Feb 27 • Eelco Bolk

Top six things you need to know about CSRD

Starting in 2025, a lot of companies will need to comply with ESG reporting requirements. This obligation arises with the implementation of the European Corporate Sustainability Reporting Directive (CSRD), a component of the European Green Deal and the successor to the Non-Financial Reporting Directive (NFRD).
Knowledge about Corporate Social Responsibility (CSR) reporting is crucial as it enables organizations to transparently communicate their social, environmental, and economic impacts.
By accurately reporting CSR activities and initiatives, companies demonstrate accountability to stakeholders, including investors, customers, employees, and the community.

Effective CSR reporting enhances corporate reputation, fosters trust, attracts investment, and facilitates sustainable business practices. It also helps identify areas for improvement and aligns business strategies with societal expectations and sustainable development goals.

1. What is the function of the CSRD?

In essence, the EU holds the belief that both consumers and investors are entitled to transparent insights into the sustainability practices of businesses.

The creation of the Corporate Sustainability Reporting Directive (CSRD) stemmed from the inadequacy of existing legislation in fulfilling this objective.

Prior to CSRD, the Non-Financial Reporting Directive (NFRD) laid out reporting standards for large corporations. However, it was found by the European Commission that the information provided by companies was lacking:
"Reports frequently lacked key information deemed essential by investors and other stakeholders. Comparing reported data across companies was challenging, leading to uncertainty regarding its reliability." — European Commission.

The European Commission highlighted the detrimental impact of subpar sustainability reporting, especially concerning the promotion of sustainable investments. A robust understanding of the sustainability implications of investment portfolios is crucial for fostering a credible market for green investments. Even investors not primarily focused on green ventures must comply with the disclosure obligations outlined in the Sustainable Finance Disclosure Regulation (SFDR). Furthermore, the European Commission identified an "accountability gap" as a rationale for proposing CSRD: "Enhanced public accountability through high-quality and dependable company reporting is paramount." — European Commission.

Consequently, CSRD was established with the aim of enhancing transparency in reporting and furnishing investors with the necessary data to evaluate a company's sustainability practices.

2. Which companies will be impacted by CSRD? 

CSRD will affect all companies established within the European Union, Iceland, Liechtenstein, Switzerland, and Norway that surpass at least two of the following criteria:

A net turnover of €40 million
A balance sheet total of €20 million
An average of 250 employees over the financial year.

Furthermore, non-EU companies that generate a net turnover of over €150 million from EU-generated profits and companies with a subsidiary or branch in the EU generating over €40 million net turnover are also encompassed within the scope.

The new sustainability reporting regulations will additionally extend to all large companies and those listed on regulated markets, excluding those listed with micro trades. These entities are also accountable for evaluating relevant information concerning their subsidiaries.

3. What information must be reported under CSRD?

CSRD requires reporting of forward-looking, retrospective, qualitative and quantitative information necessary to understand the companies impacts on sustainability matters.   The information is essential to interpreting how these matters influence a company’s development, performance, and position. But it also sheds light on the adverse impacts that the company may have on the climate – or any other dimension of sustainability. This is called “double materiality”.
The information must contain a description of the company’s:
  • Business model & strategy, as well as opportunities and resilience to sustainability risks and transition plans.
  • Sustainability targets and their progress.
  • Sustainability governance (administrative, management and supervisory bodies and their expertise and skills to fulfil their role).
  • Incentives schemes linked to sustainability matters.
  • Due diligence of sustainability matters and the process to conduct it.
  • Principal adverse impacts, and those of its value chain, including its products and services, its business relationships and its supply chain; principal sustainability risks and their management.

4. Global Impact

The implementation of the CSRD has the potential to drive positive change in corporate sustainability practices not only within the European Union but also globally, by setting a precedent for comprehensive and standardized sustainability reporting.

5. When will CSRD start applying?

The application of CSRD will take place in four stages:
  • Stage 1: Reporting in 2025 for the financial year 2024 for companies already subject to the NFRD.
  • Stage 2: Reporting in 2026 on the financial year 2025 for other large companies.
  • Stage 3: Reporting in 2027 on the financial year 2026 for listed SMEs (except micro undertakings), small and non-complex credit institutions and captive insurance undertakings.
  • Stage 4: Reporting in 2029 on the financial year 2028 for non-EU undertakings with net turnover above €150 million in the EU if they have at least one subsidiary or branch in the EU exceeding certain thresholds.

6. The proactive implementation of CSRD offers advantages.

Getting ahead of the curve with CSRD compliance offers numerous benefits: uncovering fresh insights as companies delve into non-financial indicators tied to corporate operations. For instance, it reveals opportunities for cost savings such as energy efficiency improvements and process optimizations.

With the proposed ramp-up of climate ambitions, the EU is set to roll out stricter regulations on ESG in the coming years, impacting both major corporations and SMEs. Proactively preparing for these changes and devising strategic plans to mitigate adverse effects ensures your company remains agile and resilient in the face of challenges.

Prioritizing ESG not only ensures compliance but also grants a competitive edge over peers not yet subject to reporting obligations.


In conclusion, understanding the Corporate Sustainable Reporting Directive (CSRD) is paramount in navigating the increasingly complex landscape of corporate sustainability. With businesses facing mounting pressure to adopt transparent and accountable practices, knowledge of the CSRD empowers stakeholders to effectively assess companies' environmental, social, and governance (ESG) performance.

By fostering greater transparency and accountability, the CSRD not only bolsters investor confidence but also drives positive societal and environmental impact. Embracing the principles of sustainable reporting not only benefits individual companies but also contributes to the collective effort towards a more sustainable and equitable future for generations to come.

Thus, the importance of grasping the nuances of the CSRD cannot be overstated in fostering responsible corporate behavior and advancing global sustainability goals.
Created with