The Corporate Sustainability Reporting Directive, explained
The CSRD is the European Union’s most ambitious sustainability disclosure regulation to date. Adopted in January 2023, it fundamentally changes how companies report on environmental, social, and governance (ESG) topics.
Unlike its predecessor , the Non-Financial Reporting Directive (NFRD) , the CSRD introduces standardised reporting through the European Sustainability Reporting Standards (ESRS), mandatory third-party assurance, and digital tagging in XBRL format.
Who needs to report?
The CSRD applies in phases:
- 2025 (FY2024 data): Large public-interest entities already subject to NFRD (500+ employees)
- 2026 (FY2025 data): All large EU companies (250+ employees or €40M+ revenue or €20M+ total assets)
- 2027 (FY2026 data): Listed SMEs, small credit institutions, and captive insurance undertakings
- 2028 (FY2027 data): Non-EU companies with €150M+ EU revenue
In total, more than 50,000 companies across Europe will need to comply.
What does CSRD require?
The directive mandates reporting across three pillars:
- Environmental: Climate change, pollution, water, biodiversity, circular economy
- Social: Own workforce, workers in the value chain, affected communities, consumers
- Governance: Business conduct, including anti-corruption and lobbying
Each pillar is broken down into specific ESRS standards with over 1,100 individual datapoints.
The double materiality assessment
Before you report, you must conduct a double materiality assessment , a structured process to determine which ESRS topics are relevant to your company. This considers both:
- Impact materiality: How your operations affect people and the environment
- Financial materiality: How sustainability risks and opportunities affect your financial performance
Only material topics need to be reported on, which means the assessment directly determines the scope of your report.
How to prepare
- Start your double materiality assessment early , it typically takes 6–8 weeks and requires stakeholder input
- Map your existing data , most companies already have 60–70% of what they need, scattered across departments
- Centralise data collection , tools like Dcycle let you collect each data point once and map it to every framework
- Plan for XBRL , your final report must be digitally tagged, so choose tools that support this format
- Engage your auditors early , limited assurance is required from day one
Ready to start your CSRD journey? Request a demo to see how Dcycle simplifies every step.
