What the Corporate Sustainability Reporting Directive (CSRD) means for your organisation
This guide will answer your questions about the EU’s new sustainability reporting directive, the CSRD, which came into effect in 2025. It will explain how and when your organisation will need to comply with the CSRD and what you will need to report, whether you are based inside or outside the EU.
What is the CSRD?
CSRD stands for Corporate Sustainability Reporting Directive. It has been introduced by the European Union as a means to require organisations to disclose reports on their environmental, social and governance (ESG) factors, and how these can impact the business’s financial performance – but it should also help sustainable projects to win more investment. Aligning with the CSRD is compulsory for many companies in and outside of the EU, but it can be of direct benefit too.
Who needs to comply with the CSRD, and when?
Most companies will need to comply at some point – the CSRD will apply to almost all industries – but exactly when depends on a variety of factors, including the size of your organisation.
The first phase is already underway, but will only apply to large organisations (undertakings) that are also public interest entities (PIEs) with more than €25 million in total assets or more than €50 million in net revenues and with at least 500 employees. Non-EU organisations with financial securities listed on EU-regulated markets that fit this criteria are also included in this phase. These businesses must start reporting in line with CSRD in 2025 for the 2024 financial year.
In 2026, as part of phase 2, any other company that is not a PIE, but suits the remaining criteria above or has more than 250 employees, must start reporting for the 2025 financial year.
Phase 3 then applies to smaller companies but along the same lines. Listed EU SMEs and non-EU SMEs with financial securities listed on EU-regulated markets must start reporting in 2027 for the financial year 2026. These organisations will have an option to delay until 2029.
You can see a diagram with each of the CSRD phases on this explainer from EcoOnline.
Alternatively, you can use a scoping tool from Pinsent Masons to determine whether your organisation will be required to comply.
Most companies will need to comply with the CSRD at some point – but exactly when depends on a variety of factors, including the size of your organisation.
Will the CSRD apply in the UK?
Yes – in total around 10,000 non-EU companies are likely to be impacted by the CSRD. However, there are a number of factors that determine when it will apply to your business. As above, any large UK company or SME with financial securities on EU-regulated markets will be required to begin reporting by 2029 at the latest. Reporting will also become compulsory in 2029 for all non-EU companies with over €150 million in turnover in the EU for two financial years or more, who also have at least:
- One EU subsidiary that satisfies the criteria for a large undertaking as above
• One EU SME subsidiary with financial securities on an EU-regulated market, or
• A branch in the EU generating at least €40 million in net turnover.
Any large UK company or SME with financial securities on EU-regulated markets will be required to begin reporting by 2029 at the latest.
What do you need to report under CSRD rules?
On a more general level, you will be required to provide annual reports, based on the EU’s general sustainability reporting standards. The European Sustainability Reporting Standards (ESRS) ultimately decide what companies will need to disclose. The standards are covered in more detail in the Commission Delegation Regulation.
The ESRS comprises 12 standards. Some of these are mandatory, while others are dependent on a double materiality assessment – ‘outside in’ and ‘inside out’ materiality. Outside in materiality concerns only external ESG factors and how they affect an organisation’s performance. Inside out materiality, meanwhile, examines how a business’s own actions impact the environment.
On a more general level, you will be required to provide annual reports, based on the EU’s general sustainability reporting standards. The European Sustainability Reporting Standards ultimately decides what companies will need to disclose.
Get prepared for Scope 3 emissions reporting – how Mobilityways can help
Mobilityways is on a mission to make zero carbon commuting a reality. We support employers to meet their net-zero goals with our suite of climate tech tools. These tools enable organisations to measure, reduce and report their Scope 3 commuter emissions, providing full visibility of commuting challenges and identifying sustainable travel alternatives for employees.
Commuting emissions account for a sizeable chunk of Scope 3 emissions, and Mobilityways helps you to measure and report your commuter emissions with ease – while reducing them too.
Full visibility and reporting of your commuting emissions under the CSRD will strengthen your sustainability credentials and could help you win more investment. Book a free demo below to find out more.
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