Corporate Approaches to Double Materiality: Implications for the Corporate Sustainability Reporting Directive as a Compliance- or Change Mechanism

Abstract

This research posits itself within the intersection of sustainability reporting and strategy as it hones in on the implications of a DMA under the EU’s CSRD. There is a vast amount of research investigating sustainability reporting within a business context. However, given the novelty of the CSRD, investigations into how a DMA is undertaken, and whether it moves companies towards strategic transformation, is underexplored. This research seeks to reduce the gap and does so by applying both neo-institutional theory and a resource-based theory to analytical focus points ‘Before’, ‘During’, and ‘After’ the conduction of the DMA. The data sample constitutes 18 semi-structured interviews with DMA project leaders- and experts. The research found that best practices do not exist and choices regarding resource allocation made during the DMA will impact efficiency. In addition, companies’ perceptions of why to engage with the DMA have implications for the strategic outcomes of the analysis. Finally, implementing the crystallised landscape, that the DMA creates, into a corporate strategy requires active deliberation from a company, and it must not miss the essential step of firstly incorporating it into the sustainability strategy. The research proposes a ‘compliance’ – ‘front-runner’ continuum, which outlines key factors for practitioners to take into consideration when engaging with the DMA. Moreover, it is proposed that researchers must apply a further qualification of isomorphisms, and incorporate norms and values in the VRIO-framework for investigating sustained competitive advantage. Thus, the research contributes to the novel but rapidly expanding field of strategic implications of sustainability reporting.