CSRD - short and compact

The Corporate Sustainability Reporting Directive (CSRD) is an EU directive that obliges numerous companies to provide more detailed sustainability reporting.

The reporting covers the ESG topics – environment, society and corporate governance – and follows the binding European Sustainability Reporting Standards (ESRS). The data must also be integrated into the management report.

A key element is the dual materiality analysis, 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 more transparency and promote sustainable business practices in the EU to promote. For companies, it is both a regulatory challenge as well as an opportunityto integrate sustainable strategies in a targeted manner.

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 obliges 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 on environmental, social and governance(ESG) aspects and thus promote sustainable business models.

Objectives of the directive

The CSRD pursues several key objectives aimed at making sustainability reporting in the EU clearer, more uniform and more effective:

  • Increasing transparency: Companies must disclose their sustainability measures in more detail and in a more comprehensible manner 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 for making sustainability reporting harmonized and comparable.
  • Promotion of sustainable business models: Mandatory reporting is intended to motivate companies to take their environmental and social responsibility more seriously and develop long-term sustainable strategies.
  • Improving comparability: Uniform and standardized reporting formats make it easier for stakeholders such as banks, investors and consumers to evaluate sustainability data directly and compare companies specifically according to their ESG performance.

Through these measures, the CSRD should not only improve the quality of sustainability reporting, but also help companies to position 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 fulfill at least two of the following three criteria:
    • Balance sheet total: over 25 million euros
    • Net sales: over 50 million euros
    • More than 250 employees
  • Capital market-oriented SMEs from 2026 (with the option to defer until 2028).

Timetable for implementation

The EU directive comes 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 innovation: Omnibus package to simplify sustainability reporting

In November 2024, the European Commission announced the introduction of an omnibus package in the Budapest Declaration. This is intended to better align the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU taxonomy in order to simplify reporting obligations for companies and reduce bureaucratic hurdles.

The implementation deadlines and the thresholds that determine which companies are required to report could also be adjusted again. Further details are expected in the coming months.

3. what reporting obligations arise from the CSRD?

The CSRD requires detailed sustainability disclosures to be made in accordance with the ESRS (European Sustainability Reporting Standards).

Required content of sustainability reporting

Which aspects and specific data points a company must actually report on is determined by the result of the double materiality analysis. The following information is generally 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 balance sheet and information on environmental pollution, water, biodiversity and the circular economy, making ecological impacts measurable.
  • Society (S): Companies must disclose data on the treatment of 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 corporate culture, including lobbying activities, corruption and bribery, must be recorded in detail to ensure responsible corporate governance.
  • Value chain: In addition to internal company processes, upstream and downstream activities along the entire value chain must also be taken into account so that all relevant sustainability aspects are comprehensively mapped.
  • Stakeholders: The perspectives of interest groups must be actively incorporated into the identification and evaluation of material topics. Disclosure of these assessments in the sustainability report is therefore a central component of reporting.

The double materiality

The CSRD anchors the approach of dual materiality approachwhich means that companies must take two different perspectives into account:

  1. Financial materiality: How do sustainability aspects (risks and opportunities) influence the company?
  2. Impact materiality: What (positive and negative) effects does the company have on the environment and society?

We have created a practical four-step guide for preparing the double materiality analysis according to CSRD.

Integration into the management report

Sustainability information must be integrated into the management report so that it is treated in the same way as financial information. In addition, this information, just like the financial information, is subject to an external audit obligationwhich 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)
The CSRD requires companies to prepare their reports in accordance with the ESRS standards in order to ensure comparable and reliable reporting.

Requirements for the audit of reports

  • Independent verification: Sustainability reports must be checked by external, independent auditors to ensure that the information disclosed is correct, comprehensible and comparable.
  • Limited assurance: The audit must be carried out at least at the level of a “limited assurance”, which means that the auditors carry out a limited audit 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 audit of sustainability disclosures, 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 it.
  • 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 reports, especially for financial institutions and supervisory authorities that need to efficiently evaluate large volumes of sustainability data.

4 What challenges and opportunities does CSRD bring for companies?

Potential challenges

  • Increased administrative costs: Companies must revise their internal processes and create new structures in order to implement sustainability reporting efficiently. This applies in particular to 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 must provide detailed information on environmental, social and governance aspects. They must also ensure that the data collected is comprehensible, robust and consistent in order to meet the requirements of the audit.
  • Rising external assurance costs: As sustainability reports are subject to mandatory external assurance, 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 increasingly value sustainable business models and prefer companies that pursue a clear ESG strategy. Transparent and compliant sustainability reporting can therefore facilitate access to capital markets and at the same time increase the attractiveness for sustainability-oriented investors.
  • Competitive advantages: Companies with a good ESG performance become more attractive not only to investors, but also to customers, business partners and talent. 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 applies in particular to climate-related, regulatory and social risks that can have an impact on business operations. Adapting to sustainability requirements at an early stage helps to avoid future costs, penalties or reputational damage.

5 Where is there further support for the implementation of the CSRD?

Assistance and guidelines for implementation

There are numerous guidelines and tools that support companies in implementing CSRD:

Further reading and links

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6. frequently asked questions (FAQ)

The CSRD is a European directive that obliges companies to report on their sustainability strategy and environmental, social and governance (ESG) aspects. It replaces the Non-Financial Reporting Directive (NFRD) and sets out extended reporting obligations.

Implementation is staggered:

  • From 2024: Large capital market-oriented companies (>500 employees).
  • From 2025: All other large companies.
  • From 2026: Capital market-oriented SMEs (with deferral possible until 2028).

The CSRD concerns:

  • All listed companies (except micro-enterprises).
  • Large companies that fulfill two of the three criteria:
    • Balance sheet total over € 25 million
    • Turnover over € 50 million
    • More than 250 employees

The CSRD requires reporting from two perspectives:

  1. Financial materiality → How do sustainability issues influence the company?
  2. Impact materiality → How does the company influence the environment & society?

Companies must report on the following aspects:

  • Business model & strategy in relation to sustainability.
  • Governance structure and responsibility for ESG.
  • Environmental impact (e.g. CO₂ emissions, energy consumption).
  • Social aspects (e.g. employee rights, diversity).
  • Sustainability risks & opportunities for the company.

Reporting must be carried out in accordance with the European Sustainability Reporting Standards (ESRS), which were developed by the European Financial Reporting Advisory Group (EFRAG).

The CSRD requires sustainability reports to be integrated into the management report and made publicly accessible via the European Single Access Point (ESAP).

Yes, sustainability reports must be externally audited. Initially, a “limited assurance” is sufficient, but in the long term a “reasonable assurance” is to be introduced.

Companies that do not fulfill the reporting obligations must expect fines or sanctions that are determined by the respective national authorities.

  • Increased transparency towards investors & stakeholders.
  • Competitive advantages through sustainable corporate management.
  • Better access to financing, as ESG factors are becoming increasingly important for investors.
  • Optimization of internal processes through structured ESG strategies.

Yes, there are numerous guides & advice options, including:

  • Official EU guidelines & ESRS standards: The European Commission and EFRAG provide detailed guidance to correctly implement the CSRD requirements.
  • Industry associations & chambers of industry and commerce: Many chambers of industry and commerce and trade associations offer webinars, checklists and practical guidelines to provide companies with targeted support during implementation.
  • CSR Tools SolutionsDigital tools for automated sustainability reporting that help companies to efficiently collect and manage ESG data and create CSRD-compliant reports.