The Corporate Sustainability Reporting Directive (CSRD) is an EU law adopted in 2022 that significantly expands the sustainability reporting obligations previously set out under the Non-Financial Reporting Directive (NFRD) of 2014. It was published in the Official Journal of the European Union as Directive (EU) 2022/2464 and entered into force on 5 January 2023. Member States were required to transpose it into national law.
Under the CSRD, in-scope companies must report on environmental, social, and governance (ESG) matters according to the European Sustainability Reporting Standards (ESRS), developed by EFRAG and adopted by the European Commission. Reporting follows the principle of double materiality: firms must disclose both how sustainability issues affect their business (financial materiality) and how their activities affect people and the environment (impact materiality).
The scope is broader than the NFRD. It progressively covers:
- Large EU companies and parent companies of large groups meeting size thresholds (assets, turnover, employees).
- Listed small and medium-sized enterprises (SMEs) on EU-regulated markets, with a lighter regime.
- Certain non-EU companies generating significant turnover in the EU through subsidiaries or branches.
Disclosures must be published in the management report, digitally tagged, and subjected to limited assurance by an auditor, with a pathway toward reasonable assurance.
The CSRD interacts with the EU Taxonomy Regulation (2020/852) and the Sustainable Finance Disclosure Regulation (SFDR) to form the EU's sustainable finance framework. It is also relevant to the Corporate Sustainability Due Diligence Directive (CSDDD), adopted in 2024.
In early 2025, the European Commission proposed the Omnibus simplification package, which would narrow CSRD scope, delay reporting timelines for some "wave 2" and "wave 3" companies, and revise the ESRS. Negotiations on these amendments were ongoing in the EU institutions, meaning the directive's final perimeter remains subject to political revision.
Example
In 2024, large EU-listed companies such as TotalEnergies and Siemens began preparing their first CSRD-compliant sustainability reports for the 2024 financial year, applying the ESRS standards.
Frequently asked questions
CSRD covers far more companies, mandates standardized ESRS disclosures, introduces double materiality, requires digital tagging, and imposes external assurance, whereas the NFRD allowed largely discretionary reporting by roughly 11,000 firms.
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