The Corporate Sustainability Reporting Directive (CSRD) is an EU directive that ushers in a new era of sustainability reporting. It significantly expands the reporting obligations previously regulated by the Non-Financial Reporting Directive (NFRD) and aims to establish sustainability as an integral part of corporate strategies.
Who is affected by the CSRD?
The CSRD applies to around 50,000 companies in Europe – five times more than the NFRD. It applies to large companies, capital market-oriented companies, SMEs and selected non-European companies operating in Europe. This makes it a key regulatory requirement for many sectors.
What does the CSRD cover?
Companies must prepare reports in accordance with the European Sustainability Reporting Standards (ESRS), which comprise 12 standards:
Overarching Standards (ESRS 1 and 2): Focus on due diligence, strategy and value chain.
Topic-specific standards: Address environmental, social and governance issues.
Key components of the CSRD
- Double materiality: companies must assess and disclose both their impact on the environment and society (inside-out approach) and sustainability-related risks to their business (outside-in approach).
- Digitization: Reports must be available in machine-readable XHTML format.
- Integrated reporting: Sustainability data is part of the management report.
- External assurance: Sustainability reports must be confirmed by independent auditors.
What are the requirements for companies?
The directive requires comprehensive transparency on greenhouse gas emissions, strategies for reducing emissions and the integration of sustainability into business models. A central component is the creation of a Corporate Carbon Footprint (CCF), which takes into account all emissions along the value chain.
Why is the CSRD important?
The CSRD strengthens stakeholder confidence and creates a comparable basis for sustainable investments. It is an integral part of CSR and ensures that sustainability reporting is not just a voluntary practice, but a legally regulated standard.