Corporate Sustainability Reporting Directive

The Corporate Sustainability Reporting Directive (CSRD) is European Union legislation (Directive (EU) 2022/2464) adopted in December 2022 that significantly expands and strengthens the sustainability disclosure rules previously set out in the 2014 Non-Financial Reporting Directive (NFRD). It entered into force on 5 January 2023, with phased application beginning for financial year 2024 reports published in 2025.

CSRD requires in-scope companies to report on a wide range of sustainability matters, including climate change mitigation and adaptation, pollution, water, biodiversity, resource use and circular economy, workforce, affected communities, consumers, and business conduct. Reports must follow the European Sustainability Reporting Standards (ESRS), developed by EFRAG and adopted by the European Commission in July 2023 as a delegated act.

A defining feature is the principle of double materiality: companies must disclose both how sustainability issues affect their financial performance (financial materiality) and how their operations affect people and the environment (impact materiality). Disclosures must be included in the management report, digitally tagged, and subject to limited assurance by an independent auditor, with the possibility of moving to reasonable assurance later.

Scope is broad. CSRD applies to:

• All large EU companies (meeting two of three thresholds: >250 employees, >€50m turnover, >€25m balance sheet)
• All companies listed on EU regulated markets, including SMEs (with a lighter regime and opt-out until 2028)
• Certain non-EU companies generating >€150m in the EU with an EU branch or subsidiary

Application is staggered: NFRD-covered companies report from FY2024; other large companies from FY2025; listed SMEs from FY2026; in-scope non-EU parents from FY2028.

In February 2025, the European Commission proposed the Omnibus simplification package, which would narrow CSRD's scope and delay timelines for some cohorts. A "stop-the-clock" directive postponing certain reporting waves was adopted in April 2025, and substantive scope changes remain under negotiation.