What is the Corporate Sustainability Reporting Directive (CSRD)?

In April 2021 the European Commission announced it will implement the Corporate Sustainability Reporting Directive. The CSRD states that as of 2024 large companies will be required to report on the impact of their activities on society and the environment. In this post, we explain what CSRD means exactly, to whom it applies, and what your organization needs to do to be prepared.

What is the purpose of the CSRD (Corporate Sustainability Reporting Directive)?

The purpose of the Corporate Sustainability Reporting Directive is to increase the quality of information and transparency about the impact of companies on people and the environment. The Corporate Sustainability Reporting Directive is part of the climate agreement, the EU Green Deal. In order to achieve the goals set in the Green Deal, transparency is needed about the current situation. The CSRD legislation from the European Commission is then adopted by national governments. The CSRD will be quite a challenge for more than 50,000 organizations, because only a few organizations currently report on their impact. Listed companies were previously required to submit a basic report under the Non-Financial Reporting Directive (NFRD). Whether you comply with the Corporate Sustainability Reporting Directive is ultimately checked by an external audit body. You will not receive an auditor’s signature if you do not comply with the legislation.

Prepare your organization for the CSRD using our structured process. Reduce implementation time using our automated tools.

More about CSRD

Which companies in the Netherlands have to comply with the CSRD directive?

As of January 1, 2024, companies to which the non-financial reporting directive (NFRD) applies must comply with CSRD. As of 2025, it will also apply to large companies that meet two of the following criteria:

250+ employees

More than 50 million euro turnover per year

More than 25 million euros on the balance sheet total

The CSRD will apply to listed SMEs as of January 1, 2026. The ‘ordinary’ SME will most likely also have to comply with the CSRD as of 2025. Perhaps not by law, but they will be asked to provide input for the indicators of their suppliers/customers. For example, for Scope 3 (emissions/emissions) or other indicators from within the supplier chain. Most SMEs do not have this insight yet, so SMEs will also have to set up processes to be able to provide information to the CSRD obliged organizations.

What is ESRS in relation to the CSRD?

Companies often do not have a structured non-financial reporting structure yet. Currently standards are being developed for this kind of reporting, namely the ESRS (European Sustainability Reporting Standards). The ESRS contains instructions and standards for large and listed companies to report on various key topics, such as biodiversity, working conditions in the chain and more global topics. The CSRD requires organizations to report based on these ESRS standards.

How do you determine what to report on for the CSRD?

To determine what you as an organization should report on, a materiality analysis must be done. You need to know which risks cause the organization, but also which risks affect the organization itself. This is called dual materiality. A materiality analysis looks at such things as:

Stakeholders of the organization & the relationship with the organization

Sector analysis

Risk analysis on global materiality issues

Visualization using a materiality matrix

Tip: Download our free white paper on how to do a materiality analysis here.

A materiality analysis means a lot of figuring out, so it’s important that you start early.

Timeline of the CSRD and the ESRS

It was planned that the CSRD would already have been implemented by 2023. However, the standards (ESRS) were not yet available at the time, so the CSRD had been postponed until 2024. But the ESRS is now finalized and with the help of the GRI (Global Reporting Initiative) standards, companies can start with the materiality analysis. We advise starting the materiality analysis as early as possible, since this takes about 3 to 4 months. Also, as an organization you should start thinking about non-financial reporting. Which tools are you going to use? Where are you going to store data? Who will be (ultimately) responsible for this process?

You also need to start thinking about the non-financial reporting structure. Which tools are you going to use? Where are you going to store data? Who will be (ultimately) responsible for this?