The Corporate Sustainability Reporting Directive (CSRD), Directive (EU) 2022/2464, modernises and broadens the EU's rules on corporate sustainability disclosure. It replaces the earlier Non-Financial Reporting Directive (NFRD) and requires in-scope companies to report environmental, social and governance (ESG) information against mandatory European Sustainability Reporting Standards (ESRS), with that information subject to external assurance.
Current status (mid-2026): the CSRD has been heavily reshaped by the EU's "Omnibus I" simplification reform. A "stop-the-clock" directive in April 2025 first postponed reporting deadlines, and the final Omnibus I Directive (EU) 2026/470 was published on 26 February 2026. It sharply narrows who must report (to companies with more than 1,000 employees and over EUR 450 million net turnover), shifts the first reporting year under the new scope to financial year 2027, keeps assurance at the "limited" level only, and provides relief for the original first-wave reporters. Member States must transpose most provisions by 19 March 2027. Because national implementation and revised ESRS are still being finalised, companies should confirm details against the latest official EU sources.
What is the CSRD and what does it require?
The CSRD requires in-scope companies to publish detailed, standardised sustainability information as part of their management report. Key features:
- Mandatory standards: reporting must follow the European Sustainability Reporting Standards (ESRS), developed by EFRAG and adopted by the European Commission.
- Double materiality: companies report both how sustainability matters affect the business (financial materiality) and how the business affects people and the environment (impact materiality).
- Assurance: sustainability information must be independently assured (currently at the limited assurance level).
- Digital tagging: reports must be prepared in a digital, machine-readable format.
The CSRD itself amends the EU Accounting Directive (2013/34/EU), the Transparency Directive, the Audit Directive and the Audit Regulation.
Who is in scope?
Scope was significantly narrowed by the Omnibus I Directive (EU) 2026/470.
Scope under the amended CSRD: the obligation applies to companies meeting both of the following:
- more than 1,000 employees, and
- net turnover above EUR 450 million.
This applies to large EU companies and qualifying EU subsidiaries/branches of non-EU groups (non-EU groups are caught where EU turnover exceeds EUR 450 million, with a branch/subsidiary threshold of EUR 200 million).
Original (pre-Omnibus) scope was far broader — covering large companies (over 250 employees / above size thresholds), all listed companies including listed SMEs, and large non-EU undertakings — and was expected to capture roughly 50,000 companies. The narrowed scope removes many of these, including most listed SMEs, from mandatory reporting. Companies below the threshold may report voluntarily.
What is the reporting timeline?
The original CSRD set a phased "wave" timeline. Most of it has been superseded by the 2025 "stop-the-clock" directive and the 2026 Omnibus I reform.
Original phased timeline (now largely overtaken):
- FY2024 (report 2025): large public-interest entities already under the NFRD (first wave).
- FY2025: other large companies.
- FY2026: listed SMEs (with opt-out).
- FY2028: in-scope non-EU undertakings.
Current position after Omnibus I:
- The first wave already started reporting on FY2024 in 2025, but in-scope-narrowing means many first-wave companies that fall below the new thresholds receive a transition exemption for FY2025 and FY2026.
- Companies that meet the new thresholds report from financial year 2027 (reports published in 2028), under revised ESRS.
Always verify the exact date applicable to a given entity, as national transposition (deadline 19 March 2027) determines local effect.
What is double materiality?
Double materiality is the CSRD's core assessment principle and the filter that determines which topics a company must disclose. It has two complementary dimensions:
- Impact materiality ("inside-out"): the actual or potential impacts — positive or negative — of the company's own operations and value chain on people and the environment.
- Financial materiality ("outside-in"): sustainability matters that pose risks or opportunities affecting the company's financial position, performance, cash flows or access to finance over the short, medium and long term.
A matter is reportable if it is material under either lens. The methodology is set out in ESRS 1 (General requirements). The 2025–2026 ESRS simplification streamlines the assessment but retains double materiality as a defining feature distinguishing CSRD from investor-focused frameworks.
What are the ESRS and how are they changing?
The European Sustainability Reporting Standards (ESRS) define the specific disclosures CSRD reporters must make. The first set was adopted by the Commission in July 2023 (published in the Official Journal December 2023).
Structure of the first set:
- 2 cross-cutting standards: ESRS 1 (General requirements) and ESRS 2 (General disclosures).
- 10 topical standards: 5 environmental (climate, pollution, water/marine, biodiversity, resource use/circular economy), 4 social, and 1 governance (business conduct).
Simplification under way: EFRAG delivered technical advice on simplified ESRS to the Commission in December 2025, reducing the number of mandatory data points substantially and adding flexibility. The Commission is expected to adopt revised ESRS via a delegated act, with the revised standards applying from FY2027. Plans for sector-specific ESRS have been scaled back.
What assurance is required?
Sustainability information reported under the CSRD must be subject to external assurance. The directive originally envisaged a phased move from limited assurance toward potentially reasonable assurance (a higher level closer to a financial-statement audit).
The Omnibus I reform removed the planned escalation to reasonable assurance: only limited assurance is retained. Limited assurance provides a lower, negative-form conclusion (the assurer states nothing came to its attention indicating material misstatement) rather than the positive opinion of reasonable assurance. The Commission is expected to issue assurance guidance to support consistent application.
How does the CSRD relate to the NFRD?
The CSRD replaces and significantly expands the Non-Financial Reporting Directive (NFRD) (Directive 2014/95/EU), which applied to roughly 11,000–12,000 large public-interest entities.
Key differences from the NFRD:
- Mandatory standards (ESRS) rather than the NFRD's flexible "report or explain" approach.
- Mandatory assurance of the reported information.
- Double materiality made explicit.
- Digital tagging for machine-readability.
Note that the CSRD's once-large expansion of coverage has been substantially curtailed by the 2026 Omnibus reform; the population of mandatory reporters is now much smaller than originally projected. The CSRD also interacts with related EU instruments such as the EU Taxonomy Regulation and the Corporate Sustainability Due Diligence Directive (CSDDD).
Frequently asked questions
Is the CSRD still in force after the 2025–2026 Omnibus changes?
Yes. The CSRD remains EU law. It has not been repealed — it has been amended to simplify and narrow it. The "stop-the-clock" directive (April 2025) delayed deadlines, and the final Omnibus I Directive (EU) 2026/470 (published 26 February 2026) narrowed scope, deferred reporting and limited assurance to the "limited" level. Member States must transpose most changes by 19 March 2027.
Who has to report under the CSRD now?
Under the amended scope, mandatory reporting applies to companies with more than 1,000 employees and net turnover above EUR 450 million (with equivalent EU-turnover thresholds for non-EU groups). Many companies covered under the original broader scope — including most listed SMEs — are no longer required to report and may instead report voluntarily.
When does reporting start under the new rules?
First-wave companies began reporting on financial year 2024 in 2025, but those falling below the new thresholds get a transition exemption for FY2025–FY2026. Companies meeting the new thresholds report from financial year 2027 (reports published in 2028), using the revised ESRS. Exact timing depends on national transposition.
What is double materiality in one sentence?
It is the requirement to report a sustainability matter if it is material either because of the company's impact on people and the environment (impact materiality) or because it affects the company's financial position (financial materiality).
What level of assurance is required?
Limited assurance. The Omnibus reform removed the previously planned move to reasonable assurance, so reported sustainability information must be subject to limited (not reasonable) assurance.
Does the CSRD replace the NFRD?
Yes. The CSRD repeals and replaces the Non-Financial Reporting Directive, introducing mandatory ESRS standards, mandatory assurance, explicit double materiality and digital tagging — a materially more rigorous regime, though now narrowed in scope by the 2026 Omnibus reform.