Sustainability Reporting: How Private Companies Can Leapfrog Their Listed Competitors

Starting in January 2026, thousands of private companies operating in the European Union will be required to report on their sustainability efforts. For many, it will be their first ever report. It’s tempting to see it as an unnecessary burden that’s still a year down the line. But starting now is not only critical for effective compliance, it also ensures there’s time to craft a clear and compelling story of social and environment progress that makes the company stand out.

The EU’s Corporate Sustainability Reporting Directive came into force in January this year. In the first phase, large, listed companies have to report on their performance the year prior starting in 2025. Despite being used to the rigors of mandatory reporting, many find it to be a challenging and time-consuming process.

Almost six in 10 companies struggled to get their hands on the data they need, especially when reporting on complex value chains. Short deadlines, lack of expertise and limited resources add to the headache.

Against that backdrop, private companies that have to report on their progress for the first time at the start of 2026 have a lot of catching up to do. The immediate reaction may be for companies to bury their head in the sand, but that means they miss out on the benefits at every stage of the reporting process, from business preparation to publication, and make compliance more challenging.

The business benefits of reporting

Focused on creating a thriving business to pass on to future generations, private and family-owned organizations are more likely than their publicly listed cousins to take a longer-term view. This leads many to make great strides to reduce their environmental harm and increase positive social impact. But they pass up the opportunity to shout about it.

Almost three-quarters of EU employees say their job is more fulfilling if they can have an impact on social and environmental issues, and just over half suggest they would not work for a company with strong social and environmental commitments. Similarly, 78 percent of United States employees want to work for organizations with values that align with their own. This makes sustainability a compelling recruitment tool.

Once employed, 70 percent of EU employees indicate they would be more loyal to company that enables them to contribute to important issues. In the U.S., 70 percent of those under 30 would take a meaningful job over a higher salary. Even in older age groups in the United Kingdom, around one-quarter of employees would consider "climate quitting" if their company was not reducing its environmental impact quickly enough.

A transparent and engaging sustainability narrative can be a strong differentiator, with the majority of U.S. consumers indicating that social and environmental concerns are a factor in their purchasing decisions.

As reporting requirements increase, companies will expect their partners to provide information about their sustainability strategy and progress. Companies that can supply that data quickly will be easier to do business with — ultimately becoming partners of choice. One-third of U.S. businesses already report losing out to competitors due to inadequate sustainability strategies.

Unburdened until now by reporting requirements, many privately-owned organizations are more flexible and entrepreneurial with lighter-touch policies and processes. Done well, the more robust governance and impact assessment that comes with mandatory reporting enables companies to strengthen their risk management and opportunity assessment — helping protect the business and identify new avenues for growth. The assessment provides a holistic view of the business and helps to direct activity and investment to where it will reap business benefits while reducing negative impacts. 

Mandatory reporting necessitates robust policies and procedures. While it may feel like additional red tape, it’s an invaluable way to strengthen the long-term viability of the business.

Playing catch-up on sustainability reporting

Preparing for the Corporate Sustainability Reporting Directive (CSRD) can seem daunting, especially given publicly-listed organizations with large reporting teams and years of reporting experience found it a challenge. But the entrepreneurial culture in many private organizations allows them to catch up and potentially even gain an advantage over those that are reporting in the first wave. Not least because they can learn from the experience of around 12,000 early adopters. The key is to approach it systematically.

A good sustainability strategy always starts with a review of the company’s sustainability universe. This is an integral part of the CSRD process — the double materiality assessment. It requires companies to look at their impact on people and the planet, as well as where environmental, social and governance topics might create financial risks and opportunities for the company. The aim is to identify the issues of greatest importance that should form the backbone of the company’s strategy and determine the topics it needs to report on.

The European Sustainability Reporting Standards, which accompany the CSRD, list dozens of data points relevant to each sustainability topic — some mandatory, some set to phase in over coming years and some optional. Companies new to reporting may decide to stick to the mandatory data points only, unless there is a particularly strong appetite for transparency.

A gap analysis then helps to identify what data the company already has to hand and put in place plans for collecting what’s missing. Data requirements are far reaching, needing support from across the business. Clearly communicating the business benefits of the CSRD to all employees eases data collection. Without it, employees can view the process as a distraction from the day job.

Bringing the story to life

Faced with so much data and detailed reporting requirements, it’s easy for the company’s core message to get buried — and with it, the benefits of telling employees and customers about its sustainability achievements.

It may seem like extra work, but it is worth taking time to step back and consider whether there’s need for a summary or supplementary report that talks to stakeholders other than regulators and is more accessible while avoiding greenwashing. Alternatively, it is worth considering how the company will update stakeholders through its website, marketing activities and internal communications.

Once companies understand their sustainability universe, what data they have available, what they need to collect and how they want to communicate their story, they are ready to reap the rewards of CSRD compliance.