What is CSRD?
CSRD stands for Corporate Sustainability Reporting Directive.
It expands sustainability reporting in the European Union and replaces the earlier Non-Financial Reporting Directive, known as NFRD.
CSRD introduces more detailed sustainability disclosures, standardized reporting requirements, digital reporting, and third-party assurance.
In simple terms, CSRD asks companies to explain not only what they do in sustainability, but also how sustainability topics affect their business and how their business affects people and the environment.
Why CSRD matters
CSRD aims to improve the quality of sustainability information available to investors, customers, regulators, employees, communities, and other stakeholders.
It supports:
- Transparency — clearer sustainability information from companies.
- Consistency — more standardized reporting across companies and sectors.
- Comparability — information that can be compared more easily by stakeholders.
- Accountability — greater responsibility for sustainability-related impacts, risks, actions, and targets.
- Better decision-making — more useful information for investors, customers, procurement teams, regulators, and internal management.
Who may be affected by CSRD?
CSRD applies to specific groups of companies. The exact applicability depends on company size, listing status, location, group structure, and EU activity.
Large companies
Large companies may be in scope if they meet at least two of the following criteria:
- Balance sheet over €25 million
- Net turnover above €50 million
- More than 250 employees
Listed SMEs
Listed SMEs may be included if they meet two or more of the following criteria:
- More than 50 employees
- Balance sheet over €5 million
- Net turnover above €10 million
Micro-enterprises are excluded.
Non-EU companies
Non-EU companies may also be affected if they have significant activity in the EU.
A non-EU company may be in scope if it has more than €150 million net turnover in the EU for two consecutive years and also has at least one large EU subsidiary, one listed EU subsidiary, or an EU branch with more than €40 million net turnover.
Supply chain relevance
Even companies that are not directly in scope may receive sustainability information requests from larger customers, banks, investors, or procurement teams.
For many SMEs, CSRD may therefore become relevant indirectly through supply chain and customer requirements.
CSRD reporting timeline
- 2025 — first reports for companies already subject to NFRD, based on financial year 2024.
- 2028 — first reports for large companies, based on financial year 2027.
- 2029 — first reports for listed SMEs and certain non-EU companies, based on financial year 2028.
Companies should use the preparation period to improve sustainability data collection, internal responsibilities, documentation, and reporting processes.
What does CSRD ask companies to report?
CSRD reporting is structured around both financial and non-financial sustainability information.
The main general disclosure areas include:
- Governance — how sustainability responsibilities, policies, controls, and oversight are managed.
- Strategy and business model — how sustainability topics relate to the company’s business model, strategy, planning, and value creation.
- Impacts, risks, and opportunities — how the company identifies and manages sustainability impacts, business risks, and opportunities.
- Metrics and targets — what data, indicators, targets, and progress information the company uses to measure sustainability performance.
Double materiality
Double materiality is a core concept in CSRD reporting.
It asks companies to look at sustainability from two directions.
Impact materiality
This means how the company affects people, society, and the environment.
Examples include emissions, waste, resource use, working conditions, human rights, supplier practices, customer impacts, and community effects.
Financial materiality
This means how sustainability topics affect the company’s financial position, business performance, cash flows, access to finance, cost of capital, risks, and opportunities.
Examples include climate risks, energy costs, regulation, customer expectations, supply chain disruption, and investor requirements.
Together, these two views help companies identify which sustainability topics are material for reporting.
ESRS overview
CSRD reporting is based on the European Sustainability Reporting Standards, known as ESRS.
The ESRS framework includes 12 standards:
- 2 cross-cutting standards
- ESRS 1 General Requirements
- ESRS 2 General Disclosures
- 5 environmental standards
- ESRS E1 Climate Change
- ESRS E2 Pollution
- ESRS E3 Water and Marine Resources
- ESRS E4 Biodiversity and Ecosystems
- ESRS E5 Resource Use and Circular Economy
- 4 social standards
- ESRS S1 Own Workforce
- ESRS S2 Workers in the Value Chain
- ESRS S3 Affected Communities
- ESRS S4 Consumers and End-users
- 1 governance standard
- ESRS G1 Business Conduct
The ESRS standards help companies report sustainability information in a structured and comparable way.
What information should companies collect?
Before formal CSRD reporting, companies usually need to collect and organize information from different parts of the business.
Company information
- Business model
- Locations and activities
- Products and services
- Employee numbers
- Ownership and group structure
- Value chain overview
Governance information
- Sustainability responsibilities
- Policies and codes of conduct
- Compliance processes
- Risk management systems
- Anti-corruption measures
- Data protection and business conduct practices
Environmental information
- Energy use
- Fuel use
- Greenhouse gas emissions
- Water use
- Waste and recycling
- Materials and resource use
- Pollution-related information
- Climate-related risks and actions
Social information
- Workforce data
- Health and safety information
- Training and development
- Diversity and inclusion
- Human rights topics
- Supplier and value chain worker information
- Community and customer-related impacts
Metrics and targets
- Existing ESG indicators
- Reduction targets
- Improvement actions
- Progress tracking
- Previous year comparison where available
- Evidence and documentation
Presenting sustainability information
Under CSRD, sustainability information is expected to be included in a clearly identified section of the management report, referred to as sustainability statements.
Companies may also need to provide comparative information for quantitative metrics and monetary amounts from the previous period.
Digital tagging is also part of CSRD reporting. This means sustainability information can be labelled in a machine-readable format to support automated processing and analysis.
Assurance
CSRD introduces assurance requirements for sustainability information.
This means reported sustainability information is expected to be checked by an independent accredited auditor or certifier.
Assurance begins with limited assurance and is expected to move toward more demanding assurance requirements over time.
Common preparation challenges
Companies preparing for CSRD may face several challenges:
- Information is spread across departments, people, systems, and spreadsheets.
- Sustainability responsibilities may not be clearly assigned.
- Some data may not yet be measured or documented.
- Targets may be missing or not connected to business strategy.
- Value chain information may be difficult to collect.
- Reporting processes may need stronger internal controls.
A good starting point is to identify what information is already available, what is unclear, and what is missing.
Important note
This guide is for general information only.
It does not provide legal, audit, certification, or official CSRD compliance advice. Companies should confirm their CSRD obligations and reporting requirements with qualified legal, accounting, audit, or sustainability reporting professionals.
CSRD requirements may change over time, so companies should always check the latest official guidance and applicable regulations.
References and Disclaimer
This guide was prepared for general educational purposes using official EU sustainability reporting sources, supporting CSRD reference documents, and CSRD Fundamentals course materials reviewed by EcoGradeX.
Main references include:
- European Commission, Corporate sustainability reporting
- European Commission, FAQs on the implementation of EU corporate sustainability reporting rules
- Directive (EU) 2022/2464, Corporate Sustainability Reporting Directive
- Commission Delegated Regulation (EU) 2023/2772 on European Sustainability Reporting Standards
- Supporting CSRD reference documents reviewed by EcoGradeX
- CSRD Fundamentals course materials reviewed by EcoGradeX
The supporting documents and course materials were used only to simplify and structure the guide content. They should not be treated as legal authority.
This guide does not provide legal, audit, certification, assurance, tax, accounting, or official compliance advice. Companies should confirm their obligations with qualified legal, accounting, audit, or sustainability reporting professionals.
CSRD requirements, timelines, thresholds, and reporting standards may change over time. Users should always check the latest official EU guidance, applicable national law, and professional advice before making reporting decisions.