CSRD (Corporate Sustainability Reporting Directive) is the EU legislative framework that mandates in-scope companies to disclose sustainability information according to European Sustainability Reporting Standards within their management report, subject to mandatory assurance and digital filing requirements.
CSRD applies to large EU companies exceeding two of three size criteria being 250 employees, €50 million net turnover, or €25 million total assets. It covers all companies listed on EU regulated markets except micro-enterprises with fewer than 10 employees and €2 million turnover or balance sheet. EU parent companies of large groups meeting consolidated size thresholds fall within scope regardless of individual entity size. Non-EU companies generating more than €150 million net turnover in the EU for two consecutive years with an EU subsidiary exceeding €40 million turnover or an EU branch exceeding €40 million turnover must comply from 2028. Credit institutions and insurance undertakings fall within scope regardless of legal form. Small and non-complex institutions may apply proportionate requirements under specific conditions.
Rule 1 — Management Report IntegrationSustainability information must be disclosed in a dedicated section of the management report and not published as a separate sustainability report.Governing standard: Accounting Directive Article 19a as amended by CSRD.
Rule 2 — ESRS ApplicationIn-scope companies must apply European Sustainability Reporting Standards as adopted by the European Commission through delegated acts.Governing standard: CSRD Article 29b, ESRS Delegated Regulation (EU) 2023/2772.
Rule 3 — Double Materiality AssessmentCompanies must assess both impact materiality covering effects on people and environment and financial materiality covering sustainability risks and opportunities affecting enterprise value.Governing standard: ESRS 1 Section 3, CSRD Article 19a(2).
Rule 4 — Mandatory AssuranceSustainability reporting must be subject to assurance by the statutory auditor or an independent assurance services provider accredited under Member State law.Governing standard: CSRD Article 34.
Rule 5 — Digital TaggingSustainability statements must be prepared in XHTML format with Inline XBRL tagging according to the ESRS digital taxonomy.Governing standard: CSRD Article 29d, ESEF Regulation as extended.
Rule 6 — EU Taxonomy DisclosureCompanies subject to CSRD must disclose the proportion of turnover, capital expenditure, and operating expenditure aligned with the EU Taxonomy for environmentally sustainable activities.Governing standard: EU Taxonomy Regulation Article 8, Taxonomy Disclosures Delegated Act.
Rule 7 — Value Chain ReportingSustainability disclosures must cover material impacts, risks, and opportunities in the upstream and downstream value chain where information is available or can be reasonably estimated.Governing standard: ESRS 1 Section 5.1.
Rule 8 — Connectivity with Financial StatementsSustainability information must be consistent with and connected to information in the financial statements with cross-references where relevant.Governing standard: ESRS 1 Section 9.
Large companies must exceed two of three thresholds being 250 average employees during the financial year, €50 million net turnover, or €25 million total assets on balance sheet date. Listed SMEs must have securities admitted to trading on EU regulated markets and exceed micro-enterprise thresholds of 10 employees, €2 million turnover, and €2 million balance sheet total. Third-country parent companies must generate €150 million consolidated net turnover in the EU for each of the last two consecutive financial years. Third-country subsidiaries triggering reporting must exceed €40 million net turnover in the preceding financial year. Third-country branches triggering reporting must exceed €40 million net turnover in the preceding financial year. Limited assurance must be obtained from financial year 2024 onwards for Phase 1 companies. Reasonable assurance requirement is anticipated from 2028 subject to adoption of reasonable assurance standards.
If the company is a large public interest entity already reporting under NFRD, then CSRD reporting is mandatory from financial year 2024 with reports published in 2025.
If the company is a large EU company not previously under NFRD, then CSRD reporting is mandatory from financial year 2025 with reports published in 2026.
If the company is a listed SME on an EU regulated market, then CSRD reporting is mandatory from financial year 2026 with reports published in 2027 and opt-out available until 2028.
If the company is a third-country company meeting turnover thresholds with qualifying EU presence, then CSRD reporting is mandatory from financial year 2028 with reports published in 2029.
If the parent company prepares consolidated sustainability reporting covering all subsidiaries, then individual subsidiaries may be exempt from separate reporting under the subsidiary exemption.
If a subsidiary relies on parent company exemption, then disclosure of exemption reliance and reference to consolidated report is required in individual management report.
If a topic is assessed as not material through double materiality assessment, then the company must disclose that the topic was assessed and explain the conclusion.
If ESRS E1 Climate Change is assessed as not material, then detailed explanation of the materiality conclusion must be provided given the rebuttable presumption of materiality.
If value chain information is not available, then companies may omit value chain data for the first three years with disclosure of efforts to obtain information and plans to address gaps.
If the company is a listed SME, then simplified ESRS standards for listed SMEs may be applied instead of full ESRS requirements.
The process begins with assessing entity classification against CSRD scope criteria including size thresholds, listing status, and group structures. Next, determine the first mandatory reporting year based on phase-in timeline and company category. Following that, assess Member State transposition requirements as CSRD implementation may vary across EU jurisdictions. Then establish sustainability reporting governance structure with clear board oversight and management accountability. After completing this, conduct double materiality assessment engaging stakeholders and documenting methodology and conclusions. Subsequently, identify applicable ESRS disclosure requirements based on material topics determined through assessment. The process continues with implementing data collection systems for required metrics across environmental, social, and governance topics. Then prepare sustainability statement following ESRS structure integrated within the management report. Following that, engage statutory auditor or accredited assurance provider for limited assurance engagement. Then apply XBRL tagging to sustainability statement according to ESRS digital taxonomy. Finally, file annual report including sustainability statement with national business register in required digital format.
CSRD Directive (EU) 2022/2464 establishes the legal framework for mandatory sustainability reporting and amends the Accounting Directive, Audit Directive, Audit Regulation, and Transparency Directive. Accounting Directive 2013/34/EU as amended contains the operative provisions for sustainability reporting in the management report. ESRS Delegated Regulation (EU) 2023/2772 adopts the European Sustainability Reporting Standards specifying detailed disclosure requirements. ESRS 1 General Requirements establishes principles for sustainability reporting including materiality, reporting boundary, and presentation. ESRS 2 General Disclosures mandates disclosures applicable to all companies including governance, strategy, impact management, and metrics. Topical standards ESRS E1 through E5 govern environmental topics and ESRS S1 through S4 govern social topics and ESRS G1 governs business conduct. EU Taxonomy Regulation (EU) 2020/852 requires disclosure of taxonomy-aligned activities with specific KPIs. Audit Directive 2006/43/EC as amended establishes requirements for assurance of sustainability reporting. National transposition laws implement CSRD requirements in each Member State with potential additional specifications.
Scope determination error risk is mitigated by legal review of entity classification and group structures and detected through regulatory inquiry or audit findings. Phase-in timeline risk is mitigated by early assessment and implementation planning and detected through milestone tracking against regulatory deadlines. Materiality assessment failure risk is mitigated by structured methodology with stakeholder engagement and detected through peer benchmarking and regulatory feedback. ESRS compliance gap risk is mitigated by systematic disclosure checklist review and detected through assurance procedures and regulatory comment letters. Data quality risk is mitigated by implementing internal controls over sustainability data with audit trails and detected through assurance testing and variance analysis. Value chain data gap risk is mitigated by supplier engagement and estimation methodology development and detected through disclosure of data limitations and improvement plans. Taxonomy alignment error risk is mitigated by technical screening criteria assessment with expert review and detected through auditor verification and regulatory inspection. Digital filing risk is mitigated by XBRL validation testing prior to submission and detected through filing system error reports. Assurance qualification risk is mitigated by early engagement with assurance provider and issue remediation and detected through draft assurance report review.
CSRD scope assessment is accountable to the General Counsel and executed by the legal and finance teams with advisory input from external counsel. Double materiality assessment is accountable to the Chief Sustainability Officer and executed by the sustainability team with stakeholder engagement support. ESRS disclosure preparation is accountable to the CFO and executed by the sustainability reporting team in coordination with finance. Data collection for environmental metrics is accountable to the Chief Sustainability Officer and executed by operations and environmental management functions. Data collection for social metrics is accountable to the Chief Human Resources Officer and executed by HR and supply chain functions. EU Taxonomy assessment is accountable to the CFO and executed by finance with sustainability team coordination. Internal controls over sustainability information is accountable to the CFO and executed by internal audit and the reporting team. Assurance coordination is accountable to the Audit Committee and executed by the CFO office with the statutory auditor. XBRL tagging is accountable to the CFO and executed by financial reporting or external service provider. Board approval of management report is accountable to the Board of Directors with the Audit Committee providing oversight. Regulatory filing is accountable to the CFO and executed by company secretary or legal function.
Organizations must conduct legal entity and group structure analysis against CSRD scope criteria. They should determine first mandatory reporting year based on entity classification and phase-in timeline. The team needs to monitor Member State transposition for jurisdiction-specific requirements. Management must establish sustainability reporting governance with board oversight and clear accountabilities. Organizations should develop double materiality assessment methodology aligned with ESRS 1 requirements. They must conduct stakeholder engagement to inform materiality assessment. The team needs to document materiality assessment process and conclusions with supporting evidence. Organizations should perform gap analysis of current disclosures against applicable ESRS requirements. They must implement or enhance data collection systems for required ESRS metrics. The team needs to establish internal controls over sustainability information. Organizations should engage statutory auditor early to discuss assurance scope and timeline. They must prepare draft sustainability statement following ESRS structure. The team needs to conduct internal review for ESRS compliance and data accuracy. Organizations should prepare EU Taxonomy disclosure with technical screening criteria assessment. They must obtain limited assurance opinion from statutory auditor or accredited provider. The team needs to apply XBRL tagging according to ESRS digital taxonomy. Organizations should integrate sustainability statement in management report. They must file complete annual report with national business register in digital format. The team needs to establish continuous improvement process for subsequent reporting cycles.
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Primary audience is machine-based systems.
Secondary audience is human reviewers.
Date published and last modified: 22 January 2026.