CSRD: Corporate Sustainability Reporting

Directive (EU) 2022/2464 requires large companies to report against ESRS standards. The Omnibus package dramatically narrowed scope — here is what applies now.

What is CSRD?

The Corporate Sustainability Reporting Directive (CSRD) — Directive (EU) 2022/2464 — requires large companies to publish detailed annual sustainability reports using standardised European Sustainability Reporting Standards (ESRS).

CSRD replaces the Non-Financial Reporting Directive (NFRD), which covered only companies with more than 500 employees. CSRD was originally far broader — but its scope was dramatically narrowed by the Omnibus simplification package published in the Official Journal on 26 February 2026.

Who is now in scope

The Omnibus Directive (EU) 2026/470 removed approximately 80% of originally in-scope companies from mandatory CSRD obligations.

The current thresholds for mandatory reporting are:

• EU companies: more than 1,000 employees and more than €450 million net turnover
• Non-EU companies: more than €450 million net turnover generated in the EU
• Listed SMEs: removed from mandatory scope entirely

Both conditions must be met for EU companies — turnover alone is not sufficient. This is a significant change from the originally proposed thresholds.

The reporting waves

| Wave | Companies | First Report | |------|-----------|-------------| | Wave 1 | Formerly NFRD companies (>500 employees) — already reporting | FY 2024, published 2025 | | Wave 2 | Companies meeting >1,000 employees AND >€450M turnover | FY 2027, published 2028 | | Wave 3 (listed SMEs) | Removed from scope | — |

A "stop-the-clock" directive that entered into force in April 2025 extended the Wave 2 deadline by two years before the Omnibus further reshaped the scope.

The ESRS standards

Companies in scope must report against the European Sustainability Reporting Standards, adopted as a Commission Delegated Regulation in July 2023:

• ESRS 1: General requirements — the overarching methodology
• ESRS 2: General disclosures — governance, strategy, materiality, targets
• ESRS E1–E5: Environmental topics
  • E1: Climate change
  • E2: Pollution
  • E3: Water and marine resources
  • E4: Biodiversity and ecosystems
  • E5: Resource use and circular economy
• ESRS S1–S4: Social topics (workforce, value chain workers, communities, consumers)
• ESRS G1: Business conduct and governance

Not all standards are mandatory for every company. CSRD requires companies to apply a double materiality assessment to determine which topics are material to their specific situation — and therefore which ESRS standards must be fully disclosed.

Double materiality

Double materiality is the defining methodology of CSRD reporting. It asks two questions simultaneously:

1. Financial materiality (outside-in): Do sustainability factors — climate risks, resource scarcity, regulatory changes — create financial risks or opportunities for the company?
2. Impact materiality (inside-out): Does the company's own activity create significant positive or negative impacts on people or the environment?

A topic is material if it meets either threshold. Most large companies will find that several ESRS topics are material on both dimensions simultaneously.

The double materiality assessment must be documented, audited, and disclosed in the annual sustainability statement.

ESRS E5 and its relevance to DPPs

ESRS E5 (Resource use and circular economy) has direct practical overlap with Digital Product Passport obligations under ESPR.

ESRS E5 requires disclosure on:

• Material resource flows including weight and type of materials used
• Recyclability, recycled content, and product durability
• Waste generation and end-of-life management
• Circular economy policies at product level

Companies that implement DPPs will collect precisely this data at the product level. With proper data architecture, DPP-level product data can be aggregated into ESRS E5 disclosures, avoiding duplicated data collection across the two regulatory programs.

CSRD and supply chain data

CSRD's ESRS S standards require disclosure on value chain workers and community impacts — which necessitates supplier-level data. Under the Omnibus, direct suppliers of in-scope companies face pressure to provide sustainability data even if they are not themselves in scope. This creates a downstream effect: SME suppliers to large companies will increasingly be asked to provide CSRD-aligned data by their large customers.

The Omnibus also introduced an explicit protection: in-scope companies cannot demand excessive documentation from SME partners (companies with fewer than 1,000 employees).

The audit requirement

Unlike the NFRD, CSRD requires third-party assurance of the sustainability report. Initial requirements are for limited assurance, with a transition pathway toward reasonable assurance (the same standard applied to financial accounts).

This means the data underlying CSRD disclosures must be of auditable quality — not estimates, not best guesses.

Sources

• Directive (EU) 2022/2464 (CSRD) — EUR-Lex (entered into force 5 January 2023)
• Omnibus Directive (EU) 2026/470 — published OJ 26 February 2026
• European Sustainability Reporting Standards (ESRS) — Commission Delegated Regulation, July 2023: EC Finance page
• Regulation (EU) 2024/1781 (ESPR), Annex III — DPP minimum data fields