Is It OK to Publish a Sustainability Report Without Governance? Pandora’s 2024 Report Sparks Debate on ESG Transparency

Pandora’s 2024 sustainability report has stirred considerable discussion among ESG professionals and sustainability reporting experts.  As businesses navigate their first year of CSRD compliance, Pandora's choice to omit Governance from its ESRS-aligned report has sparked debate over the credibility and completeness of its ESG disclosures. The company maintains that corporate governance had no material impacts, risks, or opportunities (IROs) in its Double Materiality Assessment (DMA). But does this omission highlight a flaw in Pandora’s reporting, a failure of auditing, or an issue with how DMA is applied?

Could Corporate Governance be Immaterial?

Despite excluding governance from its Sustainability report, Pandora dedicated 11 pages to the topic in its annual statement. This raises a key question: if governance is truly immaterial, why dedicate so much space to it elsewhere in the report? Annual reports are meant to focus on material aspects—so if governance is relevant for shareholders, does that not imply materiality?  

The logical gap here is hard to ignore. If the rationale for excluding governance from the Sustainability Statement is that it does not meet the materiality threshold, then why is it still a prominent feature in other corporate disclosures? If governance information is included because of regulatory or shareholder expectations, then by definition, it holds material significance.  

The Double Materiality Assessment (DMA) Dilemma

materiality assessment included input from internal and external stakeholders, guided by its Sustainability Board and overseen by its Board of Directors.  However, its conclusion that governance posed no material impacts raises concerns, particularly for a large multinational corporation like Pandora. The company’s justification for excluding governance is that it’s "less material or immaterial from a sustainability perspective, based on current practices and assessments."

But this raises further questions:

• What “current practices” are being referenced?

• Does this imply that Pandora has such strong governance structures that governance-related risks are fully mitigated?

• Or does it reflect an overly conservative or restrictive interpretation of double materiality?

The European Sustainability Reporting Standards (ESRS) do not mandate explanations for immaterial topics (except for E1), but providing a rationale would enhance transparency and help stakeholders understand Pandora’s reporting logic.

Why Governance Still Matters for Stakeholders

Many ESG analysts argue that governance should always be considered material, alongside climate (E1) and workforce (S1). From an investment perspective, governance-related disclosures are crucial for risk mitigation and assessing company resilience. ESG analysts typically rely on sector-based materiality benchmarks, not solely on a company’s DMA, so governance omissions could signal to investors that governance risks are poorly managed. Without visibility into their corporate governance structures, stakeholders may assume Pandora has vulnerabilities in this area.

For stakeholders, it’s less about whether governance is labelled as "material" and more about being able to assess governance risks. If governance isn’t disclosed clearly, investors might interpret this as a lack of oversight, which could reflect poorly on the company’s leadership.

A Technicality Within the ESRS Framework?

ESRS 2 mandates certain governance disclosures for all companies, including board structure, due diligence, stakeholder engagement, and risk management. However, topics like political lobbying, bribery, and supply chain practices are subject to materiality assessments. Pandora may have split governance-related disclosures between ESRS 2 and the management review section of its Annual Report, rather than excluding them entirely.

This raises an interesting question: Is Pandora being unfairly critiqued for excluding governance in its Sustainability Statement, or does this omission reflect the evolving nature of ESRS implementation?

The Role of Auditors: Can We Trust Their Judgment on Governance?

Pandora’s Sustainability Statement received limited assurance, meaning auditors reviewed the process that led to the exclusion of governance from the report. Limited assurance doesn’t guarantee that the topic of governance is immaterial—it only suggests that the process followed was reasonable.

This raises the question: Should stakeholders simply accept the auditors' judgment, or is greater scrutiny needed on how governance is evaluated during the DMA process?

Key Takeaways for 2025 Sustainability Reporting

Pandora’s case serves as a valuable lesson for companies finalizing their CSRD-compliant reports. Some key takeaways include:

• Materiality decisions should be well explained- even when topics are deemed immaterial.

• Stakeholders, ESG analysts, and advocacy groups will scrutinize materiality conclusions- companies should be prepared to justify exclusions.

• Governance is difficult to dismiss as immaterial- companies should be ready to defend their governance disclosures or exclusions convincingly.

As the first wave of CSRD reports rolls out, Pandora’s case could set a precedent for how materiality decisions are perceived in the future. Will it lead to greater transparency or growing scepticism about DMA outcomes?

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