Corporate Sustainability Reporting Directive (CSRD) Scope Considerations

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November 13, 2024

CSRD Scope Considerations

Last Updated: May 2025

The Corporate Sustainability Reporting Directive (CSRD) introduces rigorous and standardized ESG disclosure obligations for companies operating in or interacting significantly with the EU. Following the 2025 Omnibus Simplification Package, the scope and application thresholds have been refined to reduce administrative burdens while ensuring transparency.

🔍 1. Scope of Applicability (Post-2025)

Companies required to report under the CSRD now include:

  • EU Large Companies:
    Must meet at least two of the following:
    • More than 1,000 employees (raised from 250 in 2025)
    • Net turnover over €50 million
    • Total assets exceeding €25 million
  • Listed Companies:
    All companies listed on EU-regulated markets, except micro-enterprises (fewer than 10 employees and < €700,000 turnover).
  • Non-EU Companies:
    Non-EU companies are subject if they:
    • Generate over €150 million in net turnover within the EU, and
    • Operate at least one EU branch or subsidiary.
  • SMEs:
    Listed SMEs will be required to report starting in FY2028 under a simplified ESRS, with the VSME standardavailable for voluntary use.

🕒 2. Reporting Timeline (Updated)

Company TypeReporting YearReport DueLarge public-interest entities (ex-NFRD)FY20242025Other large companies (Wave 2)FY2025 → FY20282029Listed SMEsFY2026 → FY20282029Non-EU companies with EU operationsFY20282029

Note: Deadlines postponed by 2–3 years in the 2025 simplification package.

📊 3. European Sustainability Reporting Standards (ESRS)

Disclosures must align with the ESRS, organized into:

  • E (Environmental): Climate, pollution, biodiversity, water
  • S (Social): Employees, human rights, supply chains
  • G (Governance): Ethics, risk management, board diversity

The ESRS requires a combination of:

  • Quantitative KPIs
  • Qualitative narratives
  • Forward-looking risk and opportunity disclosure

⚖️ 4. Double Materiality Principle

The CSRD mandates double materiality assessments, considering:

  • Impact materiality: How the company affects society and the environment
  • Financial materiality: How ESG factors impact the company’s bottom line

Both perspectives are required for compliant reporting.

✅ 5. Audit and Assurance

  • Companies must obtain limited assurance for sustainability disclosures.
  • The move to reasonable assurance has been shelved as of 2025.
  • Internal systems must support traceable, verifiable data flows.

💻 6. Digital Reporting Format

All reports must be:

  • Prepared in XHTML,
  • Tagged using the ESEF taxonomy,
  • Machine-readable to enable automatic analysis by regulators and investors.

🌍 7. Non-EU Company Considerations

Non-EU multinationals with EU turnover over €150M must:

  • Include EU subsidiaries in a consolidated CSRD-compliant report
  • Align other frameworks (GRI, TCFD, ISSB) with ESRS
  • Harmonize global ESG reporting for transparency across jurisdictions

🧩 8. Compliance Readiness Checklist

To prepare for CSRD compliance:

  • ✔️ Conduct a double materiality assessment
  • ✔️ Build or update sustainability data systems
  • ✔️ Map current disclosures to ESRS requirements
  • ✔️ Engage with auditors and build assurance readiness
  • ✔️ Train teams on ESG governance, risk, and stakeholder engagement

🚀 Next Steps

Determine your CSRD applicability and reporting year.
If in scope, prioritize materiality mapping, data architecture, and auditor engagement now. Early action will smooth your compliance path and enhance stakeholder trust.

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Official EU portal for CSRD disclosure scope and implementation guidance

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