in a world reshaped by climate risks, biodiversity loss, social expectations, and evolving regulation.

And for the AFM, that effort is worth applauding. But it’s not the end of the journey.

A Compass for Investors, Boards, and Society

At the heart of the CSRD is a deceptively simple idea at its core. Companies should report on the sustainability matters that matter. The new reports apply a concept called double materiality, where companies assess not only how sustainability issues affect them financially, but also how their own operations affect people, the planet, and society more broadly.

This, the AFM says, is what makes the reports useful, not just for investors, but for everyone trying to make sense of what role businesses are playing in today’s complex world.

For investors, it offers a clearer picture of risk, opportunity, and potential greenwashing. For executive and supervisory boards, it opens up new pathways for forward-looking decisions, boardroom discussions, and strategy alignment. And for the broader public, it’s a step toward the kind of transparency that builds trust.

As one company put it, “It helps us to understand ourselves better.”

Praise Where It’s Due, and a Nudge for What’s Next

The AFM isn’t just pointing fingers or wagging pens. It’s actually giving credit where it’s due. Companies, it says, have already made their reports more structured, easier to navigate, and, mercifully, more visual.

But this is just the first leg of a longer journey, and the AFM is using this moment to offer three gentle but firm suggestions for where the next steps should go:

1. Tell us how you chose what matters: Don’t just list your material topics, explain how you got there. What was the process for deciding which sustainability issues are financially and socially significant?
2. Explain your reasoning: For each topic, whether it's biodiversity, pollution, or labor rights, be transparent about how you assessed the risks and impacts. That clarity makes the whole report more trustworthy and usable.
3. Connect the dots to your strategy: This is the big one. Show how sustainability affects your business model and where it fits into your long-term plans. Investors (and your own board) want to know not just what’s happening, but what you’re doing about it.

Of course, implementing CSRD and the ESRS isn’t a plug-and-play task. It’s a learning curve. The European Commission’s recent Omnibus proposal, which tweaks the timeline and scope of CSRD reporting, acknowledges that companies need room to grow into these new expectations.

The AFM gets that. Its message isn’t about perfection, it’s about progress. The first round of reports, it says, lays a solid foundation. And with continued refinement, especially in how companies understand and communicate materiality, sustainability reporting can become not just a compliance exercise, but a meaningful reflection of a company’s place in the world.

As the AFM puts it, “implementing the CSRD and ESRS requirements is a journey.” But one that’s clearly underway.

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