CSRD: Corporate Sustainability Reporting Directive (EU 2022/2464)

The Corporate Sustainability Reporting Directive (CSRD) sets how companies in the EU report on sustainability and ESG (environmental, social and governance) matters. Adopted in December 2022 to replace the Non-Financial Reporting Directive (NFRD), it introduced the European Sustainability Reporting Standards (ESRS) and the double materiality assessment: how sustainability issues affect the company (financial materiality) and how the company affects people and the environment (impact materiality). Reports are tagged digitally and are subject to limited assurance. In 2025 the stop-the-clock Directive (EU) 2025/794 postponed the second and third waves by two years. In February 2026, Omnibus I (Directive (EU) 2026/470) narrowed the scope to undertakings with more than 1,000 employees and more than EUR 450 million in net turnover, removed listed SMEs and dropped the planned move to reasonable assurance.

1. EU undertakings and parent undertakings of groups that exceed both EUR 450 million in net turnover and an average of 1,000 employees, for financial years starting on or after 1 January 2027.
2. Issuers listed on an EU regulated market that exceed the same two thresholds. Listed SMEs are no longer in scope.
3. Companies in the first wave (large public-interest entities with more than 500 employees, previously under the NFRD), which report from financial year 2024. Member States may exempt those below the new thresholds for 2025 and 2026.
4. Non-EU groups with more than EUR 450 million in EU net turnover in each of the last two years, through an EU subsidiary or branch with more than EUR 200 million in turnover, from financial year 2028.

1. 01

   Double materiality assessment

   Companies must assess sustainability topics from two angles: how sustainability matters affect the company's financial position (financial materiality) and how the company affects the environment and society (impact materiality).

2. 02

   ESRS reporting standards

   Reports follow the European Sustainability Reporting Standards (ESRS): cross-cutting standards (ESRS 1 and 2) and topical standards for environment (E1-E5), social (S1-S4) and governance (G1). Omnibus I provides for a revised, simpler set of ESRS by delegated act.

3. 03

   Value chain reporting

   Companies report on impacts, risks and opportunities across their value chain. Since Omnibus I, they cannot require partners with up to 1,000 employees to provide more than the voluntary reporting standard sets out.

4. 04

   Digital tagging (XBRL)

   The CSRD foresees sustainability reports in XHTML with inline XBRL tags, so regulators and investors can read the data by machine. Both apply only once the ESRS digital taxonomy and the related ESEF rules are adopted.

5. 05

   Limited assurance

   Sustainability reports are subject to limited assurance by an independent auditor or assurance provider. Omnibus I removed the planned move to reasonable assurance.

6. 06

   Management report integration

   Sustainability information sits in a dedicated section of the management report, next to the financial information and the strategy.

The CSRD leaves penalties to Member States, which must set effective, proportionate and dissuasive sanctions. They vary by country and typically include administrative fines, public statements, orders to correct the report and, in serious cases, liability for executives. Companies that fail to report or publish misleading sustainability information also face scrutiny from investors and supervisors. National regulators and securities authorities oversee compliance.

1. Dec 2022

   CSRD adopted and published in the Official Journal of the EU.

2. Jul 2023

   The European Commission adopts the first set of ESRS.

3. Jan 2024

   First wave: companies previously under the NFRD report on financial year 2024.

4. Apr 2025

   Stop-the-clock Directive (EU) 2025/794 postpones the second and third waves by two years.

5. Feb 2026

   Omnibus I (Directive (EU) 2026/470) limits the scope to more than 1,000 employees and EUR 450 million in turnover.

6. Jan 2027

   Other companies in the new scope start reporting on financial year 2027.

7. Mar 2027

   Deadline for Member States to transpose Omnibus I (19 March 2027).

8. Jan 2028

   Non-EU groups in scope start reporting on financial year 2028.