An introduction to CSRD

The Corporate Sustainability Reporting Directive (CSRD) is a European Union regulation that significantly expands non-financial reporting requirements for companies operating within or doing business in the EU. It replaces the earlier Non-Financial Reporting Directive (NFRD) and was officially adopted on November 28, 2022, coming into effect on January 5, 2023.

The CSRD aims to improve transparency and comparability of corporate sustainability information by standardising how companies disclose environmental, social, and governance (ESG) data. It ensures stakeholders receive reliable insights into a company’s sustainability performance and risks, builds consumer trust, enhances reputation and access to capital.

As of 2025, the CSRD is being significantly revised through the Omnibus package. The European Commission has agreed to a two-year postponement of reporting requirements. This delay means large companies with more than 250 employees must report in 2028 instead of in 2026 as was expected. Some proposed changes include simplifications to the European Sustainability Reporting Standards (ESRS) by reducing the number of disclosures and datapoints, and significant changes to eligibility thresholds. The criteria for reporting is expected to increase from 250 to 1,000 employees for EU companies, and from €150 million to €450 million in net turnover for non-EU companies. If adopted, these amendments will substantially narrow the CSRD’s scope, and make it irrelevant in markets where small and medium-sized enterprises (SMEs) prevail. Companies affected from delayed applicability or exemption should consider the Voluntary Sustainability Reporting Standards for SMEs (VSME) as an alternative. For more information, consult our article on VSME here.

Who’s required to report under the CSRD and when?

Under the preceding NFDR, only large listed companies, banks and insurance companies (public interest entities) with more than 500 employees were required to report their non-financial performance. The CSRD expands this criteria by making it mandatory for a larger number of companies to comply with sustainability reporting.

As of today, EU companies that meet two of the following criteria will have to comply with the CSRD:

€ 50 million or more in annual revenue
€ 25 million or more in assets
250 or more employees (expected to increase to 1750 employees)

These requirements are expected to be significantly raised by the Omnibus proposal mentioned above.

Non-EU companies with more than € 150 million turnover (expected to increase to € 450 million) and operations in the EU will also have to comply with the CSRD.

CSRD compliance is structured around a phased timeline, with different company types required to begin reporting in stages from 2024 through 2028, but the recent regulatory updates mentioned above have delayed some deadlines for large companies and SMEs.

Which sustainability metrics are required to report under CSRD?

The CSRD requires companies to report a broad set of sustainability metrics organised under the European Sustainability Reporting Standards (ESRS), spread across environmental, social, and governance dimensions. These metrics are designed to provide transparent, comparable, and comprehensive sustainability data for stakeholders and regulatory compliance purposes.

In practice, companies must conduct a thorough double materiality assessment to identify which metrics are relevant for them. Double materiality requires companies to evaluate sustainability topics from two perspectives: how their business activities impact society and the environment (impact materiality), and how societal and environmental impacts can affect their own financial performance and business prospects (financial materiality). It ensures that sustainability reporting addresses both the company's role in broader societal and environmental contexts and its exposure to societal and environmental risks.

A typical report covers hundreds of individual data points: such as total water use, emissions per sector, workforce diversity statistics, and board oversight practice; with the full ESRS including more than 1,000 data points. Below you can find some commonly reported data points.

Environmental metrics (ESRS E1-E5)

GHG Emissions: Total Scope 1, 2, and 3 greenhouse gas emissions with breakdowns by category, GHG emissions intensity per net revenue
Energy consumption: Total energy consumption, with the breakdown of different energy sources
Water usage: Total water consumption, intensity of operations, mitigation actions in water risk areas.
Biodiversity: Number and area of sites affecting biodiversity-sensitive areas, financial impact of biodiversity offsets.
Waste: Total waste generation, percentage recycled, hazardous/radioactive waste levels
Circular economy: recycling rates, product lifespan vs. average, secondary material consumption
Pollution: air emissions, soil and water impacts

Social metrics (ESRS S1-S4)

Own workforce: Employee count, diversity, gender pay gap, working conditions, occupational health and safety rates, training hours.
Supply chain workforce: Metrics on contractors and supply chain employees, including labor rights and working conditions.
Affected communities: Community engagement, impact assessments, and mitigation actions regarding local populations.
Consumers and end-users: Customer satisfaction, product safety, responsible marketing, access to products/services.

Governance metrics (ESRS G1)

Business conduct: Anti-corruption measures, bribery prevention, whistle-blower statistics, board diversity, executive compensation structure.
Transparency: Disclosure of stakeholder engagement practices and management process transparency.
Oversight of sustainability strategy: roles, responsibilities, organizational structures for ESG management

How can a company ensure compliance with the CSRD?

A company must have performed all the steps mentioned below to be CSRD compliant:

Reporting standards: Report according to the European Sustainability Reporting Standards (ESRS), covering environmental, social, and governance topic
Double materiality assessment: Evaluate and disclose both financial and impact materiality
Value chain coverage: Include material sustainability impacts across the value chain (e.g., supply chain Scope 3 GHG emissions, social and human labor impacts)
Assurance: Report must be externally audited for reliability
Digital reporting format: Report should be delivered in the European Single Electronic Format (ESEF) and disclosures should be tagged for machine readability and comparability
Integration with management report: Companies must report sustainability information as an integrated part of their management reports, not separately
Governance and strategy: Report on their governance, strategy, and long-term objectives related to sustainability
Transparency of process: Well documented and transparent processes for data collection and internal controls

These requirements, even though rigorous, combine to create a high bar for transparency, completeness, and accountability in corporate sustainability reporting.