The Corporate Sustainability Reporting Directive (CSRD) is an EU directive that obliges numerous companies to provide more detailed sustainability reporting.
The reporting includes the ESG issues – environment, society and corporate governance – and follows the mandatory European Sustainability Reporting Standards (ESRS). In addition, the data must be integrated into the management report.
A central element is the double Materiality Assessment, as it takes into account both the company’s impact on the environment and society and, conversely, the financial opportunities and risks arising from sustainability issues.
The CSRD aims to create more transparency and promote sustainable business in the EU to promote. For companies, it is both a regulatory challenge and an opportunity to specifically integrate sustainable strategies.
Helpful tools for your CSRD reporting
CSRD knowledge
1. What is the Corporate Sustainability Reporting Directive (CSRD)?
The Corporate Sustainability Reporting Directive (CSRD) is a European directive and part of the European Green Deal, which requires companies to report comprehensively on their sustainability strategy and measures. It replaces the previous Non-Financial Reporting Directive (NFRD) and significantly expands its requirements. The CSRD was introduced to create more transparency about environmental, social and governance aspects (ESG) and thus promote sustainable business models.
Objectives of the directive
The CSRD pursues several central objectives that aim to make sustainability reporting in the EU clearer, more uniform and more effective:
- Increasing transparency: Companies must disclose their sustainability measures in more detail and comprehensibly so that investors, consumers and other stakeholders can make informed decisions.
- Introduction of uniform reporting standards: With the ESRS standards, the EU is creating a binding basis to make sustainability reporting harmonized and comparable.
- Promoting sustainable business models: The mandatory reporting is intended to motivate companies to take their ecological and social responsibility more actively and to develop sustainable strategies in the long term.
- Improving comparability: Uniform and standardized reporting formats make it easier for stakeholders, such as banks, investors and consumers, to directly evaluate sustainability data and specifically compare companies based on their ESG performance.
Through these measures, the CSRD is intended not only to increase the quality of sustainability reporting, but also to support companies in positioning themselves in a future-oriented and sustainable manner.
2. Which companies are affected by the CSRD?
The CSRD affects around 50,000 companies in the EU that have to prepare a sustainability report, including around 15,000 companies in Germany.
Affected companies and criteria
The reporting obligation applies to:
- Large companies that meet at least two of the following three criteria:
- Balance sheet total: over €25 million
- Net sales revenue: over €50 million
- More than 250 employees
- Capital market-oriented SMEs from 2026 (with the possibility of postponement until 2028).
Timetable for implementation
The EU directive will come into force in stages:
- From 2024: Large, capital market-oriented companies with more than 500 employees.
- From 2025: All other large companies.
- From 2026: Listed SMEs (with a transitional period until 2028).
Important new feature: Omnibus package to simplify sustainability reporting
In November 2024, the European Commission announced the introduction of an omnibus package in the Budapest Declaration. This CSRD Omnibus Proposal was published on February 26, 2025, and aims to better align the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy, to simplify reporting obligations for companies and reduce bureaucratic hurdles.
It was also proposed to adjust the implementation deadlines and the thresholds that determine which companies are even subject to reporting requirements.
According to the Omnibus proposal, only the following companies would have to report:
- From 2024: Large, capital market-oriented companies with more than 500 employees that are already affected by the NFRD.
- From 2027: All companies with more than 1,000 employees AND either have a balance sheet total of at least €25 million OR generate a turnover of over €50 million.
3. What reporting obligations arise from the CSRD?
The CSRD requires detailed sustainability disclosures, which are made in accordance with the ESRS (European Sustainability Reporting Standards).
Required content of sustainability reporting
Which aspects and specific data points a company actually has to report on is determined by the result of the double Materiality Assessment. In general, the following information is required:
- Business model & strategy: Companies must define their sustainability goals and regularly report on their progress so that developments can be tracked transparently.
- Environment (E): This includes information on climate change, the company’s environmental footprint and information on pollution, water, biodiversity and the circular economy, which makes ecological impacts measurable.
- Society (S): Companies must disclose data on how they deal with their workers both internally and in the value chain. This includes working conditions, equal opportunities and the protection of affected communities, consumers and end users to ensure social responsibility.
- Governance (G): Information on the corporate culture, including lobbying activities, corruption and bribery, must be recorded in detail to ensure responsible corporate governance.
- Value chain: In addition to the internal company processes, the upstream and downstream activities along the entire value chain must also be taken into account so that all relevant sustainability aspects are comprehensively represented.
- Stakeholders: The perspectives of interest groups must be actively incorporated into the identification and assessment of material issues. Therefore, the disclosure of these assessments in the sustainability report is a central component of the reporting.
Double materiality
The CSRD enshrines the approach of double materiality, which means that companies have to consider two different perspectives:
- Financial materiality: How do sustainability aspects (risks and opportunities) affect the company?
- Impact materiality: What (positive and negative) impacts does the company have on the environment and society?
We have created a practical four-step guide to creating the double Materiality Assessment according to CSRD.
Integration into the management report
Sustainability information must be mandatorily integrated into the management report so that it is treated as equivalent to financial information. In addition, this information, just like the financial information, is subject to an external audit requirement, which is intended to ensure its accuracy, comparability and reliability.
Relationship between the European Sustainability Reporting Standards (ESRS) and the CSRD
The European Sustainability Reporting Standards (ESRS) are detailed EU-wide uniform reporting standards developed by the European Financial Reporting Advisory Group (EFRAG).
They define how companies must disclose their sustainability information and include, among other things:
- ESRS 1 & 2 (general requirements)
- ESRS E1-E5 (Environment)
- ESRS S1-S4 (Social)
- ESRS G1 (Governance)
Requirements for the audit of reports
- Independent audit: Sustainability reports must be checked by external, independent auditors to ensure that the disclosed information is correct, comprehensible and comparable.
- Limited Assurance: The audit must be carried out at least at the level of “Limited Assurance”, which means that the auditors carry out a limited review of the sustainability data provided and assess its plausibility.
- Reasonable Assurance: In the long term, an extended audit obligation at the level of “Reasonable Assurance” is planned. This would include a detailed and in-depth review of the sustainability information, similar to the audit of financial reports, in order to ensure even greater reliability.
Transparency and public accessibility
- Publication in the European Single Access Point (ESAP): Companies are obliged to publish their sustainability reports centrally in the ESAP. This is intended to create uniform and transparent access to ESG data within the EU so that investors, authorities and other stakeholders can easily view and compare them.
- Digital accessibility & machine readability: Sustainability information must be digitally available and machine-readable in accordance with the XBRL taxonomy. This facilitates the automated processing, analysis and comparability of the reports, especially for financial institutions and supervisory authorities that need to efficiently evaluate large amounts of sustainability data.
4. What challenges and opportunities does the CSRD bring for companies?
Potential challenges
- Increased administrative burden: Companies need to revise their internal processes and create new structures to implement sustainability reporting efficiently. This particularly affects data collection, analysis and reporting, which requires additional personnel and technical resources.
- Extended data requirements: The collection, validation and preparation of ESG data is not only becoming more complex, but also more extensive, as companies have to provide detailed information on environmental, social and governance aspects. In addition, they must ensure that the data collected is comprehensible, reliable and consistent in order to withstand the requirements of the audit.
- Rising external audit costs: As sustainability reports are subject to a mandatory external audit, the costs for auditing services are rising. Depending on the scope and complexity of the reporting, this can lead to significantly higher financial burdens, especially if the audit obligation is extended from “Limited Assurance” to “Reasonable Assurance”.
Opportunities through improved sustainability practices
- Better access to capital markets: Investors are increasingly focusing on sustainable business models and prefer companies that pursue a clear ESG strategy. Therefore, transparent and compliant sustainability reporting can facilitate access to capital markets and at the same time increase attractiveness for sustainability-oriented investors.
- Competitive advantages: Companies with good ESG performance are becoming more attractive not only to investors, but also to customers, business partners and talents. Demonstrably responsible and sustainable corporate governance can strengthen the brand image, open up new business opportunities and improve customer loyalty in the long term.
- Risk management: By integrating sustainability strategies, companies can better identify, assess and minimize long-term risks. This particularly affects climate-related, regulatory and social risks that can affect business operations. An early adaptation to sustainable requirements helps to avoid future costs, penalties or reputational damage.
5. Where can I find further support for the implementation of the CSRD?
Assistance and guidelines for implementation
There are numerous guidelines and tools to support companies in implementing the CSRD:
- EU Commission: Official CSRD and ESRS requirements.
- EFRAG: Offers numerous implementation guides.
- DNK: The German Sustainability Code offers partly free support services.
- Industry associations & Chambers of Industry and Commerce: Webinars, checklists & information events.
- Sustainability report template for SMEs (ESRS VSME) incl. VSME data point list
- Excel template for carrying out the Materiality Assessment & matrix
- CSRD Compass Newsletter: Get practical implementation tips every 2 weeks.
Further reading and links
Smart tools for your CSRD reporting!
6. Frequently Asked Questions (FAQ)
1. What is the Corporate Sustainability Reporting Directive (CSRD)?
The CSRD is a European directive that obliges companies to report on their sustainability strategy, environmental, social, and governance (ESG) aspects. It replaces the Non-Financial Reporting Directive (NFRD) and establishes extended reporting obligations.
2. When does the CSRD apply?
Implementation will be staggered:
- From 2024: Large listed companies (>500 employees).
- From 2025: All other large companies.
- From 2026: Listed SMEs (with a possible deferral until 2028)
Important new feature: Omnibus package to simplify sustainability reporting
In November 2024, the European Commission announced the introduction of an omnibus package in the Budapest Declaration. This CSRD Omnibus Proposal was published on February 26, 2025, and aims to better align the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy, to simplify reporting obligations for companies and reduce bureaucratic hurdles.
It was also proposed to adjust the implementation deadlines and the thresholds that determine which companies are even subject to reporting requirements.
According to the Omnibus proposal, only the following companies would have to report:
- From 2024: Large, capital market-oriented companies with more than 500 employees that are already affected by the NFRD.
- From 2027: All companies with more than 1,000 employees AND either have a balance sheet total of at least €25 million OR generate a turnover of over €50 million.
3. Which companies must report under the CSRD?
The CSRD affects:
- All listed companies (excluding micro-enterprises).
- Large companies that meet two of the three criteria:
- Balance sheet total over €25 million
- Turnover over €50 million
- More than 250 employees
4. What is the double materiality approach?
The CSRD requires reporting from two perspectives:
- Financial materiality → How do sustainability issues affect the company?
- Impact materiality → How does the company affect the environment & society?
5. What information must companies disclose in their reports?
Companies must report on the following aspects:
- Business model & strategy in relation to sustainability.
- Governance structure and responsibility for ESG.
- Environmental impacts (e.g., CO₂ emissions, energy consumption).
- Social aspects (e.g., employee rights, diversity).
- Sustainability risks & opportunities for the company.
6. Which standards must be used for reporting?
Reporting must be carried out in accordance with the European Sustainability Reporting Standards (ESRS), developed by the European Financial Reporting Advisory Group (EFRAG).
7. Where must the sustainability reports be published?
The CSRD requires that sustainability reports be integrated into the management report and made publicly available via the European Single Access Point (ESAP).
8. Is there a requirement for an external audit?
Yes, sustainability reports must be externally audited. Initially, “limited assurance” (restricted audit) is sufficient, but in the long term, “reasonable assurance” (full audit) is to be introduced.
9. What penalties apply for non-compliance with the CSRD?
Companies that fail to meet the reporting obligations must expect fines or sanctions imposed by the respective national authorities.
10. What are the benefits of the CSRD for companies?
- Increased transparency towards investors & stakeholders.
- Competitive advantages through sustainable corporate governance.
- Better access to financing, as ESG factors are becoming increasingly important for investors.
- Optimization of internal processes through structured ESG strategies.
11. Is there support for companies in implementing the CSRD?
Yes, there are numerous guidelines & consulting options, including:
- Official EU guidelines & ESRS standards: The European Commission and EFRAG provide detailed specifications to correctly implement the CSRD requirements.
- Industry associations & Chambers of Commerce: Many Chambers of Industry and Commerce as well as professional associations offer webinars, checklists, and practical guides to specifically support companies in their implementation.
- CSR Tools Solutions: Digital tools for automated sustainability reporting that help companies to efficiently collect and manage ESG data and create CSRD-compliant reports.
