CSRD reporting: Obligations, deadlines & implementation for companies

Summary: The CSRD at a glance

The Corporate Sustainability Reporting Directive (CSRD) is the central EU framework for comparable and auditable sustainability reporting. In future, certain companies will have to report on environmental, social and governance (ESG) issues in a standardized manner, in accordance with the binding ESRS, integrated into the management report and generally audited externally. The aim is to make sustainability disclosures more robust, easier to compare and more reliable for investors, banks, customers and business partners.

Content is reported along the ESG dimensions, but only on those topics that are classified as relevant in the context of double materiality. Companies must not only present their impact on the environment and society, but also disclose financial risks and opportunities, specific targets, measures and measurable progress.

Prior to possible changes due to the EU Omnibus Initiative, large companies in particular are required to report if they meet at least two of the three thresholds (≥ 250 employees, ≥ € 50 million turnover, ≥ € 25 million balance sheet total). Depending on the classification, listed companies, small credit institutions or captive insurance companies may also be affected, while micro-enterprises are exempt.

The introduction will be staggered: Companies that were already subject to the NFRD will report for the first time for the 2024 financial year (publication in 2025). Other large companies will follow from the 2027 financial year (2028 report), listed SMEs and certain third-country companies from the 2028 financial year (2029 report).

Violations may result in national sanctions such as fines or orders to make improvements. In addition, reputational damage and indirect economic disadvantages can arise, as sustainability data is increasingly being factored into financing and supply chain decisions.

Update (status: February 2026)

The CSRD remains the central framework for comparable and auditable sustainability reporting in Europe, but has recently been adjusted in terms of timing and scope. As a result of the "stop-the-clock" amendment, the start dates for companies in the second and third waves have been postponed by two years. At the same time, the omnibus package is intended to significantly reduce the number of companies subject to reporting requirements (including higher thresholds; listed SMEs are to be removed from the scope). The final design is still in the legislative process.

In terms of content, the ESRS remain the binding basis, supplemented by a "quick fix" to relieve the first rapporteurs. Sector-specific ESRS and standards for third-country companies have been postponed to 2026. For non-reporting companies, the voluntary VSME standard is gaining in importance as a structured way of responding to data requests from value chains. Digital publication is also continuing to develop: ESMA is working on integrating sustainability disclosures into the ESEF regime (tagging/XBRL).

What is the Corporate Sustainability Reporting Directive (CSRD)?

Definition and key features of the CSRD

The Corporate Sustainability Reporting Directive (CSRD) is the central EU framework for comparable and verifiable sustainability reporting. It specifies which companies must systematically report on environmental, social and governance(ESG) issues in future. The focus is no longer on individual formats, but on uniform requirements.

At its core, the CSRD anchors sustainability where it is most relevant for external addressees: in the management report. Sustainability disclosures are therefore no longer a separate communication report, but part of regular corporate reporting. They also have higher requirements in terms of structure, traceability and internal approval processes.

A key feature of the CSRD Directive is the binding reporting framework provided by the European Sustainability Reporting Standards(ESRS). The ESRS define what must be reported and how the information is to be structured. This applies not only to topics and key figures, but also to methods, explanations and the way in which information should be documented. The aim is to achieve a reporting level that is more consistent than before and can be audited externally.

In terms of content, the CSRD Directive follows the principle of dual materiality. On the one hand, companies must describe which sustainability issues can influence their financial situation (risks and opportunities). On the other hand, they must explain what material impacts the company itself has on the environment and society. This creates a more complete picture of relevance - both from the company's perspective and from the perspective of external impact. This is also referred to as "double materiality". Read more about this in our article on double materiality.

Finally, digital publication is also evolving. The direction is clear: in the future, sustainability disclosures should be more digitally readable and therefore easier to compare, for example via tagging approaches in the context of the ESEF Regulation. Overall, the CSRD is also part of the European sustainable finance approach and therefore also the SFDR (Sustainable Finance Disclosure Regulation). This means that the data is not only "communicated", but also provided in such a structured way that it can actually be used for capital market requirements and value chains.

Background and development of the CSRD

The CSRD builds on the previous Non-Financial Reporting Directive(NFRD) from 2014 and its national implementation. In Germany, this was implemented via the CSR-RUG or CSRD Implementation Act, among other things. In practice, however, it quickly became apparent that the scope, comparability and verifiability of non-financial disclosures were often inadequate. Reports were structured very differently, key figures and methods were not standardized and a reliable comparison between companies was only possible to a limited extent.

The reform was primarily triggered by the European Green Deal and the EU's Sustainable Finance Strategy. The European Commission presented its proposal in April 2021. Following negotiations, the Corporate Sustainability Reporting Directive was published as Directive (EU) 2022/2464 in the Official Journal of the EU and has been in force since January 5, 2023. The member states had to transpose the requirements into national law by July 6, 2024 at the latest. Here you can find the FAQ of the EU Commission.

The content of the CSRD is specified by the European Sustainability Reporting Standards (ESRS). They have been adopted as Delegated Regulation (EU) 2023/2772 and lay down binding rules on what companies must report and how the disclosures must be structured. For companies that are the first to report, there are also targeted simplifications ("quick fixes") to make it easier to get started with individual disclosures.

The timetable is staggered: Companies that were already covered by the NFRD will apply the CSRD for the first time for the 2024 financial year. Publication of the report was planned for 2025. For other groups of companies, the original timetable was recently adjusted politically. The start dates for later waves have been pushed back by two years due to so-called "stop-the-clock" changes. For many companies, this means more preparation time and greater clarity that the requirements are coming and need to be implemented in a structured manner.

Why the CSRD was introduced

The CSRD Implementation Act was introduced because the need for reliable and comparable sustainability information has risen sharply, but many previous reports were not sufficient. Investors, banks, customers and business partners want to better understand how companies deal with climate and environmental risks, what social risks exist, how supply chains are set up and how governance structures function. However, if reports are structured very differently, terms are used inconsistently or key information is missing, information gaps arise - and decisions become more difficult.

This is precisely where the CSRD comes in: it makes sustainability disclosures more binding, more standardized and generally verifiable, thereby also reducing the risks of intransparency and greenwashing. For companies, this means more demands and more effort because data, responsibilities and internal controls have to be clearly established. At the same time, the CSRD creates structure and orientation: those who start early establish robust ESG reporting and can meet requirements from financing and value chains more consistently.

Affected companies & implementation

The CSRD is generally intended for large companies and certain capital market-oriented companies and will be introduced in stages. Important (as of February 2026): In addition to the classic CSRD scope, there are already effective shifts due to stop-the-clock, and in parallel, a political line is on the table with the omnibus package, which is intended to significantly reduce the scope (including higher thresholds; listed SMEs are to be excluded).

Note: Changes through the omnibus package are in the legislative process and have not yet been finalized.

Criteria for determining the reporting obligation

Whether a company is subject to CSRD reporting essentially depends on three questions:

1) Does the company fall into one of the CSRD categories?

Typically these are:

• Large companies (according to the size criteria of the EU accounting system) and parent companies of large groups that meet at least two of three size criteria:
  • Balance sheet total: ≥ € 25 million
  • Net sales: ≥ € 50 million
  • Employees: ≥ 250
• Other groups subject to reporting requirements (depending on the classification in the respective national transposition law):
  • Listed companies
  • small credit institutions
  • Company insurance
• Micro-enterprises (CSRD definition), i.e. companies that do not exceed the following values, are exempt:
  • Balance sheet total: ≤ € 450,000
  • Net sales: ≤ € 900,000
  • Employees: ≤ 10

Important for classification in group structures: Thresholds apply at consolidated level if a group exists.

2) When does the obligation apply (waves/timing)?

The EU has deliberately staggered the introduction. The introduction began with companies that have already reported according to the previous logic (NFRD/CSR-RUG): for the first time for the 2024 financial year, publication then typically in 2025.

For later waves, application has now been postponed by two years ("stop-the-clock"). This affects companies that were originally required to report for the first time for financial years 2025 and 2026.

3) What role does the Group (corporate group) and EU anchoring play?

The CSRD can apply both to individual companies and at group level. In addition, the obligation can be triggered for certain non-EU groups via the EU structure (EU subsidiary/EU branch, EU turnover threshold).

Differences between large companies and SMEs

Large companies are at the center of the CSRD system. They must report comprehensively in accordance with ESRS and have their disclosures audited externally. The requirements for data quality, processes and internal controls are correspondingly high. In practice, large companies are therefore usually the most affected and have to further develop their reporting structures and data management the most.

SMEs, on the other hand, should be viewed in two ways:

• In the original CSRD design, listed SMEs were always in scope (with the option of opting out). Due to "stop-the-clock", the starting point for this wave has shifted backwards.
• Non-listed SMEs are typically not directly subject to CSRD, but often feel the impact indirectly: via data requests from customers, banks or group structures.

Even if an SME is not directly required to report, it often still feels the effects of CSRD in practice. For example, through data requests from customers, banks or larger corporations in the supply chain. The voluntary SME standard(VSME) can help in such cases: It offers a clear framework for providing typical sustainability data in a structured and efficient manner.

Deadlines for implementation: Deadlines for large companies and SMEs

The application is carried out in several waves:

First wave: companies already subject to NFRD, generally large capital market-oriented companies

• First-time application for the 2024 financial year
• Publication of the first report in 2025

These companies already had to report in accordance with the previous NFRD regulation and are the first group to switch to ESRS.

Second wave: other large companies

• Originally planned: Financial year 2025
• Postponed to financial year 2027 due to the "stop-the-clock directive"
• Publication of the report in 2028

This affects large companies that were not previously subject to the NFRD.

Third wave: listed SMEs (if remaining in scope)

• Originally planned: Financial year 2026
• Postponed to financial year 2028
• Publication of the report in 2029

Transition periods and exceptions

In addition to the staggered introduction, the CSRD provides for several transitional arrangements.

Stop-the-clock adjustment: For companies in the second and third wave, the original start of application has been postponed by two years. This is intended to give companies more time to prepare.

Opt-out rule for listed SMEs: Listed SMEs can make use of the reporting obligation for a limited transitional period, but must explicitly declare this.

Group regulations: In some cases, subsidiaries do not have to prepare their own CSRD report. This applies if they are included in the Group report and the requirements for this are met.

Political developments (omnibus package): While the CSRD is already starting, negotiations are continuing in the EU on who exactly should be subject to reporting requirements in future. The threshold values could still change. Companies should therefore continue to monitor these developments.

Timetable for the introduction of reporting obligations

The following chronological overview can be summarized:

• 2024: First application for existing NFRD companies
• 2025: Publication of the first CSRD reports
• 2027: Launch of the application for other large companies
• 2028: Publication of these reports
• 2028: Start for listed SMEs (if in scope)
• 2029: Publication for SMEs and non-EU companies

What needs to be reported?

Sustainability risks and their management

Material sustainability risks and opportunities are a central component of reporting. Companies must disclose:

• which ESG issues are material to their business model,
• what impact their actions have on the environment and society,
• what financial risks and opportunities arise from sustainability issues,
• how these risks are identified, assessed and managed.

In addition to current risks, the CSRD also requires a look ahead. Companies must set out the sustainability goals they are pursuing, how they intend to achieve them and how they will measure progress.

Environmental, social and governance aspects

In terms of content, the reporting is structured along the three ESG dimensions. The ESRS specify which topics are typically to be covered.

Environment (E):

• Climate change and greenhouse gas emissions
• Energy and resource utilization
• Circular economy
• Biodiversity and environmental pollution

Social (S):

• Working conditions and employee rights
• Diversity and equal opportunities
• Occupational health and safety
• Human rights in the supply chain
• Impact on affected communities

Governance (G):

• Corporate governance and supervision
• Compliance and anti-corruption measures
• Remuneration systems in connection with sustainability targets
• Integration of ESG issues into strategy and decision-making processes

Not every company has to cover every topic in equal depth. The decisive factor is the materiality analysis, which determines which aspects are reportable.

Financial and non-financial reporting

An important feature of the CSRD is that sustainability and financial reporting belong together. Sustainability disclosures do not stand alone, but are considered in conjunction with the economic situation of the company.

The sustainability disclosures are part of the management report and must be audited externally, initially usually with limited assurance. In the future, they should also be published in a digitally readable format. This makes it clear what needs to be reported. In practice, however, the main question is how companies implement these requirements in a clean and structured manner.

Standards and guidelines for CSRD reporting

European Sustainability Reporting Standards (ESRS)

The ESRS are the binding basis for CSRD reporting. They were developed by the European Financial Reporting Advisory Group (EFRAG) and adopted by the EU as Delegated Regulation (EU) 2023/2772.

The standards consist of general requirements and topic-specific requirements on the environment, social issues and governance. Companies start with a materiality analysis that determines which disclosure requirements are relevant and must be reported accordingly.

A key feature of the ESRS is its depth of detail. They require not only key figures, but also descriptions of strategies, objectives, measures and governance structures. This means that sustainability reporting is more formalized and integrated into corporate management. You can find out more about the ESRS here.

Reference to international standards such as GRI and TCFD

The ESRS were not developed in a "vacuum". International frameworks were taken into account during the development process so that companies have to duplicate work as little as possible.

The most important frames of reference include

• GRI (Global Reporting Initiative): Widely used standard for sustainability reporting with a focus on environmental and social impacts.
• TCFD (Task Force on Climate-related Financial Disclosures): Recommendations for the disclosure of climate-related risks and opportunities, particularly with regard to financial impacts.

The ESRS adopt important elements from these standards, particularly in climate reporting and the presentation of risks. Companies that have already reported in accordance with GRI or the TCFD recommendations therefore often have a good basis for getting started.

However, the CSRD does not simply replace national or voluntary frameworks. Rather, it creates a separate, binding EU standard. Companies can continue to use existing structures, but must adapt them to the specific ESRS requirements. The EU taxonomy also plays a significant role in sustainability reporting. Find out more about the EU taxonomy here.

Integration of CSRD into existing reporting structures

For many companies, the question arises as to how the CSRD can be practically integrated into existing reporting processes. The directive requires that sustainability information becomes part of the management report. This makes it clear that sustainability must not be managed as a separate report outside of financial communication.

Companies that have already produced sustainability reports can build on existing structures. However, the CSRD often requires a more systematic approach, particularly in terms of data quality, documentation and preparation for the external audit.

Integration into existing processes is therefore not just a formal compulsory exercise. In many companies, this means real change: responsibilities are redistributed, processes are adapted and interfaces between sustainability, finance and compliance are more closely interlinked. Sustainability reporting is thus increasingly becoming part of good corporate governance and no longer just a communication issue.

Differences between CSRD and NFRD

Extended scope of application of the CSRD

A key difference lies in the significantly expanded scope of application. The NFRD applied to large public interest entities with more than 500 employees. These included, in particular, capital market-oriented companies, banks and insurance companies. The group of companies subject to reporting requirements was therefore comparatively limited.

This significantly increases the number of companies potentially subject to reporting requirements. While around 11,000 companies were affected under the NFRD, the number may increase many times over under the CSRD, depending on the political design. The aim of this expansion is to create a more level playing field and to make sustainability information accessible to more than just a small group of large companies.

Stricter reporting obligations and standards

In addition to the expanded scope, the CSRD differs primarily in terms of the quality and binding nature of the reporting obligations. Under the NFRD, companies were able to report with comparative flexibility. Although certain topics had to be addressed, there were no detailed, binding European standards. The reports were therefore often structured differently and difficult to compare in terms of content.

These requirements make reports significantly more comparable, comprehensible and auditable. This makes sustainability reporting more standardized and brings it closer to the logic of financial reporting.

While the NFRD was primarily intended to promote transparency, the CSRD is also aimed at standardization, reliability and integration into corporate management. For companies, this means: the effort involved increases, but at the same time a clear framework is created that provides orientation and can lead to more consistent processes in the long term.

Sanctions for non-compliance

Types of sanctions: Fines and other consequences

Although the CSRD itself does not specify the level of fines, it obliges the member states to introduce appropriate sanctions for breaches of the reporting obligations. These include, for example:

• Administrative fines for missing or incorrect reporting
• Orders to rectify or disclose corrected information
• Public announcement of violations (naming and shaming)
• In certain cases, supervisory measures against board members

As the CSRD is transposed into national law in every EU country, the specific sanctions are not the same everywhere. In Germany, for example, enforcement is carried out via existing commercial and supervisory procedures, such as the Federal Office of Justice in the case of disclosure obligations or the capital market supervisory authority in the case of listed companies.

Supervisory authorities and their role

Compliance with the CSRD is primarily monitored by national authorities. Which authority is responsible depends on how the directive has been implemented in the respective country and which supervisory structures are already in place. In practice, several players are often involved: for example, authorities from the commercial or judicial sector when it comes to disclosure obligations and formal requirements for the management report. In the case of capital market-oriented companies, financial market supervisory authorities often also come into play, as sustainability disclosures are increasingly becoming part of regulated corporate reporting.

The mandatory external audit also plays a key role. The sustainability information is not simply published, but checked by auditors or auditing companies. This noticeably raises the bar: The content, database and documentation must be prepared in such a way that they can be clearly understood and verified.

At EU level, the CSRD will be linked to the existing accounting and capital market reporting rules. The European Securities and Markets Authority (ESMA) plays an important role here - especially when it comes to digital reporting obligations and the question of how sustainability disclosures will be embedded in existing reporting formats in future.

Reputational risks and potential loss of business

In addition to formal sanctions, the economic and reputational effects are often just as relevant. The CSRD significantly increases transparency. Incomplete, contradictory or incorrect information can therefore have negative consequences, even if no direct fines are imposed.

Possible consequences are

• Loss of confidence among investors and financial institutions
• Limited access to sustainability-related financing
• Reputational damage due to public criticism
• Competitive disadvantages compared to more transparent companies

CSRD therefore not only works via formal sanctions, but also via market mechanisms. Sustainability reporting is becoming a factor for competitiveness and corporate reputation.

Advantages and disadvantages of reporting

The new EU regulation on corporate sustainability is an important step towards better reporting on environmental and social issues. It obliges companies to disclose their work on environmental, social and governance(ESG) issues. This should ensure that information on sustainability is easier to understand and compare. Although this rule brings many benefits, such as greater clarity for companies, investors and the general public, it also presents some challenges.

Advantages of sustainability reporting

More transparency and credibility

Those who present ESG issues in a comprehensible manner create trust among investors, customers and the public. If the reporting also remains consistent over the years, this strengthens the company's reputation and helps to credibly position the company as responsible.

Better risk management

When companies systematically record environmental and social risks, they often recognize problems earlier and can take more targeted countermeasures. This makes them more resilient, for example in the event of new requirements, changes in the market or rising stakeholder expectations.

Competitive and employer advantages

Transparency can be a differentiating factor towards customers, in competition and in recruiting. Companies with clear sustainability goals and measurable progress often appear more attractive to talent and business partners.

Easier access to capital

Investors and banks are increasingly looking at ESG criteria in their assessments. Those who report reliably here often have better cards in financing discussions, including for sustainability-related financing.

Disadvantages and typical challenges

High effort and costs

The effort involved is particularly noticeable at the beginning: data needs to be collected, processes and systems need to be put in place, internal controls need to be established and employees need to be trained. Depending on the initial situation, external support may also be required.

Complex requirements

The requirements are detailed and require a good understanding of the standards and processes. Smaller companies in particular reach their capacity limits more quickly, even if they are only indirectly affected (e.g. via supply chain inquiries).

Risk of overloading

Comprehensive reports can become confusing if the essentials and structure are not clearly defined. This results in "lots of content" but little clarity.

Reputational risks

Greater transparency also means that weaknesses become more visible. If targets are not achieved or data appears inconsistent, this can trigger criticism. At the same time, honest and comprehensible reports create trust in the long term.

Example of a report

A sustainability report shows what a company is doing for the environment, society and good corporate governance (ESG). A clear report not only shows that the company complies with the rules, but also how seriously it takes sustainability. Using the example of an invented company, "GreenTech Innovations", we show what such a report could look like.

Conclusion

The importance of CSRD makes sustainability reporting in Europe much more binding. In future, companies will no longer report according to their own formats, but according to the ESRS. The sustainability indicators will then be integrated into the management report, subject to mandatory auditing and increasingly digitally readable. This brings sustainability closer to normal corporate management: materiality, risks, targets, measures and governance must not only be described, but also backed up with reliable data and clearly documented.

For companies, this initially means more work. Above all, data processes must be set up properly, responsibilities clarified and documents prepared in such a way that they stand up to scrutiny. At the same time, however, the CSRD also provides guidance. Those who set up robust ESG reporting at an early stage save time and friction later on, manage internally better and can respond more consistently to requests from banks, customers or the supply chain. It is crucial not to see the CSRD as a one-off reporting project, but as a change process that is built up and improved step by step over several reporting years.