The Corporate Sustainability Reporting Directive (CSRD) is setting new rules for how businesses across the European Union disclose their sustainability performance. Its scope will expand significantly in the coming years, fundamentally reshaping the reporting process for businesses of all sizes.
Where are we now?
Phase 1 of the CSRD, which began in January 2024, focuses on large companies previously covered under the NFRD. These companies must now align their sustainability disclosures with the new standards, ensuring compliance with their reporting obligations and publishing their first reports in 2025.
What’s next?
From January 2025, phase 2 will extend the CSRD’s reach to include more large companies. If your business employs more than 250 people, generates a net turnover exceeding €50 million, or holds assets of €25 million or more, you’ll need to comply. The first reports for this group will be due in 2026.
Phase 3, starting in 2026, will bring SMEs listed on EU-regulated markets into the fold. These businesses will need to begin reporting on sustainability issues, though smaller companies have the option to opt-in by 2028 to allow for additional preparation time.
What does this mean for you?
If your company falls into phase 2, now is the time to act. By enhancing the transparency of your sustainability data, you can meet reporting obligations while building trust with stakeholders and aligning your business model with the broader goals of the CSRD. Below is a simple guide to help you navigate compliance.
Key CSRD Requirements
The Corporate Sustainability Reporting Directive (CSRD) is a key initiative by the European Commission, designed to harmonize how companies report on sustainability matters. The directive applies to companies across EU member states and non-EU companies with substantial EU operations. It mandates businesses to integrate sustainability disclosures into their management reports, ensuring accuracy through mandatory assurance and alignment with European Sustainability Reporting Standards (ESRS).
Central to the directive is the double materiality assessment, which evaluates both financial materiality—how sustainability issues affect your business—and environmental and social materiality—how your business impacts people and the planet. Companies must set measurable sustainability targets, track progress, and ensure their reporting covers the entire value chain.
For more information on CSRD requirements, take a look at our dedicated resource.
5 Steps to CSRD Compliance
1. Build your CSRD team
Creating a robust reporting process requires collaboration across functions, including CSR, Procurement, Finance teams, IT/Data specialists.
2. Conduct a double materiality assessment
This step involves identifying the sustainability issues most relevant to your business model:
- Financial materiality: How sustainability affects your company’s financial performance.
- Impact materiality: How your operations affect the environment, society, and value chain.
Tailor your approach to reflect these findings in your disclosures.
3. Upgrade your data systems
To streamline the reporting process, it’s important to centralize the collection of ESG data across all departments and supply chain partners. Ensure the data is accurate, traceable, and compliant with national laws. Using digital platforms can help improve efficiency and ensure more reliable results.
4. Submit your report
Integrate your ESG disclosures into your annual management report, ensuring they meet ESRS guidelines and address both retrospective data and forward-looking sustainability targets. Ensure third-party assurance for accuracy and submit your report to the relevant national authority in your jurisdiction.
5. Monitor and refine
Sustainability reporting isn’t static. Regularly review and adjust your reporting process to stay aligned with evolving CSRD requirements and integrate these efforts into your long-term business strategy.
Start your CSRD journey today
The 2025 reporting deadline may seem distant, but establishing a thorough reporting framework takes time. By acting now, your company can stay ahead of its reporting obligations, address critical sustainability issues, and align its business model with the EU’s climate change goals.
Looking for guidance?
Explore our resources on double materiality and the reporting process, including our comprehensive Guide to the CSRD, to help you get started.
