The Urgent Need for Evidence: Understanding the Supply and Demand Dynamics of ESRS Adoption

The European Sustainability Reporting Standards (ESRS) represent a historic step forward in corporate transparency. Yet, as academics and policymakers increasingly look to evidence-based approaches, a critical gap remains: We lack robust, systematic evidence on the supply-side costs and demand-side benefits of ESRS compliance. While initial small-sample analyses, such as those from the Sustainability Reporting Navigator, reveal that the quality and structure of sustainability reports—particularly among German DAX and Euro STOXX 50 companies—have markedly improved under the new framework, fundamental questions remain unanswered:

• What are the true compliance costs for firms, especially across industries and firm sizes?
• How do stakeholders, from investors to civil society, actually use and value the enhanced disclosures?
• Where does the burden exceed the benefit—and where does transparency fuel better market outcomes?

Reliable, granular evidence on these dynamics is essential. Without it, both practice and policy risk flying blind: improvements to the ESRS and its application cannot be meaningfully designed, and firms may continue to view sustainability reporting as a compliance exercise rather than a value-creating opportunity. This is particularly important given EFRAG’s current work plan for revising Set 1 of ESRS, as mandated by the European Commission under the current Omnibus legislation.

To support this much-needed research, tools like the Sustainability Reporting Navigator have been launched. The Navigator is an open-science platform developed by the TRR 266 “Accounting for Transparency” consortium, initiated by researchers from LMU Munich, Goethe University Frankfurt, and the University of Cologne. It offers a powerful AI-enhanced search engine covering over 340 ESRS reports from 2024, allowing users to analyze and compare disclosures quickly and systematically.

We encourage the academic community to make full use of these resources to investigate not just what companies are reporting, but why and with what effects. Strengthening the empirical foundation on the economics of sustainability reporting is key to ensuring that ESRS continues to evolve in a way that benefits companies, stakeholders, and society at large. Look at our proposed large-scale ESRS adoption study and follow Navigator news here.