Reporting requirements explained: Corporate Sustainability Reporting Directive (CSRD)
This insight was updated following the introduction of the omnibus simplification package.
The Corporate Sustainability Reporting Directive (CSRD) is a significant piece of European Union (EU) legislation designed to standardise and enhance the quality of corporate sustainability reporting. It applies not only to EU-based companies but also to certain non-EU (including UK) companies with substantial EU operations. The CSRD’s objective is to improve the transparency, consistency, and comparability of environmental, social, and governance (ESG) information disclosed by companies, aiding investors, policymakers, and stakeholders to support the transition to sustainable economies.
Who is in scope?
The scope of CSRD is broad and has been further clarified and adjusted in the February 2025
Omnibus Amendments. Key updates include changes to timelines, exemptions, and reporting pathways for non-EU groups.
Entities required to report include:
- All large EU companies, defined as meeting two out of the following three criteria:
- more than 1,000 employees;
- net turnover exceeding €50 million; and/or
- balance sheet total over €25 million.
- All companies listed on EU-regulated markets, except listed micro-enterprises.
- EU subsidiaries or branches of large non-EU groups, where:
- The non-EU group has generated a net turnover in the EU of more than €450 million in each of the last two consecutive financial years; and
- has either:
- an EU subsidiary that is large (per criteria above); or
- an EU branch with annual turnover exceeding €40 million.
Consolidated reporting and exemptions
- If a non-EU parent prepares a consolidated sustainability report under standards that are deemed equivalent to EU standards (based on equivalency assessments by the European Commission), its EU subsidiaries and branches may be exempt from separate reporting under CSRD.
- The February 2025 Omnibus introduced a grace period for equivalency determinations, allowing companies to rely on national frameworks (e.g. U.S. SEC climate rules, UK SDR) as provisionally acceptable until formal assessments are published.
What must be reported?
CSRD requires companies to provide detailed, standardised, and verifiable sustainability information. This includes:
- Sustainability-related risks, opportunities, and policies;
- Impacts of the company on environmental and social factors (and vice versa – the “double materiality” principle), Metrics and targets on:
- greenhouse gas emissions (Scopes 1, 2, and—where material—3);
- energy usage, biodiversity impact, water usage, and circular economy indicators; and
- workforce diversity, employee well-being, and human rights performance.
- governance structures and anti-corruption measures;
- strategy alignment with climate transition pathways; and
- disclosures consistent with the European Sustainability Reporting Standards (ESRS).
The ESRS provide sector-agnostic and sector-specific standards. Companies must also indicate how their reporting aligns with other major frameworks (e.g. GRI, ISSB, TCFD).
Reporting timeline (updated)
Summary
The CSRD marks a major expansion in sustainability reporting obligations in the EU. With the 2025 Omnibus Amendments, the directive now includes more flexible transition rules for non-EU companies and greater clarity around reporting exemptions and third-country equivalency. Businesses impacted should begin preparing now, especially to align with the European Sustainability Reporting Standards (ESRS) and to evaluate whether group-level exemptions apply.
