What is the Corporate Sustainability Reporting Directive (CSRD)? 

Home » What is the Corporate Sustainability Reporting Directive (CSRD)? 

The Corporate Sustainability Reporting Directive (CSRD) is a new EU regulation that requires companies to disclose detailed sustainability and ESG data. Replacing the Non-Financial Reporting Directive, CSRD aims to increase transparency, accountability, and sustainable business practices across Europe. Learn what it means for your organisation and how to comply.

What is CSRD?, Green energy innovations Ireland

CSRD Meaning

The Corporate Sustainability Directive (CSRD) is an European Union directive designed to enhance the scope and quality of sustainability reporting by corporations operating within the EU. It mandates the detailed disclosure of a wide range of sustainability-related information. The CSRD replaces the Non-Financial Reporting Directive (NFRD) to meet growing demands for transparency. 

Key Changes from NFRD: 

Extended Reporting Requirements Standardisation Third-Party AssuranceDigital Reporting
Includes more companies.Ensures comparability of information.Introduces mandatory assurance for credibility.Uses digital formats for easier access and analysis.

The CSRD is part of the broader EU Sustainable Finance Framework, and it works alongside the EU Taxonomy and the Sustainable Finance Disclosure Regulation (SFDR) to achieve EU Green Deal goals.

Key element of CSRD reporting:

The key elements of CSRD reporting include mandatory disclosure of environmental, social, and governance (ESG) impacts, risks, and performance using standardised EU criteria. Companies must follow the European Sustainability Reporting Standards (ESRS), ensure third-party assurance, and provide digitally tagged, comparable data aligned with the EU Green Deal and sustainable finance goals.

Double Materiality

Double materiality allows for a dual focus reporting on how company operations impact ESG factors, and how ESG factors affect business operations. Following the CSRD directive, companies must report on Impacts, Risks, and Opportunities (IROs) related to their operations and value chain.

Objectives and Scope of the CSRD

The objectives of the CRSD are:

Transparency and ConsistencyReliable and Comparable InformationSupport EU GoalsFoster Sustainable Practices
Standardised reporting for easy access and understanding.Integrates sustainability with financial reports for comprehensive stakeholder insight.Aligns with the European Green Deal and aims for climate neutrality by 2050.Encourages integration of sustainability risks and opportunities into business strategies.

The scope of CRSD is:

EntitiesGeographical and Sectoral ReachSustainability Information
All large companies, listed SMEs, and non-EU companies with significant EU operations.Global impact, affecting companies across all sectors with significant EU presence.Reports on ESG issues, impacts, risks, and opportunities related to business strategies.

Who is Subject to the CSRD?

The CSRD applies to all large companies and all companies listed on EU regulated markets, excluding micro-enterprises. The list is estimated to cover approximately 50,000 companies, a significant increase from the 11,000 under the NFRD.

  • Companies Under NFRD:
    • Criteria: Publicly listed, employ more than 500 people, and balance sheet > €25 million, or net turnover > €50 million.
  • Large Companies:
    • Criteria: Meet at least two of the following:
      • Balance sheet > €25 million
      • Net turnover > €50 million
      • Employee count > 250
  • Listed SMEs:
    • Criteria: Listed on EU markets, and meet two or more of:
      • More than 50 employees
      • Balance sheet > €5 million
      • Net turnover > €10 million
  • Non-EU Companies:
    • Criteria: Non-EU companies with a significant EU presence, either through meeting any of the criteria above, or:
      • A net turnover > €150 million in the EU for two consecutive years, AND fulfills any of the following:
        • At least one subsidiary in the EU considered a “large company”
        • At least one listed subsidiary on an EU market
        • Has an EU branch with net turnover > €40 million

CSRD Reporting Implementation Timeline

Companies should prepare for full compliance, building robust systems for data collection and reporting.

Phased-In Approach:

NFRD Companies                                                    Listed SMEs

From January 1, 2024                                          From January 1, 2026

First report due in 2025                                      First report due in 2027

Optional two-year opt-out with an explanatory statement

Additional Phase-In Flexibility:

First Year:

Omission of anticipated financial effects from climate and other environmental impacts allowed.

First Three Years:

Qualitative disclosures allowed if quantitative disclosures are impracticable.

Small Entities:

May omit data on GHG emissions, biodiversity, resource use, and social disclosures in first two reporting years.

CSRD Disclosure Requirements

CSRD requires companies to disclose detailed, standardised information on how sustainability issues affect their business and how their operations impact people and the environment. Disclosures must cover key ESG areas—such as climate, biodiversity, social responsibility, and governance—using the European Sustainability Reporting Standards (ESRS), with mandatory third-party assurance.

Financial and Non-Financial Disclosures

The disclosures can fall under financial and non-financial categories.

Financial Disclosures:

  • Traditional financial statements
  • Financial implications of sustainability risks and opportunities
ExampleDescription
Revenue and Profit MarginsIncome generated and profitability over a given period.
Capital Expenditures (CapEx)Investments in physical assets, including sustainability-related upgrades.
Carbon Pricing LiabilitiesCosts or provisions related to carbon taxes or emissions trading schemes.
ESG-Linked Financial InstrumentsBonds or loans tied to sustainability performance targets.
Climate Risk Impact on FinancialsDisclosure of how climate change affects assets, liabilities, and cash flow.

Non-Financial Disclosures:

  • Environmental matters: Emissions, waste management, resource conservation  
  • Social concerns: Employee well-being, human rights, community relations
  • Governance issues: Board diversity, executive remuneration, anti-corruption measures
ExampleDescription
Greenhouse Gas (GHG) EmissionsScope 1, 2, and potentially Scope 3 emissions across operations and supply chain.
Workforce Diversity and InclusionGender, age, and ethnic diversity metrics; inclusion policies.
Human Rights Due DiligenceMeasures to prevent and mitigate human rights violations in operations/supply chains.
Water and Waste ManagementData on consumption, recycling, and discharge practices.
Corporate Governance StructureBoard composition, ESG oversight responsibilities, and stakeholder engagement.

General Disclosure Requirements

GovernanceStructures
Policies
Practices related to sustainability
Strategy and Business ModelSustainability strategy
Objectives
Alignment with overall business strategy
Impacts, Risks, and Opportunities (IROs)Processes for identifying and assessing material impacts
Sustainability risks and opportunities.
Metrics and TargetsSpecific metrics
Targets for sustainability performance.

Conclusion: What is CSRD?

In conclusion, the Corporate Sustainability Reporting Directive (CSRD) marks a major shift in how companies across the EU—and beyond—report on their sustainability practices. By requiring transparent, standardised, and assured ESG disclosures, the CSRD aims to improve corporate accountability, empower stakeholders with better information, and drive the transition to a more sustainable, resilient economy.

CSRD: FAQs

1. What is the Corporate Sustainability Reporting Directive (CSRD)?

The Corporate Sustainability Reporting Directive (CSRD) is an EU regulation requiring large companies and listed SMEs to disclose detailed, standardised information about their environmental, social, and governance (ESG) performance. It replaces the Non-Financial Reporting Directive (NFRD) and introduces mandatory third-party assurance, digital tagging, and reporting under the European Sustainability Reporting Standards (ESRS).

2. Who does the CSRD apply to?

The CSRD applies to:
All large EU companies (meeting 2 of the 3: €25M+ in assets, €50M+ turnover, 250+ employees)
Listed SMEs (except micro-enterprises)
Non-EU companies with €150M+ turnover in the EU and a significant operational presence (subsidiary or branch)
It is expected to affect over 50,000 companies, up from 11,000 under the NFRD.

3. What is double materiality under CSRD?

Double materiality is a core concept of CSRD that requires companies to report:
How sustainability issues impact the business (financial materiality)
How the business impacts people and the environment (impact materiality)
This dual perspective ensures holistic ESG reporting aligned with stakeholder expectations and EU policy.

4. What are the CSRD disclosure requirements?

Under CSRD, companies must disclose both financial and non-financial sustainability information using the ESRS framework. Required disclosures include:
GHG emissions (Scope 1, 2, and 3)
Climate and biodiversity risks
Workforce diversity and human rights
Board governance and anti-corruption policies
ESG-related CapEx and risk impacts on financials

5. When does CSRD reporting start?

CSRD follows a phased implementation:
From Jan 1, 2024: Companies already under the NFRD
From Jan 1, 2026: Listed SMEs (with optional 2-year opt-out)
First reports are due in 2025 and 2027, respectively

Additional flexibilities apply in the first 1–3 years, including limited exemptions and qualitative disclosures.

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