The Corporate Sustainability Reporting Directive (“CSRD”)


On April 21, 2021, the European Commission adopted an ambitious Sustainable Finance Package, which includes a proposal for a Corporate Sustainability Reporting Directive (“CSRD”).

The CSRD, which has already been the subject of a provisional political agreement between the European Council and the Parliament, expands the scope and the disclosure requirements for Environmental, Social and Governance (“ESG”) information, which were already provided for to some extent by the existing Non-Financial Reporting Directive (“NFRD”).

What information must be reported? As a matter of reminder, the NFRD requires to share non-financial information related to four key areas: (i) respect for human rights, (ii) environmental protection, (iii) anti-corruption and bribery, (iv) employee related matters, such as gender, educational, professional and age diversity, social responsibility, and the treatment of employees.

The CSRD contains additional requirements:

  • A double materiality concept: Reporting entities are required to disclose (i) the information necessary to understand how sustainability factors affect the entity and (ii) the information necessary to understand the entity’s own impacts on society and the environment.


  • Additional information to report: In addition to the non-financial information listed by the NFRD, entities shall provide information about (i) their strategy, (ii) targets, (iii) the role of the board and management, (iv) the principal adverse impacts connected to the company and its value chain, (v) intangibles, and (vi) how they have identified the information they report.

Furthermore, entities should also report qualitative and quantitative information, forward-looking and retrospective information, and information that covers short, medium and long-term time horizons as it deems appropriate.


  • Green financial indicators: Reporting entities will also have to disclose their green financial indicators in accordance with the European Taxonomy Regulation to disclose which of their activities are sustainable.


How and in what form should the reporting be prepared? The sustainability report must be included in the annual report. This entails that companies must bring sustainability reporting forward to the time they publish their annual report.

In addition, companies must prepare their report in a single electronic reporting format, requiring that reported sustainability information has to be digitally tagged.

The reporting will have to be certified by an auditor. To ensure that companies comply with the reporting rules, the auditor will ensure that the sustainability information complies with the certification standards adopted by the European Union. If the sustainability reporting is carried out by an auditor from a third country, the competent authority may request additional documentation from the competent authorities of this third country.

Who shall comply with the CSRD? While the NFRD only requires public interest entities (“PIEs”) meeting the relevant criteria as included in the NFRD (see our article on NFRD in this regard) to report on their sustainability performance, the CSRD will require the following entities to report on their sustainability:

  • Large companies, including foundations, trusts and franchises, meeting at least two of the following criteria:
  • Having more than 250 employees; and
  • Having a balance sheet total of more than EUR 20 million; and/or
  • Having a net turnover of more than EUR 40 million);
  • Non-EU entities, listed on European regulated markets;
  • EU subsidiaries of non-EU entities, having a net turnover of more than EUR 150 million within the European Union;
  • Non-EU entities providing goods and services within the EU;
  • SME’s on a voluntary basis, unless when they are listed on European regulated markets or performing high-risk economic activities (which will most likely be assessed based on the NACE codes of entities); and
  • Large banks and insurance companies, regardless of their capital market orientation.


However, the CSRD provides for an exemption for the EU subsidiaries that are listed in a parent company’s consolidated sustainability report that conforms with the CSRD. The consolidated management report must (i) include the non-financial information individually or in accordance with EU sustainability reporting guidelines, (ii) be made public, and (iii) exempted subsidiaries must make reference to it in their respective management reports.


As such, the CSRD vastly expands the scope of NFRD, meaning that approximately five times more entities will fall within the scope of the CSRD, compared to the NFRD.

When will the CSRD be applicable ? Entities falling within the scope of the CSRD shall submit their sustainability report at the following dates:

  • January 1, 2024, reporting on the financial year 2023, for companies already subject to the NFRD;
  • January 1, 2025, reporting on the financial year 2024, for large companies not currently subject to the NFRD;
  • January 1, 2026, reporting on the financial year 2025, for listed SMEs, as well as for small and non-complex credit institutions and captive insurance companies.

For non-EU companies listed on EU regulated markets, it is expected that the requirements will be effective from 1 January 2025 (i.e. with periods ending 31 December 2025).

For other non-EU companies (referred to as third country undertakings in the CSRD), the requirement to provide a sustainability report applies from 1 January 2028 to all third country undertakings generating a net turnover of more than €150 million in the EU and which have at least one large or listed EU subsidiary or a EU branch generating a net turnover of more than €40 million.

What should my company do? From a practical perspective, it will be a time-consuming challenge for reporting entities to collect and audit the required data and comply with the new legislation.

In this respect, we recommend to proceed with (i) the analysis on whether your company fall within the scope of the CSRD and (ii) perform internal due diligence to determine if this information/data is readily available. If this information and data is not available, immediate action is highly advised to comply with the CSRD by January 1, 2024, since the relevant information and data should already be gathered throughout the financial year 2024 in order to be able to report in a correct manner in 2025.