CSRD Legislation

The Corporate Sustainability Reporting Directive

On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force. It modernises and strengthens the rules concerning the social and environmental information that companies have to report.

A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability. Some non-EU companies will also have to report if they generate over EUR 150 million on the EU market.

The first companies will have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025.

Companies subject to the CSRD will have to report according to European Sustainability Reporting Standards (ESRS). The standards are developed in a draft form by the EFRAG, the European Financial Reporting Advisory Group, an independent body bringing together various stakeholders.

The first set of ESRS was published in the Official Journal on 22 December 2023 under the form of a delegated regulation. These standards apply to companies under the scope of the CSRD regardless of which sector they operate it.

The CSRD also requires assurance on the sustainability information that companies report and will provide for the digital taxonomy of sustainability information.

Who is affected by the CSRD?

All companies (including non-capital market-oriented companies) that meet two of the following three criteria:

• 250 employees
• 50 million EUR turnover
• 25 million EUR balance sheet total

As well as publicly listed SME that meet two of the following three criteria:

• 10 employees
• 900,000 EUR turnover

When must companies comply with the CSRD?

• Starting in financial year 2024 (and reporting in 2025). Compliance is mandated for organizations (or ‘entities’) already mandated to comply with the NFRD. This includes all organizations listed in an EU-regulated market with 500 or more employees.

• Starting in financial year 2025 (reporting in 2026). Compliance is mandated for large undertakings (see above) not already mandated to comply with the NFRD.

• Starting in financial year 2026 (reporting in 2027). Compliance is mandated for small and medium-sized undertakings (also called small and medium sized entities, or SMEs) listed on an EU-regulated market.

• Starting in the financial year 2028 (reporting 2029). Compliance is mandated for certain third-country undertakings.