Democratising Sustainability Assessments: Beyond Regulation

European sustainability reporting is at an inflection point. Some organisations are taking the omnibus offramp to decelerate their ESG efforts, others are looking to double down sustainability initiatives, whilst many are seemingly in a state of uncertainty.

A key lesson learnt from our CSRD clients over the last few years is that Double Materiality Assessments (DMA) are not merely a compliance exercise, but rather a strategic study enabling companies to identify and manage business risks and opportunities whilst accelerating impact. For owners, investors, and lenders, these assessments can provide insights that drive informed decision-making where even for the most ESG-skeptical companies, a DMA will undeniably offer commercial benefits and better risk management. Many EU SME’s who’ve fallen out of the CSRD scope are evidently on-board with this value proposition and are pushing hard ahead with their assessments.

The reality for mid-market companies however is that budget constraints, shrinking sustainability teams, and the omnibus fallout create major hurdles. Consequently, without mandatory reporting requirements for these burdensome assessments, projects will likely only continue if SME’s have clear internal sustainability leadership, or if the strategic value of conducting such assessments, justifies the costs and resource input.

This current wave of regulatory easing again raises critical questions about the value of collecting data for data's sake, and therefore puts the onus back on the sustainability industry to propose practical, actionable assessments that directly resonate with decision-makers at SME’s and the needs of their stakeholders.

Amidst these challenges, the recent de-regulatory period undoubtedly presents a clearer opportunity to leverage the power of AI to break the decision making paralysis of mid-market companies to bring automated and source-led impact, risk and opportunity insights, in a cost effective and scalable way. We strongly believe that for SMEs in this new deregulatory environment, a pragmatic approach is vital and that by prioritising progress over perfection, AI can play a substantial role in re-engaging mid market companies and their stakeholders with sustainability reporting efforts in 2025.

In parallel to our regulatory aligned technical DMA module, at FINGREEN AI we will soon be releasing our 100% automated DMA analysis tool with an aim to bring insights to any company globally, in just a few clicks. Ideal for research, due diligence and the first steps in double materiality assessments.