What is CSRD? 

The CSRD aims to establish a harmonized and consistent reporting framework for companies to disclose information related to their environmental, social, and governance (ESG) performance. This includes mandatory reporting on a wide range of sustainability topics with a particular focus on the impact of their activities on people and the environment. It is a fundamental reform of the previous framework, Non-Financial Reporting Directive (NFRD).


What information must be disclosed? 

In the future, the European Sustainability Reporting Standards (ESRS), developed by EFRAG, will become binding common standards and complement the legal text, enhancing the standardization of reporting. These standards will offer guidance on various factors, including environmental, social, human rights, and governance aspects. EFRAG submitted the initial draft of 12 standards to the European Commission on November 23, 2022. A final consultation on the ESRS was conducted on June 6, 2023, and concluded in July 2023. The adoption of the final set of ESRS is expected by the end of August 2023. 

The first set of 12 ESRS outlines reporting requirements for the CSRD. It comprises:  

  • 2 cross-cutting standards with general requirements applicable to all covered topics 
  • 10 topical standards specific to environmental, social, and governance issues.  

Sector-specific standards will be added later to complement these draft standards.


Who are the companies concerned and what are the reporting deadlines? 

Below are the deadlines for various types of companies required to comply with the CSRD requirements: 

From 1 January 2024

Companies already subject to the NFRD should report according to the new standards (i.e., reporting in 2025 on 2024 data). This refers to large, listed companies, banks and insurance companies. Large companies are defined as those exceeding at least two of the following three criteria on a consolidated basis: 

  • Balance sheet total: €20 million or more 
  • Net turnover: €40 million or more 
  • Average number of employees during the financial year: 250 or more 

As of 1 January 2025

The reporting obligation shall apply to large companies that are not yet subject to the mandatory reporting (i.e., reporting in 2026 on the data of 2025).  

From 1 January 2026

The CSRD will apply to listed SMEs and small and non-complex credit institutions and captive insurance companies (i.e., reporting in 2027 on the financial year starting from 1 January 2026).


Reporting templates 

Under the CSRD, companies have a mandatory requirement to include specific information about their sustainability impacts and how these factors influence their development, performance, and position. This reporting is in line with the European Sustainability Reporting Standards (ESRS) and adheres to the "double materiality" principle emphasized during the CSRD's development. 

To facilitate this reporting process, EFRAG is currently developing the Sustainability Reporting (SR) XBRL Taxonomy, which is anticipated to be published in Q4/2023. 

Presently, companies are obliged to tag their financial statements and notes using the "principle-based" IFRS XBRL taxonomy in the European Single Electronic Format (ESEF) for publication by Official Appointed Mechanisms (OAMs) in each country. 

Looking ahead, with the introduction of sustainability reporting through the ESRS and the "EU taxonomy" disclosures of Article 8 (EU 2020/852), digital tagging in the ESEF format will be required as part of the management report as per the CSRD.


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