The Role of the CSRD and Employee Board Representation in Early ESRS S1 Compliance

Sammanfattning

This study examines how firms adapt employee- related disclosures in response to the European Sustainability Reporting Standards (ESRS S1 - Own Workforce) during the early implementation phase. The study focuses on Swedish listed firms during the period 2024-2025 and investigates whether employee board representation influences the level of compliance in employee related disclosures. Using a quantitative research design, the study analyses 416 firm year observations through a content analysis of annual reports. A compliance index based on ESRS S1 disclosure requirements was developed to measure the level of compliance in firms' employee-related disclosures. The findings show that ESRS S1 compliance remains moderate and varies across firms suggesting that companies are at different stages of adapting to the new reporting requirements. Firms with employee board representation demonstrate higher levels of disclosure compliance. Thus, this association becomes weaker when industry differences are considered. Further, firms above the Omnibus proposal size threshold of 1 000 employees for the first wave of CSRD implementation report higher compliance levels. This may indicate that regulatory pressure is a driver of disclosure compliance, rather than internal governance mechanisms. However, no interaction effect is found between employee board representation and the CSRD size threshold. The study therefore contributes to the literature on sustainability reporting and corporate governance by providing early evidence of how firms operationalise ESRS S1 requirements during the CSRD preparation phase.