The European Union's Corporate Sustainability Reporting Directive — CSRD, for short — has been on the long-range planning horizon for European-headquartered retailers since 2022. With the first reporting cycle for in-scope large companies covering fiscal year 2024 and landing in early 2025, the long-range horizon is now the near term. The conversations we have been having with sustainability leads, finance teams, and the external advisors helping them through the process have taken on a different quality in the second half of 2024 than they did even six months ago.

The short version: most of the retailers who started seriously in 2023 are uncomfortable but on track. Most of the ones who started in 2024 are not.

The scope-3 problem keeps getting bigger

The single most common pressure point in the conversations we've had over the past quarter is scope-3 emissions data — the indirect emissions that come from a company's value chain, including supplier emissions, transportation, product use, and end-of-life. For a retailer, scope-3 is almost always the dominant share of the total footprint, often by an order of magnitude over scopes 1 and 2 combined.

CSRD's reporting requirements — through the European Sustainability Reporting Standards (ESRS) — expect a level of scope-3 detail and methodology disclosure that most retailers were not collecting eighteen months ago. The pieces giving teams the most trouble:

• Supplier-specific emissions data. Industry-average emissions factors are no longer sufficient for the suppliers that represent material portions of a retailer's footprint. Several sustainability leads told us their 2024 work has been dominated by direct engagement with their top-50 or top-100 suppliers — questionnaires, data requests, follow-ups, validation. The response rates and data quality vary enormously.
• Transportation emissions across modes. Granular emissions accounting for ocean, air, and trucking across the inbound and outbound network requires data many retailers do not own and their carriers do not consistently provide.
• Use-phase emissions for product categories where it matters — appliances, electronics, certain apparel. Methodology choices here can change reported numbers materially, and CSRD requires those choices to be defended.

A head of sustainability at a European apparel retailer told us: "We thought we had a scope-3 baseline. What we had was an estimate. The standard requires something closer to an audit trail. Those are not the same thing."

Double materiality is the other surprise

The other point of friction in late-2024 conversations is double materiality — the CSRD framework requirement that companies report on both how sustainability issues affect the company (financial materiality) and how the company affects sustainability issues (impact materiality). Each is supposed to be assessed through a defined process with stakeholder engagement, governance involvement, and documented methodology.

The retailers furthest along began their double materiality assessments in 2023 with external advisor support. The ones who left it to 2024 are now running compressed processes — and the worry expressed in several conversations is that the assessment, which determines what the company reports on at all, won't hold up to auditor scrutiny if challenged.

This matters more than it might sound. The materiality assessment shapes the scope of the entire CSRD disclosure. Get it wrong — either by under-scoping (missing topics auditors think should be reported) or by over-scoping (claiming materiality for topics the company can't credibly report on) — and the consequences cascade.

The audit readiness gap

CSRD requires limited assurance on sustainability disclosures from the first reporting cycle, with a transition to reasonable assurance later. Limited assurance is a lower bar than the reasonable-assurance standard applied to financial statements, but it is still a meaningful audit engagement — and it is now happening in parallel with financial audits at firms whose sustainability teams have historically operated independently of finance.

The friction this is creating in late 2024:

• Sustainability data that was previously reported in CSR documents now needs to be reproducible from auditable source systems. Excel-based workbooks with transformations that nobody documented are getting rebuilt.
• Internal controls over sustainability data — segregation of duties, change logs, review processes — have to be designed and stood up. Most teams did not have these.
• Finance teams that previously had little involvement in sustainability reporting are being pulled in late, with predictable interpersonal and process consequences.

A finance director at a mid-sized European retailer described the dynamic to us this way: "Our sustainability team has been doing good work for years. They have not been doing audit-ready work. Those are different things, and we are now learning what the difference costs."

What the late starters are doing

For retailers who started CSRD prep in 2024 rather than 2022 or 2023, the conversations in the back half of this year have shifted from "build the right system" to "what do we need to file." The practical patterns:

Triage to the disclosures that are unavoidable, accept that some optional or stretch disclosures will be partial in year one, document the gaps explicitly rather than papering over them, and plan for year-two improvement.

Engage with auditors earlier rather than later on methodology choices, so the first formal audit doesn't surface surprises.

Resource the work with external support where the internal team is over-stretched — recognizing that the external advisor market is itself capacity-constrained heading into the year-end and early-2025 crunch.

The summary line from one sustainability director we spoke to, who started her organization's serious CSRD work in early 2023: "Everything I am doing now in October, I wish I had been doing in March 2023. The retailers who are starting this October — I don't know what to tell them, honestly."