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CSRD – EU Corporate Sustainability Reporting Directive

EU legislation requires certain businesses to regularly publish ESG reporting on how they manage the social and environmental impacts of their products and activities. In June 2022, the European Parliament and Council agreed on a Corporate Sustainability Reporting Directive (CSRD). In essence, the CSRD mandates more detailed ESG reporting from a broader number of corporations than any previous EU law.

What is ESG Reporting?

An ESG report, also known as a sustainability report, is a document published by an organization that discusses the Environmental, Social, and Governance (ESG) impacts of the company’s products and activities. Accordingly, ESG reporting allows the organization to be more transparent about the risks and opportunities it confronts. Additionally, an ESG report outlines the quantitative and qualitative outcomes of a company’s ESG initiatives. As a result, investors can evaluate a corporate’s investment opportunities based on its ESG report and avoid enterprises with the risk of environmental harm, social blunders, or corruption. To improve its ESG score, a company can implement various Environmental Management Systems (EMS), including ISO 14001. Particularly, establishing an EMS can help your business to gain credibility by demonstrating that your products and services satisfy the environmental protection expectations of all stakeholders, including consumers, partners, employees, investors, etc.

Here we discuss two EU directives requiring organizations to disclose non-financial information through ESG reporting.

What is NFRD ESG Reporting?

Human Rights - CSRD

In 2018, all EU member states implemented Directive 2014/95/EU, known as Non-Financial Reporting Directive (NFRD), and incorporated it into national legislation. Consequently, businesses must comply with this directive if they fulfill certain conditions. Under the NFRD, certain big companies must publish information on the environmental and social impacts of their products and activities across the supply chain. This ESG reporting pertains to the following concerns:

  • Environmental-related matters
  • Social issues and treatment of employees
  • Human rights respect
  • Anti-bribery and corruption
  • Diversified board of directors in terms of gender, age, professional and educational background, etc.

This reporting guideline applies to large EU Public-Interest Entities (PIEs) with an annual average of more than 500 employees. Hence, this applies to around 11,700 EU big companies and groupings, including listed businesses, banks, and insurance firms.

What is CSRD ESG Reporting?

On November 2022, the European Union approved the Directive (EU) 2022/2464, known as Corporate Sustainability Reporting Directive (CSRD), the world’s most comprehensive mandatory ESG reporting framework. Correspondingly, the CSRD modifies and replaces reporting obligations under NFRD. To fix NFRD flaws, the CSRD updates and reinforces the standards governing the social and environmental information that organizations must publish. Moreover, per CSRD, an authorized independent auditor or certifier must verify the ESG reporting. Notably, the NFRD rule remains in effect until replacement by CSRD requirements.

audit Enviropass

What are the Purposes of CSRD?

According to CSRD, companies must report how their business strategy impacts sustainability factors, such as climate change and human rights issues. On the other hand, the report also includes how external sustainability considerations influence business operations. The followings are some of the primary goals of CSRD:

CSRD purpose
  • Ensuring readability and clarity in the information businesses provide on sustainability
  • Imposing more detailed reporting and independent auditing obligations
  • Enhancing corporate accountability regarding non-financial reporting
  • Avoiding inconsistent sustainability requirements by developing uniform ESG reporting standards that satisfy the interests of all stakeholders
  • Facilitating the transition to a more sustainable economy
  • Assisting in the elimination of greenwashing by equalizing financial and sustainability reporting
  • Empowering stakeholders, including investors, to make better decisions on sustainability-related problems

Which Companies are Affected by CSRD?

According to CSRD, approximately 50,000 organizations listed or doing business in the EU must report on sustainability, including a larger group of major corporations and listed Small and Medium-sized Enterprises (SMEs).

Impacted large companies or groups must meet at least two of the following three criteria:

  • More than 250 employees (annual average)
  • A net turnover of more than EUR 40 million
  • More than EUR 20 million in total assets


Affected listed SMEs must have at least two of the three conditions below:

  • More than ten employees (annual average)
  • A net turnover of more than EUR 700k
  • More than EUR 350k in total assets
ISO 14001 who should take the training?

The Timetable of CSRD Implementation

The CSRD goes into effect in 2024 for a group of large EU corporations and progressively expands to include different groups of companies over the following four years. The initial group of enterprises must publish their report in 2025 for the fiscal year 2024.

The table below summarizes the timeline for the CSRD implementation for different affected companies:

Type of company


First CSRD ESG Reporting Date

Large EU PIEs

Large companies already subject to the NFRD

2025 on the financial year 2024

Large companies/groups

Large companies that are not currently subject to the NFRD

2026 on the financial year 2025

Listed SMEs

Listed small and medium-sized enterprises (except micro undertakings)

2027 on the financial year 2026 (can opt-out until 2028)

Non-EU parent company having at least one division or branch in the EU

Third-country undertakings with a net turnover of more than 150 million in the EU

2029 on the financial year 2028

Contact Enviropass to learn more about ESG reporting, including CSRD, and your company’s obligations toward it!