The Corporate Sustainability Reporting Directive (CSRD) is a European directive requiring companies to report in more detail and with greater transparency on their sustainability performance and impact.

Adopted by the EU in November 2022, the CSRD replaces the previous Non-Financial Reporting Directive (NFRD). This new directive broadens its scope to more companies, imposes stricter reporting requirements, and introduces standardised reporting frameworks such as the European Sustainability Reporting Standards (ESRS).

The CSRD (Corporate Sustainability Reporting Directive) replaces the NFRD (Non-Financial Reporting Directive), significantly expanding the reporting requirements set by the previous legislation.

Starting from the 2025 financial year, the CSRD will apply to companies already under the NFRD, such as large listed companies and public interest organisations (banks and insurers).

From the 2026 financial year, the CSRD will also apply to companies meeting 2 of the following 3 criteria:
‍
-More than 250 employees
-A turnover exceeding €50 million
-A balance sheet of over €25 million

By 2027, it is expected that the CSRD will apply to listed SMEs, and from 2028, also to all EU companies with more than 10 employees, including non-EU companies with a turnover exceeding €150 million.

Smaller companies will be indirectly involved as stakeholders of larger organisations (who need to comply) in sharing sustainability information, such as your carbon footprint.

From 1 January 2026, the CSRD applies to listed SMEs. A lighter or voluntary version of the CSRD may be introduced for smaller SMEs in the future. The CSRD also provides SMEs with a good framework to structure and make ESG and sustainability transparent within their organisation.

A key aspect of the CSRD is the principle of 'double materiality'. This requires organisations to report on the impact of their business activities on people and the environment. For example, the impact on biodiversity loss or human rights violations in the supply chain.

In addition, organisations must report on the financial risks associated with ESG-related issues. These could include financial risks arising from resource scarcity, extreme weather events, and transition risks.

Under the CSRD, organisations must map and report on all impacts, risks, and opportunities (IRO) related to ESG: Environment, Social, and Governance.

Specifically, this may include topics such as environmental protection, carbon emissions, human rights practices in supply chains, anti-corruption, diversity within the organisation (e.g. gender, age), circularity KPIs, biodiversity impact, water use and pollution, and much more.

In total, there are over 1,000 data points, policies, documents, and KPIs that may need to be reported. In the first phase of our collaboration, however, we narrow this down to the topics that are relevant to your organisation and supply chain.

The time it takes to comply with all requirements depends on the size and complexity of your organisation. For a relatively straightforward, average-sized Dutch company, the process can be completed within 9 months.

A rough timeline is as follows:
‍
-Preparation and planning (1-3 months)
-Double materiality analysis and gap analysis (3-6 months)
-Developing an action plan (3-6 months)
-Implementation and reporting (3-12 months)

This depends on your organisation. In some cases, you may find all the data within your organisation. In other cases, you may need to request it from your suppliers (for raw materials or semi-finished products).

We will provide you with a tailor-made datasheet to collect all the necessary data efficiently.

The CSRD will eventually be mandatory for all organisations. Failure to meet the reporting requirements could lead to legal actions, fines, sanctions, and reputational risks or negative reactions from investors, customers, and other stakeholders.