The new Corporate Sustainability Reporting Directive (CSRD), approved by the European Union, is compelling thousands of companies, including those in Portugal, to change the way they report their non-financial performance. Since 2024, more than 250 companies worldwide have already published reports aligned with the European Sustainability Reporting Standards (ESRS), and many more will follow in the coming months.
More than just a legislative update, the CSRD represents a true paradigm shift. At the heart of this transformation is the principle of “double materiality,” which requires organizations to report both the impacts of environmental and social risks and opportunities on their financial performance and the impacts that their operations have on those same areas. This approach demands that companies rethink their understanding of value creation, moving from a model focused solely on financial results to a broader and more sustainable view of corporate success.
Naturally, this new regulatory framework presents significant challenges, from collecting and ensuring the reliability of data across complex value chains to aligning internal practices with international standards. However, this more demanding context is also paving the way for innovative solutions. One of the most promising developments is the emerging concept of impact accounting, an approach that translates the social and environmental impacts of businesses into a financial language that can be compared with traditional economic performance.
In practice, this means quantifying externalities, for instance, calculating the environmental and social cost of each tonne of greenhouse gas emissions, or the economic value generated by improvements in working conditions. Monetizing these effects allows investors, regulators, and consumers to understand, in objective terms, the financial impact companies have on society and the environment.
On one hand, organizations such as the Global Reporting Initiative (GRI), the European Financial Reporting Advisory Group (EFRAG), and the International Sustainability Standards Board (ISSB) are working to measure the effects of corporate activities, such as emissions of greenhouse gases. On the other hand, institutions like the International Foundation for Valuing Impacts (IFVI) and the Value Balancing Alliance (VBA) are developing monetization mechanisms for these effects, known as value factors. With support from the European Commission and the OECD, IFVI and VBA are leading the development of robust methodologies to make impact accounting a standardized and practical approach. This model is already being tested in pilot projects with leading international companies, in collaboration with the VBA, the Big Four (EY, PwC, Deloitte, KPMG), and other partners across various industries. In parallel, networks such as the World Economic Forum (WEF), the World Business Council for Sustainable Development (WBCSD), and the Capitals Coalition, among others, are developing real-life use cases, reinforcing the global momentum around this new way of measuring the value created by businesses.
For many Portuguese companies now facing CSRD requirements for the first time, impact accounting could be more than just a compliance tool, it could become a competitive advantage and a differentiating factor in a market where transparency, impact measurement, and corporate purpose are increasingly valued. Incorporating social and environmental costs and benefits into business decision-making makes it easier to attract young talent, secure sustainable capital, and strengthen stakeholder trust.
Of course, there are still obstacles, from the quality and availability of data to the methodological complexity of measuring subjective impacts like employee well-being. But this also opens up a strategic opportunity for Portugal to position itself at the forefront of this new phase of corporate reporting. To do so, it will be crucial to foster collaboration among businesses, academia, regulators, and civil society organizations. With this in mind, Católica-Lisbon, through the Center for Responsible Business and Leadership, held Portugal’s first conference on impact accounting on June 3. The event brought together academics, business leaders, and international experts to reflect on the shift from traditional non-financial reporting to impact accounting methodology.
In the words of Christian Heller, CEO of VBA, “impact accounting is the next essential step to accelerate business transformation.” By connecting ESG impacts to management and economic value, this approach complements the ESRS and strengthens the strategic relevance of reporting, shifting it from a box-checking exercise to a lever for corporate value creation.