Navigating regulatory ambiguity: evolving challenges and the sustainability expectation gap in assurance under the corporate sustainability reporting directive

Purpose This paper aims to examine how auditors navigate the legal principle of double materiality under the European Corporate Sustainability Reporting Directive (CSRD). It examines how regulatory ambiguity and limited assurance shape professional judgment. The study applies the Sustainability Expectation Gap (SEGAP), an extension of the Audit Expectation Gap (AEG), to explain emerging legitimacy tensions in sustainability assurance. Design/methodology/approach Seventeen semistructured interviews with auditors in Germany and Austria were examined using grounded thematic analysis. Findings Regulatory aspirations and auditor capabilities remain structurally misaligned. While double materiality is formally embedded, auditors’ professional judgment remains anchored in financial-materiality logics. Sustainability assurance is confined to management-defined audit scopes, limiting engagements to plausibility-based rather than a risk-oriented audit approach. These constraints cumulatively widen the SEGAP by eroding procedural and pragmatic legitimacy, while moral legitimacy remains fragile. Research limitations/implications The study focuses on auditor perspectives in jurisdictions, where CSRD transposition is evolving; broader stakeholder perspectives are not examined. Findings indicate that sustainability assurance contributes primarily to SDG 16 by strengthening transparency and accountability, while its broader contribution depends on methodological advancement toward a risk-oriented audit approach. Future research should therefore examine user perspectives and analyze auditors report on sustainability statements as communicative artifacts shaping the interpretation of assurance. Practical implications Findings inform auditors, companies, and regulators about structural constraints in sustainability assurance and are relevant for jurisdictions introducing mandatory sustainability assurance regimes. Social implications The study informs debates on the Omnibus Proposal by showing how symbolic compliance persists, as the transition toward assurance remains constrained by a reporting-centered regime. Originality/value The SEGAP framework explains how systemic conditions weaken double materiality and erode legitimacy, highlighting institutional limits of assurance in advancing sustainability goals.