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Many large companies have invested significant amounts of time and capital into sustainability reporting. In 2022, the European Union’s ambitious sustainability reporting framework, the Corporate Sustainability Reporting Directive, was projected to generate approximately €1.7 billion (about $1.8 billion) in one-off costs and €1.9 billion in recurring costs. Even in less regulated markets like the U.S., sustainability is treated as a long-term competitive imperative by many businesses. Globally, nearly half (48%) of companies are using double materiality assessments — that is, evaluating how efforts affect both company financial performance and society at large — to determine which sustainability topics are most significant from both a financial and stakeholder perspective. This represents a significant paradigm shift from the historically narrower focus on financial materiality observed as recently as five years ago.
Yet despite significant investments in sustainability reporting and oversight, much of the work remains a backward-looking, box-checking exercise, with an overemphasis on fulfilling regulatory requirements.
This is a missed opportunity. Compliance-driven sustainability investments in data collection systems and reporting can be transformed into something smarter and strategically valuable. Reporting may have been the driver for sustainability data investments, but it should not be the destination.
Companies like Schneider Electric and European fashion retailer Zalando can serve as models. They illustrate how broad sustainability goals can be translated into measurable, outcome-driven practices that matter on the ground, such as redesigning workflows, linking financial and nonfinancial KPIs, and stewarding data across silos. Drawing from such examples and our conversations with companies doing this work, we’ve developed five principles to help businesses treat sustainability as a cross-functional data initiative rather than just a compliance duty.
Making Sustainability a Performance Tool
Five principles can help organizations, regardless of industry or maturity, move from framing their sustainability efforts as a simple reporting obligation to a call for integrated execution across departments. These principles offer both an on-ramp for companies that are starting at zero and a transformation road map for those further along.
Principle 1: Cut to the (material) core.
Producing a comprehensive sustainability report can be a massive undertaking. Under the original reporting requirements, companies faced up to 82 disclosure requirements and more than 1,100 data points. They spanned environmental topics (such as climate change, pollution, and biodiversity), as well as social, governance, and business conduct issues (such as workforce well-being, supply chain labor conditions, and anti-corruption measures).
The problem is that many organizations respond by treating all sustainability topics as equally important. The 2025 annual reporting season of Euro Stoxx 200 companies shows that they are often using a list of material topics that is too inclusive, so they end up reporting myriad sustainability metrics. Companies often inflate their topic lists in an effort to mitigate risk, making the reporting footprint large and complex. More importantly, the process becomes disconnected from driving business value.
The way forward is to reclaim double materiality as what it was meant to be: a strategic prioritization tool. Rather than attempting to report on everything, organizations need to identify the few sustainability topics that genuinely affect both enterprise value and stakeholder impact. That requires that they make bold exclusions upfront. Even the European Sustainability Reporting Standards emphasize that a materiality assessment “requires the exercise of judgment by the company, which needs to define itself what is material/relevant to its activities and throughout the value chain.” The result should be that reported data is strategically relevant and useful for external decision makers, illustrating how a company gains and maintains competitive advantage based on nonfinancial KPIs. The materiality assessment provides the filter: Companies still meet mandatory disclosure requirements while narrowing their reporting to information assessed as material. Applying a strategic mindset instead of a compliance mindset also reduces the number of metrics that end up in annual reports.
Leading companies are demonstrating what this looks like in practice. Schneider Electric narrowed its sustainability priorities to six core materiality topics aligned with its corporate purpose. It tracks progress through specific KPIs, such as “CO2 emissions saved and avoided for clients,” and it candidly reports underperformance when necessary, noting, for instance, that only 21% of its strategic suppliers conformed to its Decent Work requirements in 2023, with that number rising to 63% in 2024. Novo Nordisk cut 30% of its initially listed material topics after internal alignment, resulting in sharper strategy execution and clearer stakeholder focus. Anchoring sustainability reporting in the company’s core health mission, such as preventing chronic diseases like diabetes and obesity, guided Novo Nordisk to translate material topics into concrete KPIs, such as patients reached and reduced incidence of illness, rather than diffused health metrics.
When companies cut to the material core, the result is fewer but higher-quality sustainability focus areas. These are more easily aligned with strategy and connected to meaningful data that can actually steer corporate performance.
Principle 2: Define the data’s job to be done.
In most organizations, sustainability data is collected primarily for reporting purposes, with sustainability teams investing significant effort in producing polished reports for external stakeholders. Data often ends up being too aggregated to be useful, disconnected from day-to-day decision-making, and rarely shared or reused across the enterprise. Operational managers, the very people who could turn sustainability ambitions into measurable progress, are left without actionable insight. They don’t rely on the report findings to guide internal decisions.
To reverse this pattern, companies must flip the starting point. Instead of beginning with what must be disclosed, they should begin with the decisions that shape sustainability outcomes, such as reducing energy consumption, selecting circular suppliers, redesigning products, and decarbonizing logistics.
Several organizations illustrate this shift. Vaude, a German textile company, integrates circularity into product development: A scorecard helps product designers and sustainability teams assess how close an it
