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With 2025 marking the first year for Corporate Sustainability Reporting Directive (CSRD) reporting, most business leaders are already zeroing in on the upsides that CSRD implementation can bring. Among these, a PwC report notes improved engagement with stakeholders, risk mitigation, and better social performance.
Not adhering to the CSRD is not an option. That’s because it always leads to legal
consequences like fines and public disclosure of non-compliance, while also damaging your company's reputation, potentially limiting investor confidence and market opportunities.
We’re exploring CSRD reporting requirements, who is impacted, what your timeline is, and where CSRD and double materiality need to align.
What is CSRD?
Corporate Sustainability Reporting Directive replaces the current EU Non-Financial Reporting Directive (NFRD) shifting the focus towards stronger sustainability reporting.
Compared to the NFRD, the CSRD directive includes more environmental, social, and governance (ESG) topics, leaves a mark on more companies, and introduces requirements for double materiality, interoperability with existing reporting standards, and third-party ESG information audits.
What is the ESRS?
The European Sustainability Reporting Standards (ESRS) provide the exact guidelines companies need to follow to meet the CSRD’s reporting requirements.
The ESRS tell companies how to share their ESG data and cover a wide array of social and environmental topics such as climate change, human rights, and biodiversity.
The draft framework includes 12 overarching requirements and specific disclosures applicable to all entities within the CSRD standards:
Who needs to comply with the CSRD directive?
Prepare for the Corporate Sustainability Reporting Directive if you run a company in the European Union or a non-EU entity with business within the European Union. More precisely, it's aimed at:
1. Large EU companies
Meeting at least two of the following three criteria:
- average number of 250 employees (during one fiscal year)
- more than €40 million in sales
- over €20 million in total assets
2. Publicly listed companies on EU-regulated markets
Small and medium businesses (except micro-enterprises) meeting at least two of the following criteria:
- a balance sheet total of €4 million
- net sales over €8 million
- an average of 50 employees (during one fiscal year)
3. Non-EU companies
With a net turnover of more than €150 million (in the EU), having at least one subsidiary or branch that brings in over €40 million (in the EU).
4. Parent or subsidiary companies of large groups
Meeting at least two of the following three criteria:
- average number of employees standing at 250 employees (during one fiscal year)
- more than €40 million in turnover
- over €20 million in total assets
CSRD disclosure: How and when to report
You should submit your sustainability reports as part of the annual management reports. All sustainability information goes under a single report together with your financial statements.
You'll then send this report in an electronic format using the European Single Electronic Format (ESEF) and make sure it's publicly accessible (ideally on your company's website). Depending on your country, there will be separate requirements for submissions from your regional regulatory authorities.
Here’s a complete CSRD reporting timeline based on company type:
CSRD assurance requirements to start working on first
Let’s note a couple of CSRD regulation requirements you should prioritize:
Double materiality assessment
Companies have to assess their social and environmental impacts as well as the financial risks and opportunities that ESG poses for them. Any organization can add this information to their CSRD compliance reporting by performing a double materiality assessment.
Carbon footprint calculation and reporting
Your organization must disclose all its climate-related risks and opportunities, report on carbon footprints, and plan in preparation for the 1.5-degree Celsius target. This comes with a series of secondary implications as you'll need to develop a new strategy to meet external benchmarks and perform scenario analyses to identify potential climate risks.
Limited assurance requirement
To perform this, companies have to get mandatory limited assurance from an external auditor.
This also means you'll need to use the ESG tools necessary to allow the auditor to review the sustainability data and processes based on accurate numbers. Besides data sample analysis, the assurance provider (i.e. the auditor) will likely also interview your company management and review the available documentation.
Miele van Vuuren, Senior Manager Sustainability Reporting and Assurance at KPMG Netherlands, further emphasizes the need for both data and technology that you, your stakeholders, and all partners can trust:
“With the CSRD requirements, the scope and the quality of non-financial reporting is going to increase significantly. With that, it brings an increase in the necessity for reliable data and technology.”
Integrated ESG reporting
ESG reporting now becomes part of your general financial reporting process. This will ultimately unite sustainability performance and financial metrics within the same report.
A single document provides a holistic view of your company's risks and opportunities, but also means you can provide stakeholders with the transparency they seek from your end. Start by updating your reporting governance and annual reports to accommodate these new disclosure requirements.
Philips, for instance, is already dedicating extra resources to align with the new CSRD standards, managing 800-1,000 data points for both reporting and business insights. This effort is temporary, as they plan to automate the process once the systems are ready for an audit.
Robert Metzke, Senior VP and Head of Sustainability, noted:
“There’s a lot of temporary work to align the things that we do with the CSRD reporting standards but that will also normalize over the next couple of years.”
Book a free demo to see how ESG Flo can help you meet all these requirements for both the CSRD regulation and other directives that have an impact on your business operations.
