Corporate Sustainability Reporting
Overview
Reliable and comparable sustainability information is essential for well-functioning capital markets. It enables investors to better understand and compare companies’ long-term performance, identify sustainability-related risks and opportunities, and allocate capital more efficiently.
The Corporate Sustainability Reporting Directive (CSRD) is the EU’s framework for corporate sustainability reporting. It aims to improve the quality, consistency and comparability of sustainability information disclosed by companies, replacing the previous Non-Financial Reporting Directive (NFRD).
The European Sustainability Reporting Standards (ESRS) specify how companies report under the CSRD. Developed by EFRAG and adopted by the European Commission, the ESRS provide a common framework for reporting on a broad range of environmental, social and governance (ESG) topics.
The Corporate Sustainability Reporting Directive (CSRD) is the EU’s framework for corporate sustainability reporting. It aims to improve the quality, consistency and comparability of sustainability information disclosed by companies, replacing the previous Non-Financial Reporting Directive (NFRD).
Together, the CSRD and ESRS aim to improve the availability, quality and comparability of sustainability information, enabling investors and other stakeholders to better assess companies’ long-term resilience, risks, opportunities and impacts. The framework also provides companies with a common reporting language, helping improve communication with investors, lenders and other stakeholders.
Current framework
Who is in scope?
The Omnibus I Simplification Directive has substantially reduced the scope of the CSRD by approximately 90% compared with the original framework. Mandatory reporting now applies to companies with:
- more than 1.000 employees; and
- more than €450 million in annual net turnover.
The rules also apply to non-EU parent companies, which must report if their group generates more than €450 million in annual net turnover within the EU or if they have an EU subsidiary or branch generating more than €200 million in turnover.
Reporting requirements
A central feature of the CSRD/ESRS is the principle of double materiality, which requires companies to report both:
- how sustainability matters affect their financial performance, position and development; and
- how their activities impact people and the environment.
The CSRD and ESRS provide greater transparency on topics such as:
- climate transition plans;
- environmental and social impacts, across companies’ value chains;
- sustainability-related risks and opportunities;
- governance of sustainability matters;
- anticipated financial effects of sustainability issues.
Value chain reporting
The revised framework introduces a “value chain cap”, limiting the sustainability information that companies within the CSRD scope may request from companies outside the scope for reporting purposes. The limit of this “value chain cap” is set by the information included in the voluntary reporting standard (see below).
Latest developments
Revised ESRS
The European Commission has also revised the ESRS as part of the Omnibus I simplification initiative, with the aim of streamlining reporting requirements. The revised ESRS Delegated Act was adopted in July 2026.
Voluntary reporting standard
In parallel, the Commission published a delegated act in July 2026 establishing a voluntary reporting standard for companies that fall outside the mandatory scope of the CSRD.
What’s next?
The revised CSRD, ESRS and the voluntary standard will start applying to companies for financial years beginning on or after 1 January 2027.
For non-EU companies within the scope of the CSRD, EFRAG is currently developing a dedicated standard (“ESRS-40a”). A public consultation on the draft standards is open until 31 October 2026.
The implementation of the revised framework, together with further guidance from the European Commission and EFRAG, will shape the next phase of corporate sustainability reporting in the EU.
Find additional information below.
