The CSRD reporting regulation is one of the main sustainability-related directives that has been introduced in recent years. It aims to hold companies to a high level of accountability in terms of their social, environmental and governance impacts. The initial reports, based on data from this year will be published in 2025. Full compliance with the CSRD will directly affect 50,000 European companies, as well as many more companies indirectly affected along supply chains.
This article addresses common questions regarding the CSRD, giving an overview of the reporting requirements, the scope & timeline and the tangible results for all companies regardless of reporting requirements.
What is the CSRD?
The Corporate Sustainability Reporting Directive (CSRD) is a standard set by the European Union introduced to enable companies to report on their Environmental, Social and Governance (ESG) components. The directive is an extension of the NFRD (Non-financial Reporting Directive) which was introduced to encourage companies to reflect on and improve their impact on both people and the planet.
The CSRD directive expands the reporting standards for companies, it identifies certain topics that companies are obligated to report on. It requires companies to give comprehensive statements about factors such as climate change mitigation, biodiversity, human rights, and the circular economy. Those subject to the CSRD reporting standards are compelled to compose sustainability reports on an annual basis, outlining their measurement and progress of ESG components.
What does this mean for companies?
CSRD reporting aims to improve transparency in firms, it has a wider scope and a further reach than previous reporting standards. The CSRD requires greater accountability from companies’ supply chains. Previously, the NFRD only required companies to report on their immediate operations. CSRD reporting encourages companies to delve deeper into their supply chain and surrounding environment.
In practice, CSRD reporting follows a set of standards outlining the factors companies must report on in their annual sustainability reports. The factors include a transition plan for climate change mitigation as well as a measurement of workers' rights and the gender pay gap. It creates a level playing field among companies, ensuring their operations are transparent for consumers. The CSRD regulation also allows companies to take stock of their operations, suppliers and processes and paves the way for future progress.
Who is in the scope of CSRD reporting?
At full compliance, CSRD reporting applies to nearly all European and some non-European companies that have branches or subsidiaries inside the EU. Large publicly listed companies and those already subject to the NFRD are required to publish their first report in 2025. SMEs are expected to report in 2027, with the option to delay for a further two years.
Scope of CSRD Compliance
European Companies
Large undertakings are those that satisfy any two of;
More than 250 employees on average
More than €50 million in turnover
More than €25 million in total assets
Small and Medium enterprises are eligible if they satisfy any two of;
50-250 employees on average
€10-€50 million in net turnover
€5-€25 million in total assets
Non-European Companies
Companies with branches or subsidiaries inside the EU with a combined group-level turnover in the EU of more than €150 million.
Companies that have listed securities on a regulated market within the EU.
Companies that have an annual EU revenue of more than €150 million and an EU branch with new revenue of more than €40 million.
Companies with an EU subsidiary that satisfy any two of the following;
More than 250 employees
More than €40 million in turnover
More than €20 million in total assets
CSRD Compliance timeline
The CSRD will apply to over 50,000 European companies at full compliance. The directive is currently in effect for large public-interest companies. They will publish their first sustainability reports under CSRD compliance in 2025, using data from 2024. Companies are being phased in until 2029 when there will be full compliance.
2025 | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|
Companies subject to the NFRD | Large companies not currently subject to the NFRD | Listed Small & Medium enterprises (with the option to delay) | Non-European companies with branches in the EU | |
Including large publicly listed companies with more than 500 employees | Non-complex credit institutions and captive insurance undertakings | With a net turnover of more than €150 million | ||
All SMEs must be compliant |
What is the objective of the CSRD regulation?
CSRD reporting was created to compel companies to disclose information on their perceived risks and opportunities. CSRD standards are based on the impact of their activities on both people and the environment. It aims to level the playing field between companies, ensuring transparency on their sustainable performance for stakeholders. CSRD reporting results in the integration of sustainability topics into business strategy and helps companies identify their impacts, risks and opportunities.
Companies that are subject to the CSRD regulation must report according to the European Sustainability Reporting Standards (ESRS). These are a group of both qualitative and quantitative data points that guide the reporting process for companies. The CSRD regulation also requires companies to receive third-party auditing for assurance of the information reported.
While the CSRD reporting requirements currently only impact a number of companies, the directive has a spillover effect throughout the entire supply chain. Large listed organisations are expected to report on their suppliers’ operations, meaning that although not every business is currently mandated to report on their ESG aspects, there is a high chance that organisations operating within a larger supply chain will receive requests for ESG information from their buyers.
At Agriplace, we support our customers along their journey to CSRD compliance. The Agriplace platform streamlines compliance processes across the entire supply chain, making it easy to request and collect data from your suppliers for the CSRD requirements. Agriplace helps identify sustainability risks based on regional and product data that aligns with impact measurement criteria.
Get in touch with our team today to find out more about how Agriplace can help with your CSRD compliance.
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