Designing a Sustainability Performance Management Framework for CSRD Compliance

ABSTRACT: (DESIGNING A SUSTAINABILITY PERFORMANCE MANAGEMENT FRAMEWORK FOR CSRD COMPLIANCE) We are living in a period of profound transformation toward sustainable development, in which organizations are increasingly required to integrate environmental and social considerations into their strategies and reporting practices. Companies are facing mounting institutional pressures, particularly in light of the EU’s Corporate Sustainability Reporting Directive (CSRD), which requires them to respond swiftly by embedding regulatory compliance into their management systems as a central element rather than a peripheral concern. The CSRD represents a pivotal regulatory development in this transition, reshaping corporate disclosure requirements while posing challenges in interpretation and implementation. This conceptual paper develops a sustainability performance management framework that provides a structured pathway for operationalizing regulatory compliance with the CSRD through the performance management system (PMS). Grounded in the Directive’s disclosure requirements and informed by sustainability control literature, the framework links sustainability reporting obligations with performance management practices. It advances a theoretical foundation for designing systems that support both regulatory compliance and strategic sustainability integration. At the same time, embedding CSRD compliance within PMSs is likely to generate organizational tensions, trade-offs, and potential misalignments across functions, governance structures, and stakeholder expectations, which cannot be resolved through regulation alone. Rather than addressing these tensions empirically, this study offers a conceptual foundation to systematically examine them. To this end, the paper proposes a set of illustrative research questions to guide future empirical investigations in the field of sustainability management control. The framework advances theoretical understanding of the relationship between sustainability regulation and management control, while providing a basis for future empirical research on how organizations design, adapt, and govern PMSs in response to mandatory sustainability reporting under the CSRD.