Sustainability reports, corporate governance, and organizational units

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Abstract

This study examines how Icelandic companies disclose sustainability-related governance practices and evaluates the impact of the new Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) (European Commission, 2025) on future disclosure practices. Building on Claessen’s (2023) approach and using qualitative methodology, the research combines document analysis of sustainability reports from ten leading Icelandic firms with semi-structured interviews with company representatives. The study finds that current governance disclosures cover only 20–30 percent of ESRS minimum requirements. Key challenges include limited knowledge of ESRS among board members and consultants, weak communication structures, insufficient metrics and verification procedures, and resource constraints. The recent changes introduced by the 2025 Omnibus Act (European Council, 2025) further complicate compliance, intensifying the urgency for firms to adapt. The findings underscore the need for Icelandic companies to invest in training, enhance internal governance systems, and build robust reporting frameworks to meet regulatory demands. Without such efforts, companies risk legal and reputational repercussions. This research provides timely, country-specific insights into governance disclosure gaps and offers practical recommendations for aligning with the European Union’s (EU’s) evolving sustainability reporting landscape.

Keywords: Sustainability, ESG, European Sustainability Reporting Standards, Corporate Sustainability Reporting Directive, Reporting, Governance

Authors’ individual contribution: Conceptualization — A.C., T.O.S., and S.W.; Methodology — A.C; Validation — S.W.; Formal Analysis — A.C.; Investigation — T.O.S. and S.W.; Writing — A.C.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G34, K22, L21, M14, Q56

Received: 31.08.2025
Revised: 14.01.2026; 09.03.2026
Accepted: 24.03.2026
Published online: 27.03.2026

How to cite this paper: Claessen, A., Sigurjonsson, T. O., & Wendt, S. (2026). Sustainability reports, corporate governance, and organizational units. Journal of Governance and Regulation, 15(2), 189–196. https://doi.org/10.22495/jgrv15i2art16