CSRD: Guide to the EU's new sustainability reporting standards

The Corporate Sustainability Reporting Directive (CSRD) is the EU's new standard for sustainability reporting. This legal standard applies to large and medium-sized enterprises and publicly listed companies.

Learn more about the CSRD and how Factlines can help your business comply.

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Introduction to the CSRD

The Corporate Sustainability Reporting Directive (CSRD) is a crucial EU legislation affecting over 50,000 EU and non-EU companies. This directive requires a phased approach to sustainability reporting, with some companies needing to start data collection as early as FY 2024 to comply.

The CSRD mandates companies to establish processes for identifying, monitoring, and managing sustainability impacts, risks, and opportunities. This enables companies to provide the detailed and comparable information that investors require for reporting under the Sustainable Finance Disclosure Regulation (SFDR).
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Timeline for affected companies:
• 2024: The CSRD takes effect in January.
• 2025: Reporting starts for listed companies with over €40 million in turnover.
• 2026: Reporting starts for non-listed companies with over €40 million turnover and over 500 employees.
• Fiscal year 2024-2025: Companies must meet 2 out of 3 criteria: balance sheet over €25 million, turnover over €50 million, or 250+ FTE.
• Fiscal year 2026 for listed SMEs: Must meet 2 out of 3 criteria: under 50 FTE employees, balance sheet under €5 million, or turnover under €10 million.
The CSRD is more than just a reporting obligation. It intends to transform the business sector into a more sustainable, resilient economy.

The framework is created to assist companies in managing both physical and transition risks that could put their assets in jeopardy. It can also help to attract capital, align their climate strategies with global net-zero objectives, and build resilient products and services that can thrive in dynamic markets.

Key components of the CSRD

Office worker typing on keyboard
Double materiality
Digitalisation
Integrated reporting
External assurance

What needs to be reported?

The CSRD requires that companies report on a range of sustainability-related (ESG) topics, including:
Environmental impact: Greenhouse gas emissions, consumption of energy and resources, waste management, and pollution.
Social matters: Workers' rights, diversity and inclusion, health and safety, and communities.
Governance and management: The company's approach to sustainability, risk management, and anti-corruption.
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Who does the CSRD apply to?
The CSRD applies to all large and medium-sized companies in the EU, as well as all publicly listed companies, regardless of size. This includes Norwegian companies that operate within the EU.
What are the penalties for non-compliance with the CSRD?
Any penalties for non-compliance will be defined by each individual Member State, or sovereign country.

The European Sustainability Reporting Standards (ESRS)
as requirements for the CSRD

There's no CSRD without the ESRS. Think of the CSRD as the rules of a game and the ESRS as the instructions that explain how to follow those rules.

The ESRS serves as a detailed guideline that companies follow when reporting on environmental, social, and governance (ESG) matters. They support the Corporate Sustainability Reporting Directive (CSRD) as the practical handbook for compliance.

The ESRS outlines twelve standards: two overarching ones that apply to all sustainability issues, providing general concepts and disclosure requirements, and ten specific ones that guide the disclosure of detailed ESG information.

These standards help companies disclose comprehensive data, including both quantitative metrics and qualitative insights about their sustainability strategies, governance, and the impacts, risks, and opportunities (IROs) related to their sustainability efforts.

How to start preparation for the CSRD

Given the extensive scope, broad standards and fast-approaching deadlines, companies need to comply with the new disclosure requirements sooner than later. Jumpstart your preparation by following these steps:
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Raise awareness and build internal understanding of CSRD changes.
Review and analyse previous sustainability efforts and conduct a gap analysis.
With help of experts and digital solutions, develop a CSRD compliance roadmap that includes a double materiality assessment to identify key material topics to focus, and establish processes to meet CSRD and ESRS standards.
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CSRD and EU Taxonomy - better together

Automate sustainability reporting with Factlines and Stratsys. See how we solve it - and why you should choose us for this task.
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Frequently asked questions
by the IT and Finance departments

What does the CSRD mean for our financial reporting?
What financial implications could CSRD have for our company?
How do we prepare for the audit of CSRD reports?
What role does technology play in complying with the CSRD?
How can our technology strategy support CSRD initiatives?
What are the biggest technological challenges in implementing the CSRD, and how can we overcome them?

Is your company ready for the first reporting
according to CSRD in 2025?

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