EU Taxonomy, CSRD, and ESRS are three distinct but deeply connected pillars of European sustainability regulation. Companies often confuse them , or worse, treat them as separate compliance workstreams when they should be addressed together. Understanding how these frameworks relate to each other is the first step toward efficient, integrated compliance.
The three frameworks at a glance
| Framework | What it is | What it does | Who sets it |
|---|---|---|---|
| CSRD | Directive (law) | Requires companies to publish sustainability reports | European Parliament & Council |
| ESRS | Reporting standards | Defines what to disclose and how | EFRAG (adopted by European Commission) |
| EU Taxonomy | Classification system | Defines which economic activities are environmentally sustainable | European Commission (TEG/Platform) |
In simple terms: the CSRD says you must report. The ESRS says what to report. The EU Taxonomy says how to classify your activities as sustainable.
How they connect
Think of these three frameworks as layers in a single regulatory architecture:
Layer 1: The CSRD (the mandate)
The Corporate Sustainability Reporting Directive is the legal instrument that mandates sustainability reporting for approximately 50,000 European companies. It replaces the earlier Non-Financial Reporting Directive (NFRD) with significantly expanded scope and requirements.
The CSRD requires companies to:
- Publish sustainability information as part of their annual management report
- Have this information assured by an independent auditor
- File reports in digital format (XBRL)
- Report according to a common standard , which is where the ESRS comes in
The CSRD itself does not specify the detailed content of reports. It delegates this to the ESRS.
Layer 2: The ESRS (the content)
The European Sustainability Reporting Standards define the specific disclosures companies must make. Developed by EFRAG and adopted by the European Commission, the ESRS cover:
Cross-cutting standards:
- ESRS 1: General requirements (principles, structure, double materiality)
- ESRS 2: General disclosures (governance, strategy, IRO management, metrics)
Topical standards:
- E1–E5: Environmental topics (climate, pollution, water, biodiversity, circular economy)
- S1–S4: Social topics (own workforce, value chain workers, communities, consumers)
- G1: Governance (business conduct)
The ESRS contain over 1,100 datapoints , though companies only report on those determined to be material through their materiality assessment.
Within the ESRS, specific disclosure requirements reference the EU Taxonomy. This creates the connection between the reporting standards and the classification system.
Layer 3: The EU Taxonomy (the classification)
The EU Taxonomy is a classification system that defines criteria for determining whether an economic activity is environmentally sustainable. It is not a reporting standard , it is a green classification framework that feeds into both the CSRD/ESRS and financial regulations.
The Taxonomy evaluates activities against six environmental objectives:
- Climate change mitigation
- Climate change adaptation
- Sustainable use and protection of water and marine resources
- Transition to a circular economy
- Pollution prevention and control
- Protection and restoration of biodiversity and ecosystems
An activity qualifies as Taxonomy-aligned if it:
- Makes a substantial contribution to at least one objective
- Does no significant harm (DNSH) to the other five objectives
- Meets minimum social safeguards (human rights, labour standards)
What each framework requires from companies
CSRD requirements
| Requirement | Detail |
|---|---|
| Who | Large companies (250+ employees or €50M+ revenue or €25M+ assets), listed SMEs, large non-EU companies with €150M+ EU revenue |
| What | Sustainability report as part of annual management report |
| How | According to ESRS, in XBRL format |
| Assurance | Limited assurance (moving to reasonable assurance by 2028) |
| Timeline | Phased: FY2024 (Phase 1) through FY2028 (Phase 4) |
ESRS requirements
| Requirement | Detail |
|---|---|
| Materiality assessment | Double materiality covering impact and financial perspectives |
| Mandatory disclosures | ESRS 2 general disclosures apply to all companies |
| Topical disclosures | E1–E5, S1–S4, G1 , only for material topics |
| Datapoint granularity | Over 1,100 datapoints across all standards |
| Value chain | Must consider upstream and downstream impacts |
| Connectivity | Must connect sustainability information with financial statements |
EU Taxonomy requirements
| Requirement | Detail |
|---|---|
| Eligibility assessment | Identify which activities are covered by the Taxonomy |
| Alignment assessment | Evaluate substantial contribution, DNSH, and minimum safeguards |
| KPI disclosure | Report Taxonomy-eligible and Taxonomy-aligned proportions of: |
| , Revenue (turnover) | |
| , Capital expenditure (CapEx) | |
| , Operating expenditure (OpEx) | |
| ESRS integration | Taxonomy KPIs are disclosed as part of ESRS E1 (climate change) |
The practical workflow
For companies facing all three frameworks, the compliance workflow follows a logical sequence:
Phase 1: Materiality assessment
Conduct the double materiality assessment required by the ESRS. This determines which topical standards apply to your company. Climate change (E1) is material for virtually all companies , which automatically triggers EU Taxonomy disclosure requirements.
Phase 2: Data collection
Collect data across all material ESRS topics. For climate-related disclosures (E1), this includes:
- Scope 1, 2, and 3 emissions
- Energy consumption and mix
- Carbon footprint intensity metrics
- Transition plan details
- EU Taxonomy KPIs (turnover, CapEx, OpEx)
Phase 3: EU Taxonomy assessment
Within the E1 reporting stream, conduct your Taxonomy assessment:
- Screen all economic activities against the Taxonomy classification
- Determine eligibility (is the activity listed in the Taxonomy?)
- Assess alignment (does it meet substantial contribution + DNSH + safeguards?)
- Calculate the three KPIs as percentages of total turnover, CapEx, and OpEx
Phase 4: Report preparation
Compile disclosures following the ESRS structure, integrating Taxonomy KPIs into the E1 section. The final report must be:
- Part of the management report (not a separate document)
- Tagged in XBRL format
- Assured by an independent auditor
Common confusion points
”Do I need to comply with all three?”
If your company falls under the CSRD, then yes , but they are not three separate compliance projects. The CSRD is the legal requirement. The ESRS defines your disclosures. The EU Taxonomy provides specific classification criteria for environmental disclosures. They form one integrated reporting obligation.
”Is the EU Taxonomy mandatory?”
The Taxonomy disclosure requirements (KPIs) are mandatory for companies subject to the CSRD. However, you are not required to have Taxonomy-aligned activities. You must assess and disclose , even if the result is 0% alignment.
”Can I do CSRD without EU Taxonomy?”
No. The ESRS E1 standard includes specific disclosure requirements that reference the EU Taxonomy. If climate change is material (which it is for most companies), Taxonomy KPIs are part of your mandatory reporting.
”How does this relate to EINF?”
The EINF (Estado de Información No Financiera) is Spain’s transposition of the earlier NFRD. As the CSRD supersedes the NFRD, the EINF requirements are being absorbed into CSRD compliance. Companies currently reporting under EINF should prepare for the expanded CSRD requirements.
”What about the GHG Protocol?”
The GHG Protocol is the methodology for calculating emissions. It sits underneath the ESRS , when E1 requires Scope 1/2/3 disclosures, the GHG Protocol is the accepted calculation methodology. It is complementary, not competing.
Timeline alignment
| Year | CSRD | ESRS | EU Taxonomy |
|---|---|---|---|
| 2024 | Phase 1 reporting year | First ESRS-based reports prepared | Taxonomy KPIs included in ESRS reports |
| 2025 | Phase 1 reports published; Phase 2 reporting year | Full ESRS application | Climate + environmental objectives fully applicable |
| 2026 | Phase 2 reports published; Phase 3 reporting year | Potential ESRS amendments | Possible Taxonomy expansion to new sectors |
| 2028 | Move to reasonable assurance | Sector-specific standards expected | Ongoing criteria updates |
Building an integrated compliance approach
The most efficient approach treats these three frameworks as a single compliance programme:
- One materiality assessment that satisfies ESRS requirements and identifies Taxonomy-relevant activities
- One data collection infrastructure that captures both ESRS datapoints and Taxonomy KPI inputs
- One reporting workflow that produces the management report in ESRS structure with embedded Taxonomy disclosures and XBRL tagging
- One assurance engagement covering the entire sustainability report including Taxonomy assertions
Companies that build separate workstreams for CSRD, ESRS, and EU Taxonomy create unnecessary duplication, inconsistency, and cost.
How Dcycle integrates all three frameworks
Dcycle’s compliance platform is designed around this integrated approach:
- Double materiality assessment with built-in ESRS topic mapping
- Automated data collection (200+ integrations) feeding both ESRS disclosures and Taxonomy KPIs
- EU Taxonomy assessment module integrated into the E1 reporting workflow
- XBRL-ready output with correct taxonomy tags for all disclosures
- Expert advisory covering CSRD obligations, ESRS interpretation, and Taxonomy technical criteria
- Single platform for the entire compliance lifecycle , no separate tools for each framework
Request a demo to see how Dcycle handles CSRD, ESRS, and EU Taxonomy compliance in one integrated workflow.
