- Key Obligations and Implications for Stakeholders
The Corporate Sustainability Reporting Directive (CSRD), adopted in November 2022, aims to strengthen and expand sustainability reporting requirements for European companies. It replaces and broadens the scope of the previous Non-Financial Reporting Directive (NFRD).
The main obligations under the CSRD include disclosing information about environmental, social, and governance (ESG) risks, as well as the impact of the company’s activities on these areas, based on the principle of double materiality.
Affected companies are now required to publish standardized sustainability reports integrated into their annual financial reports. These reports must include information about the company’s ESG strategy, business model, and governance while ensuring transparency regarding potential negative impacts of their activitie
The directive applies to a wide range of companies, including publicly listed firms, SMEs, certain large non-listed companies, and subsidiaries of international groups operating in Europe. For stakeholders, this implies significant efforts toward compliance, improved transparency for investors, regulators, and other stakeholders, as well as potential development of CSR roadmaps and enhanced overall corporate performance.
- Key Challenges and Difficulties
Implementing the CSRD presents several challenges for companies:
Immature Sustainability Reporting Systems: Most companies lack the necessary infrastructure to collect, analyze, and disclose ESG data in a manner consistent with the new standards.
Complexity of Requirements: The CSRD mandates detailed reporting covering a wide range of criteria, such as climate change, human rights, and biodiversity, across the value chain. Collecting this data can be particularly challenging for companies with global supply chains, where tracking and obtaining accurate and complete information is often difficult.
Mandatory External Audits: The directive requires external audits of sustainability reports, adding another layer of complexity and cost for businesses.
- Implementation Timeline
The CSRD implementation timeline spans several years. The directive came into force in January 2023, but the first companies must comply with the new requirements starting in 2024 for the fiscal year 2023. The progressive timeline depends on the size and status of the companies:
- 2024 : Companies already subject to the NFRD (large publicly listed companies) must adopt the new requirements for 2023 reports.
- 2025 : All large companies (with over 250 employees, €40 million in revenue, or €20 million in total assets) must comply for 2024 reports.
- 2026 : Publicly listed SMEs will be subject to these requirements, with an optional one-year extension for full compliance.
- 2028 : Non-European companies with subsidiaries or branches in Europe generating more than €150 million in revenue must adhere to transparency obligations for their 2029 reports.
This phased approach allows companies to prepare and anticipate significant changes but also increases pressure along value chains to adapt quickly, even if they are not directly targeted.
- Latest Regulatory Updates
Recent updates related to the CSRD focus on standardized reporting. The directive introduces the European Sustainability Reporting Standards (ESRS), developed by the European Financial Reporting Advisory Group (EFRAG). These standards aim to ensure greater consistency and comparability of disclosed information while incorporating the requirements of the European Taxonomy and SFDR.
In July 2023, the European Commission adopted twelve initial technical standards, outlining general principles and cross-cutting requirements on one hand, and establishing specific criteria and requirements for the environmental (E), social (S), and governance (G) pillars on the other.
- Practical Outcomes
In practice, the CSRD pushes many companies to improve their management of sustainability risks and impacts, accelerating their transition to more sustainable business models. Significant progress has been observed in integrating ESG criteria into corporate strategies, though major challenges remain
Many companies have launched internal projects to align their reporting practices with the new requirements, investing in data management tools and ESG performance monitoring systems.
However, disparities in report quality persist. Larger companies have made notable strides in sustainability reporting, while SMEs continue to struggle to adapt to the new standards.
In 2025, we eagerly anticipate the first reports compliant with the CSRD from companies already subject to the NFRD.
- Recommendations for Navigating This Regulation
To effectively navigate the CSRD, several key strategies are recommended:
- Early Preparation: Companies should start structuring their internal processes for ESG data collection and management as early as possible. This includes identifying sustainability-related risks and opportunities and integrating these elements into the overall strategy.
- Investment in Data Management Technologies: Investing in technology tools capable of centralizing, storing, and analyzing ESG data is crucial for ensuring long-term compliance. Automated management systems can simplify reporting complexity and improve the quality and consistency of disclosure
- Internal Capacity Building: Ensuring internal teams understand CSRD requirements is essential. Providing specific training on ESG criteria and recruiting experts in sustainable reporting can help meet growing expectations.
- Collaboration with External Auditors: Since external verification is mandatory, establishing relationships with qualified auditors early on will ensure timely validation of reports.
- Adopting an Integrated Approach: Companies should integrate ESG reports into traditional financial reporting instead of treating them as separate elements. This integrated approach will facilitate compliance and improve transparency for all stakeholders.
Sources : Corporate sustainability reporting, European Commission,
EY Corporate Sustainability Reporting Directive brochure,
Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting
CSRD Reporting Requirements: A Comprehensive Guide
https://www.corporateservices.euronext.com/blog/esg/csrd-reporting-requirements/
Corporate Sustainability Reporting Directive (CSRD) explained