Corporate ‎Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) has replaced the Non-Financial Reporting Directive (NFRD) in January 2024. Previously, the requirements for the information to be reported as well as the scope of companies that are obliged to report on sustainability-related matters were defined by the NFRD. Both aspects will be greatly expanded with the introduction of the CSRD.

The NFRD was introduced in response to the increasing demand from stakeholders for reliable sustainability reporting at EU level. The directive obliges companies to report on environmental, social and governance issues, such as anti-corruption and measures to respect human rights. With the introduction of the NFRD financial and non-financial reporting is put on the same level for the first time in history.

The Non-Financial Reporting Directive applies to large capital market companies with more than 500 employees (including subsidiaries) as well as insurance companies and banks. This scope included approximately 12,000 companies across the EU. The introduction of the CSRD will expand the scope of companies subject to report to an estimated 50,000 companies.

Reporting obligations according to CSRD

From the reporting year 2024 onwards the implementation of the CSRD will be mandatory for companies already subject to the NFRD. Large companies are required to report in 2025. Companies are classified as large if they fulfil two of the three criteria set out in § 267 (3) HGB:

• More than 250 employees on an annual average,
• More than 25 million euros in total assets or
• More than 50 million euros in turnover.

These thresholds will gradually be adjusted. From the reporting year 2026 onwards, the scope will be expanded to include listed SMEs. Companies based outside the EU but operating in the EU will have to report according to the CSRD by 2028.

The EU has introduced the European Sustainability Reporting Standards (ESRS) to complement the CSRD. As harmonized European standards for sustainability reporting they form the basis for comparable sustainability reporting at EU level. You can read more about the ESRS here.