July 10, 2023

Unraveling the Significance of CSRD

Dependent on so extremely delivered by. Yet no jokes worse her why.

The European Union (EU) has established the Corporate Sustainability Reporting Directive (CSRD) as a crucial regulation mandating sustainability reporting. The goal of the CRSD isto provide transparency that will help investors, analysts, consumers, andother stakeholders better evaluate EU companies’ sustainability performance as well as the related business impacts and risks.

Enforced from January 1, 2024, the CSRD builds upon the Non-FinancialReporting Directive (#NFRD), introducing the European Sustainability ReportingStandards (#ESRS) and guidelines for Environmental, Social, and Governance(#ESG) reporting.

CSRD reporting adopts the concept of double materiality, requiring organizations to disclose both environmental and social impacts alongside theirfinancial implications.

CSRD Compliance

CSRD compliance is not a one-time task. It’s a continuous process that requires companies to consistently identify, manage, and capitalize on ESG risks and opportunities. The successful implementation of these strategies cannot only help companies meet their regulatory obligations but also provide them with a competitive edge in an increasingly ESG-centric business environment.

The importance of becoming CSRD compliant cannot be understated. By adopting a strategic approach towards identifying and managing ESG risks and capitalizing on ESG opportunities, companies can ensure a smooth transition to a more sustainable and socially responsible business model. CSRD compliance isnot just about meeting regulatory obligations, it’s about fostering a corporate culture that prioritizes sustainability, ethical practices, and inclusive governance. It’s about paving the way for a sustainable future where businesses thrive without compromising the well-being of the planet and its inhabitants.

Overview: Major changes in CSRD applicability from 2024 – 2028

From January 1, 2024

(start reporting in 2025 on 2024 progress)

for major listed companies (with more than 500 employees) that are already subject to the NFRD

From January 1, 2025 

(start reporting in 2026 – deferral possible until 2028 -  on 2025progress)

for all large companies not currently subject to the NFRD that meet two of the following three criteria: Over 250 employees €40 m in turnover €20 m in total assets

From January 1, 2026

(start reporting in 2027 on 2026 progress)

 for SMEs and other listed companies (10-250 employees)

From January 1, 2028

(start reporting in 2029 on 2028 progress)

for European subsidiaries of non-European parent companies with more than €150 m in sales in Europe.

Who needs to comply with the CSRD?

Large companies (both EU and non-EU subsidiaries): Companies with over250 employees and/or with an annual turnover exceeding €50 million and/or withtotal assets exceeding €25 million are obligated to report under the CSRD.


Listed companies, including SMEs (excluding micro-companies): SMEs have a 3-year time lag before they are required to report under the CSRD.


Insurance and credit institutions: Entities within these sectors are subject to CSRD reporting requirements.


Non-European companies with subsidiaries in the EU: Non-EU companies with a net turnover of €150 million or more within the EU are obliged to reportunder the CSRD.


Exemptions: Subsidiary if the parent company includes subsidiary in its report, listed micro companies, non-listed SMEs (report on a voluntary basis).

CSRD Reporting Requirements

The Corporate SustainabilityReporting Directive (CSRD) introduces several key reporting requirements, compelling businesses to disclose specific aspects of their operations.

Reporting on:

Environmental Initiatives: Businesses are mandated to disclose detailed information regarding their environmental impact.

Social Responsibility and Treatment of Employees: The CSRD emphasizes the importance of social responsibility, requiring businesses to elaborate on their commitment to employees.

Respect for Human Rights: Companies are obligated to address their policies and practices concerning human rights to ensure they are safeguarded within their operations.


Anti-Corruption andBribery Measures: The CSRD places a strong emphasis on transparency and ethical business conduct.

Diversity on Company Boards: The CSRD places a specific focus on the diversity of company boards, requiring businesses to provide a comprehensive breakdown, covering gender diversity, age diversity and nationality diversity.

By addressing these key areas, companies can demonstrate their commitment to transparency, sustainability, and ethical business practices, aligning with the objectives set forth by the Corporate Sustainability Reporting Directive.


Double materiality: Double materiality requires companies to disclose both their sustainability impacts on society and the environment (impact materiality) and the potential financial implications of these sustainability matters (financial materiality).

Third party assurance: The CSRD introduces an EU-wide audit for sustainability reporting, with standards set by the EUCommission. Companies can choose from various assurance providers, with MemberStates ensuring consistent auditing quality.

Mandatory Scope 3 reporting: Companies are mandated to disclose indirect Scope 3 GHG emissions, encompassing their entire value chain. It requires detailed breakdowns from categories like purchasing, transportation, and investments, aligned with the GHG ProtocolCorporate Standard.

Targets and progress reporting: Companies must set and report on their emission reduction targets (e.gScience-based targets).

Align with existing policies: Reporting in line with the Sustainable Finance Disclosure Regulation(SFDR) and the EU Taxonomy Regulation. It also recognizes TCFD and GRI.

Reporting in electronic format: CSRD reporting must be included in the management report. It must be xHTML or electronic format in accordance with the European Single ElectronicFormat (ESEF) regulations and EU Sustainability Taxonomy.

Reporting structure

European Sustainability Reporting Standards (ESRS[SK1] ): The draft ESRS framework includes general, cross-cutting requirements applicable to all in-scope companies and topical disclosures that may or may not be material to a company.

CSRD Checklist: 10 Steps forSuccessful Reporting  

The process of generating your CSRD report may vary depending on several factors, such as your organizational structure and your company's maturity in terms of Sustainable Finance. However, there are ten fundamental steps that apply to most organizations embarking on their CSRD compliance journey.

·      Scope the Application of the CSRD

·      Consider the Level ofDisaggregation of Material Information

·      Perform the DoubleMateriality Assessment

·      Familiarize Yourself with the ESRS

·      Engage with yourOrganization and Communicate CSRD Requirements with Internal Stakeholders

·      Perform a Data GapAssessment

·      Discuss with yourAuditor

·      Streamline DataCollection and Monitoring

·      Embed TechnologyTools for the Production of the Report

·      Ensure ContinuousLearning on Latest Sustainable Finance Regulations

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