How CSRD is changing what companies consider material: PwC

Cora Lee Mooney

Sustainability Principal, PwC US

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Julianne Potter

Director, Sustainability, PwC US

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Earlier this year, PwC analyzed the first 250 reports under the EU’s Corporate Sustainability Reporting Directive (CSRD), offering an early, in-depth view of how companies are tackling double materiality assessments (DMAs). While CSRD requirements continue to evolve, core principles like double materiality are firmly established — shaping how businesses identify and disclose sustainability priorities. Our initial study revealed a landscape in transition: companies navigating new expectations, assessing material topics across financial and impact dimensions and aiming to meet a higher bar for transparency.

Building on that research, our latest analysis takes a deeper look into double materiality and examines critical questions: How do current outcomes differ from previous materiality judgments? This moment of regulatory change challenges companies to revisit key decisions: What is material now? How do we compare to our peers? What are the implications for our strategy, operations and reputation?

We analyzed the first wave of CSRD-aligned materiality disclosures to uncover how materiality outcomes have changed, and what that says about companies’ shifting priorities. This new lens reveals telling shifts in themes, categories and the number of material matters — shedding light on which issues are gaining prominence, which are falling from disclosures and how companies are using this regulatory inflection point to recalibrate what matters most. The findings provide insight into the dynamic evolution of materiality outcomes and the deeper implications for corporate sustainability strategy.

CSRD-aligned materiality assessment practices will continue to develop with the updates to the European Sustainability Reporting Standards (ESRS) in July 2025. The new Exposure Drafts offer a “top-down” assessment option, where companies may start by determining materiality at the topic level and only then identify the material impacts, risks and opportunities, “unless an assessment at the individual level of impacts, risks and opportunities is needed to conclude on their materiality.” The degree to which this will affect the trends observed in our research on Wave 1 reports will not be determined until future reports are published.

Cohort Inside the first wave: Who we analyzed and why

Our sample consists of 30 companies spanning eight of 11 MSCI GICS sectors, across 10 countries. These companies range from US$11 billion to US$165 billion in revenue and all have a substantial market presence. Except for one, all reports were issued at the global parent entity level.

We tracked characteristics such as revenue, consolidation level, sector, geography, independent assurance provider and country-level transposition status. Given wide variation in the detail and format of disclosed topics, we mapped the companies' pre- and post-CSRD material matters to the sub-topic or sub-sub-topics in ESRS 1 AR16 (April 2024 version).

$1.8T

Aggregated 2024 revenue of the companies PwC analyzed

Source: PwC analysis

73%

Of the companies increased or maintained the number of material matters in their CSRD Sustainability Statement compared to pre-CSRD reporting

Source: PwC analysis

30%

Of the companies named every ESRS chapter as material; 78% of those firms were in consumer-facing sectors

Source: PwC analysis

1/3

Of the companies changed the materiality status of Affected Communities; of those, 70% included a new impact to Rights of Indigenous Peoples

Source: PwC analysis

Materiality assessments Human rights and value chain impacts rise in prominence

50% disclosed more material matters than in the year prior to filing the first CSRD-aligned report
23% disclosed a similar number (within a two-topic difference)
27% disclosed fewer topics — and these were overwhelmingly in the bottom revenue quartile

Smaller companies may face greater pressure to limit topic breadth due to resourcing constraints or their assessed impact may be inherently less due to smaller scale of their operations. For instance, smaller players may consume fewer natural resources or operate in fewer jurisdictions.

Affected Communities was the most frequent new material topic, with 33% of the cohort bringing it into scope. It was closely followed by Pollution and Workers in the Value Chain.

At the sub-topic level, the most frequently newly material sub-topics were:

Rights of Indigenous Peoples
Pollution of Air
Pollution of Water
Waste
Other Work-Related Rights for Workers in the Value Chain

These sub-topics became newly material for 20%-25% of the cohort. Nearly all additions were attributed to value chain-related impacts and risks. Under ESRS guidance, the severity of potential human rights impacts must take precedence over likelihood, which likely influenced these outcomes.

Over 25% of companies removed at least one Business Conduct sub-topic.

20% dropped the entire G1 chapter — despite previously reporting it as material

While G1 is still amongst the most frequently material topics, this shift raises questions about its relative significance when assessed against the severity, magnitude and likelihood of other matters. The exception to this trend was the sub-topic of Political Engagement and Lobbying Activities, which became material for 13% of the cohort.

One-third of the cohort (10 companies) changed the materiality status of Biodiversity
- Five deemed it newly material
- Five deemed it newly immaterial
No clear trend by sector emerged

This split suggests differing interpretations and assessment of impact and magnitude, rather than a consensus shift.

30% of companies named every ESRS chapter as material
- 78% of these were in consumer-facing sectors
 63% used entity-specific topics
- 100% of companies in energy, health care, and industrials did so

The consistent use of entity-specific topics in certain sectors reflects the matters’ specific significance to those industries; they may have been anticipated as part of a future sector-specific standard, but those now appear unlikely to be developed. Entity-specific topics were also used to carry forward material matters and disclosures from previous reports that are not addressed as ESRS topics, such as business-related cybersecurity.

Potential pitfalls Some entity-specific materiality determinations may add confusion

The ESRS includes an option to develop entity-specific topics to address material matters unique to a company’s business, sector or circumstances, if the matter was “not sufficiently considered” under the list provided by the ESRS. These customizations can be necessary and helpful to present the broader view of material information to stakeholders. As an example, an airline included “noise pollution” as an entity specific sub-topic, certainly relevant for their business activities, an impact to people and animals around their operations, and not otherwise considered by the Standards.

However, we also found instances where an entity-specific topic could introduce confusion for the report user and hindered the Standards’ ambition for comparability. These include:

Introducing a social topic that includes multiple populations in the value chain — going against the structure laid out by the Standards. Social topics within ESRS are organized by populations: Own Workforce, Workers in the Value Chain, Affected Communities and Consumers and End Users. If a company creates a custom topic that crosses over multiple of these, it can be difficult to find a logical home for that disclosure in the report framework.

Using an entity-specific topic instead of a similar existing topic — this potentially introduces confusion about what information should or must be disclosed. If the impact, risk, or opportunity in question is closely related to a topic existing in the Standards, there are disclosure requirements associated with it. Creating a new topic on the same or similar issue but with a slightly different topic name can make it difficult to determine what to expect from the disclosure or for the company to know what is required.

Developing an entity-specific topic for a non-sustainability matter — unnecessarily broadening the scope of the company’s sustainability reporting. The Standards primarily consider matters affecting people and the planet, as well as how those matters affect a company’s financial performance. Some entity-specific topics instead reflect standard business risks that may be adjacent to sustainability topics but are sufficiently considered by the company’s enterprise risk management and other required reporting.

Aligning strategy As the regulatory bar rises, accountability is extending beyond direct operations

The early CSRD reports offer timely insight into how the requirements are shaping materiality outcomes. The rise in number of material matters, particularly those stemming from value chain impacts and human rights considerations, signals a growing recognition that accountability extends far beyond direct operations.

As the regulatory bar rises and external scrutiny intensifies, companies need to comply with disclosure mandates, but also critically assess how their materiality judgments align with their long-term strategies. Double materiality is no longer just a reporting exercise — it’s a window into a company’s worldview.

As your organization updates its own double materiality assessment in preparation for CSRD, ask yourself: What story does the change in our material topics tell about our preparedness for the future? How does our story reflect our understanding of our business and our responsibilities? Are you ready to stand behind that story?

About this study
This analysis draws on materiality disclosures from a sample of 30 companies among the first 250 to publish CSRD-aligned sustainability statements. Our objective was to capture emerging patterns in double materiality assessments during the initial implementation wave of the CSRD. To do this, we compared disclosures in the first CSRD reports with those published by the same companies in the prior year of reporting (before January 2025).

To confirm analytical relevance, we selected companies based on three key criteria: market leadership, operational scale and geographic and sectoral diversity. The selected companies reported annual revenues ranging from US$11 billion to US$165 billion, reflecting a combined 2024 revenue of approximately US$1.8 trillion. We used revenue and brand as a proxy to focus on companies with significant market presence and established reporting capabilities, where early interpretations of the ESRS are most likely to influence broader market practice. Except for one, all companies issued disclosures at the global parent entity level, ensuring consistency in scope and consolidation.

Our sample spans 10 countries and eight of the 11 MSCI GICS sectors, capturing a broad cross-section of economic activity and regulatory transposition contexts. Each sustainability statement was analyzed against the ESRS framework, with all pre- and post-CSRD material matters mapped to the April 2024 version of the ESRS 1 AR16 sub-topic or sub-sub-topics. We also tracked data such as independent assurance provider and entity-specific topic usage.

While the findings are not statistically generalizable, this qualitative sample enables in-depth comparative analysis of early CSRD implementation outcomes, shedding light on evolving materiality judgments across diverse industries and jurisdictions.