Last Updated: May 2025
The Corporate Sustainability Reporting Directive (CSRD), which entered into force on 5 January 2023, modernizes EU sustainability disclosure obligations and aligns them with global best practices.
1. Scope Reduction
Companies must now have more than 1,000 employees and meet at least one of the following:
This update reduces the number of companies in scope by approximately 80%.
2. Deferred Deadlines
Wave 2 & 3 companies, including listed SMEs and non-EU firms with significant EU operations, now begin reporting in FY2028 (for reports published in 2029).
3. Voluntary SME Reporting (VSME)
SMEs not in scope may report using a simplified voluntary standard developed by EFRAG. This shields them from excessive information requests from large value chain partners.
4. Simplified ESRS Standards
The EU will no longer adopt sector-specific reporting standards. The general cross-cutting ESRS has been simplified and clarified.
5. Taxonomy Reporting Made Voluntary
Companies with <€450 million turnover may opt in to voluntary and partial EU Taxonomy alignment reporting.
6. Limited Assurance Requirement Maintained
The proposed shift toward “reasonable assurance” has been removed. Only limited assurance is required for now.
7. Digital Reporting Mandate
CSRD requires use of a digital taxonomy to ensure reports are machine-readable and comparable.
Companies under CSRD must use the European Sustainability Reporting Standards (ESRS) developed by EFRAG. These build upon global initiatives such as the ISSB and GRI, ensuring compatibility and EU-specific alignment.
The CSRD aims to:
The ESG space is changing day by day, creating more uncertainty for decision makers
