Sustainability reporting in the European Union is entering a new era. The Corporate Sustainability Reporting Directive (CSRD) is reshaping how companies disclose their environmental and social impacts — making sustainability as important as financial performance.
Whether you’re a large enterprise or a non-EU company with European operations, understanding the CSRD is now essential.
The Corporate Sustainability Reporting Directive (CSRD) is a European Union regulation that mandates detailed and standardised sustainability reporting for thousands of companies. It replaces the previous Non-Financial Reporting Directive (NFRD) and significantly expands the number of companies required to disclose ESG data.
The CSRD aims to make sustainability reporting:
It aligns closely with the EU’s broader Green Deal and sustainable finance agenda, pushing companies to consider long-term environmental and social risks alongside traditional financial metrics.
Under the CSRD, companies must report on a range of Environmental, Social, and Governance (ESG) topics using a double materiality lens. That means disclosing:
Reports must be prepared in line with the European Sustainability Reporting Standards (ESRS), which cover everything from climate risks and emissions to social impacts and governance structures.
Key elements include:
The CSRD applies to a broad range of companies:
Category | Applies From |
Large EU public-interest companies | FY 2024 reports (published 2025) |
Large EU companies (meeting 2 of 3 thresholds: €40m turnover, €20m assets, 250+ employees) | FY 2025 |
Listed SMEs (with transition period) | FY 2026 |
Non-EU companies with >€150m turnover in the EU and at least one EU branch/subsidiary | FY 2028 |
As a result, many businesses outside Europe will also need to comply — if they have significant operations in the EU.
The CSRD is rolling out in phases:
Companies are encouraged to begin early preparation — especially around data readiness, double materiality assessments, and ESRS familiarisation.
The CSRD replaces and expands on the Non-Financial Reporting Directive (NFRD) in several ways:
Element | NFRD | CSRD |
Scope | ~11,700 companies | >50,000 companies |
Topics | Limited ESG disclosures | Broad ESG coverage via ESRS |
Materiality | Financial only | Double materiality |
Format | Narrative PDF reports | Digital, tagged, auditable |
Assurance | Not required | Limited assurance required |
The CSRD enforces greater rigour and consistency — and significantly expands who must report.
Complying with the CSRD involves both strategic planning and operational readiness. Key steps include:
What is double materiality in the context of the CSRD?
It requires companies to disclose both the impact of sustainability risks on their business and the impact of their operations on society and the environment.
How does the CSRD affect non-EU companies?
If a non-EU company generates >€150 million turnover within the EU and has at least one EU branch or subsidiary, it must comply from FY2028 onwards.
What are the penalties for non-compliance?
Penalties vary by member state but may include fines and reputational damage. The EU requires enforcement by national regulators.
The CSRD is a bold step toward making sustainability a core element of corporate transparency. It introduces clear, comparable ESG reporting across the EU — and beyond.
Companies that prepare now will not only ensure compliance but also unlock strategic value, improve investor trust, and future-proof their operations.