Environmental Impact Data

Series

02. Corporate Sustainability Reporting Directive (CSRD)

Part 2 of 12

Overview. The Corporate Sustainability Reporting Directive (CSRD) is the European Union’s landmark regulation that dramatically expands the breadth, depth, and reliability of sustainability reporting. It replaces the earlier NFRD and aligns EU companies with the European Sustainability Reporting Standards (ESRS).

1) Scope: Who Must Report

  • EU large undertakings: Companies that meet at least two of three thresholds (250+ employees, €40m turnover, €20m total assets).
  • EU listed SMEs (except micro): With a proportionate regime and longer phase-in.
  • Non-EU companies generating >€150m turnover in the EU, with at least one subsidiary or branch above defined thresholds.
  • Overall reach: ~50,000 companies in the EU, plus thousands of non-EU parents with EU operations.

2) What Must Be Reported

Reports must follow the ESRS, covering cross-cutting and topical disclosures under the principle of double materiality:

  • Cross-cutting: Strategy, governance, risk management, metrics & targets.
  • Environment: Climate, pollution, water, biodiversity, resource use.
  • Social: Workforce, value-chain workers, communities, consumers.
  • Governance: Business conduct, anti-corruption, political engagement.

3) Phased Timeline

Reporting Year Applies to
2024 (reports in 2025)Large public-interest entities already under NFRD (~12k companies).
2025 (reports in 2026)All other large EU undertakings.
2026 (reports in 2027)Listed SMEs, small and non-complex credit institutions, captive insurers (SMEs may opt-out until 2028).
2028 (reports in 2029)Non-EU companies with >€150m EU turnover and significant EU presence.

4) Assurance Requirements

For the first time, sustainability reports must be assured by an independent auditor or certifier:

  • Initially limited assurance (moderate confidence level, similar to a review).
  • Potential move to reasonable assurance in the future (audit-level confidence).
  • Applies to the full sustainability report, not just selected metrics.

5) Digital Tagging & Accessibility

  • Reports must be prepared in a machine-readable digital format (XHTML with XBRL tagging).
  • Ensures data interoperability, easier analysis by investors, regulators, and the public.
  • Integrates sustainability data into the European Single Access Point (ESAP).
Key takeaways.
  1. CSRD expands the scope from ~12k to ~50k+ companies, plus non-EU parents with EU operations.
  2. Disclosures are standardized via ESRS and grounded in double materiality.
  3. Phased application from 2024 to 2028, with proportional rules for SMEs.
  4. Mandatory assurance and digital tagging mark a paradigm shift from narrative reports to auditable, machine-readable data.

Source: CSRD Directive text and project manuscript, Chapter 2 (scope, reporting content, phasing, assurance, tagging).