EU Corporate Sustainability Reporting Directive (CSRD)

Overview

The EU Corporate Sustainability Reporting Directive (CSRD) is the foundational EU law governing sustainability reporting, substantially strengthening the earlier Non-Financial Reporting Directive (NFRD). It progressively mandates ESG disclosures based on a double materiality assessment.

For non-EU companies, the European Parliament's press release (December 16, 2025) covers companies with net turnover in the EU above €450 million and subsidiaries or branches with turnover above €200 million. Directive (EU) 2026/470 (Omnibus I) was published in the Official Journal on February 26, 2026 and entered into force on March 18, 2026. The press release sets the scope of sustainability reporting at EU companies with more than 1,000 employees on average and net annual turnover above €450 million.

The first wave of reporting has already been applying since FY2024 results (reported in 2025), and its effects are spreading through the value chain as companies further down the supply chain face growing requests for data.

Enforcement Timeline

January 2023: CSRD enters into force.

FY2024: First wave of application begins (large public-interest entities previously covered by the NFRD).

2025: First wave's initial CSRD reports are published.

December 2025: The European Parliament approves the Omnibus I provisional agreement (December 16).

February 2026: Directive (EU) 2026/470 (Omnibus I) is published in the Official Journal (February 26).

March 2026: Directive (EU) 2026/470 enters into force (March 18).

FY2027: Second wave of application begins (large companies, under revised thresholds).

2028: Second wave's initial reports are published.

Listed SMEs: Effectively excluded from mandatory reporting.

Related Regulations / Topics

EU European Sustainability Reporting Standards (ESRS)

The European Sustainability Reporting Standards (ESRS) are a legally binding delegated regulation (Delegated Regulation (EU) 2023/2772) under the EU Corporate Sustainability Reporting Directive (CSRD), setting out the specific disclosure items, measurement methods, and reporting formats that companies within scope must follow. Drafted by EFRAG (the European Financial Reporting Advisory Group), the standards comprise twelve total standards spanning Environment (E1–E5: climate, pollution, water, biodiversity, and resource use/circular economy), Social (S1–S4: own workforce, workers in the value chain, affected communities, and consumers), and Governance (G1: business conduct). Following the principle of "double materiality" (financial materiality and impact materiality), companies must disclose quantitative and qualitative information spanning their entire value chain.

Business Impact

European subsidiaries of companies conducting business in the EU above a certain scale may fall within the scope of CSRD reporting obligations. These companies must carry out a double materiality assessment under the ESRS, provide detailed disclosures spanning environmental, social, and governance matters, and obtain third-party assurance. Even companies without a direct reporting obligation are increasingly being asked by EU trading partners to supply value chain data. While the Omnibus revisions to scope and timing offer some relief, first-wave companies are already subject to the reporting obligation, and delays in preparation are not an option.