The Corporate Sustainability Reporting Directive (CSRD) will apply to approximately 50,000 companies across the European Union and beyond. For many organisations this will represent one of the most significant reporting changes in recent years.
Understanding the directive early matters. What this really means is that you will need to align sustainability reporting and financial reporting in a new way, prepare your supply chain for sustainability disclosure demands, and build systems that map data clearly. Here is how you move forward with confidence and achieve CSRD compliance effectively.
What the CSRD means for business
At its core, CSRD compliance requires companies to disclose information about how social and environmental issues affect their business and how their business affects people and planet. It replaces the older Non-Financial Reporting Directive (NFRD) and expands scope and depth significantly.
For example, whereas previously only a subset of listed entities had to provide non-financial statements, CSRD for businesses will bring in large private companies, subsidiaries of non-EU firms and firms doing business in the EU. The directive also demands standardised formats, digital tagging, and third-party CSRD assurance. For you as a business leader this means reporting will become more structured, more rigorous and more visible to investors, regulators and the public.
Who must comply with CSRD and when
The compliance is based on the size of the company, the status of the listing, and the extent of business activity in the EU. The directive has several phases:
- 2025 reporting (FY 2024): Companies that are already covered by the NFRD.
- 2026 reporting (FY 2025): Large EU companies that will meet two of the three criteria—more than 250 employees, €40 million in turnover, or €20 million in total assets.
- 2027 reporting (FY 2026): Small and medium-sized enterprises (SMEs) that are publicly listed.
- 2029 reporting (FY 2028): Non-EU companies that have more than €150 million in annual EU turnover and are operating through at least one subsidiary or branch in the EU.
As per PwC, non-EU parent firms should still contemplate their risk exposure not being one of the affected parties since, eventually, the EU-based subsidiaries would still be obliged to submit the relevant data for consolidated reporting.
Understanding who must comply with CSRD ensures proper planning for CSRD compliance for non-EU companies as well.
Core requirements and data challenges under CSRD
Once you know you are in-scope, you must grasp what you are being asked to report and how. CSRD requirements demand disclosure under the European Sustainability Reporting Standards (ESRS) which cover environmental, social and governance topics, from climate change through workforce and value-chain impacts to business conduct.
A critical feature is the double materiality concept: an organisation must assess both how sustainability issues impact the business (financial materiality) and how the business impacts society and the environment (impact materiality). Data demands will be heavy. One source suggests tracking around 1,200 distinct data points across ESG reporting metrics. Challenges include gathering data from across value-chains (Scope 1, 2 and 3 emissions), managing digital tagging for machine-readability (XBRL/ESEF format) and establishing audit trails for CSRD assurance. If data is scattered, manual or non-auditable you will face bottlenecks in CSRD data management.
How to prepare your business step-by-step for CSRD compliance
Here is a practical sequence of actions you can take and a step-by-step guide to CSRD reporting.
- First, you need to conduct an assessment of the double materiality. Find out what sustainability issues are of highest value to your company and its stakeholders. This will be the basis for your sustainability reporting.
- Second, carry out a comparison of your current reporting to the CSRD requirements. Are there any data gaps? What systems will you have to change?
- Third, lay out the governance structure and the roles to be played. Make it clear that the management and board will be involved in the sustainability reporting process, assign responsibility for the collection, reviewing and publishing of data.
- Fourth, put in place or modernize your CSRD data management You might want software or platforms that link the sustainability reporting metrics with the financial reporting systems, manage value-chain data, provide support for audits and offer traceability.
- Fifth, disclose your findings and put them through a test. Create draft reports, validate the data, get the internal audit or external review engaged to find any weak points in the CSRD reporting process.
- Sixth, integrate sustainability reporting into the business process. Annual reporting should include ESG reporting and it should not be treated as a side project. Review, refine and keep up with the CSRD requirements that evolve. These steps will bring structure and minimize the risk of unpleasant surprises while enhancing ESG compliance.
Turning CSRD compliance into strategic value
What often gets overlooked is that CSRD compliance is not just a cost or compliance burden. It offers strategic opportunity. By analysing your data and value chain you may identify waste, inefficiencies or ESG reporting-related risks you were unaware of. Reporting transparency can enhance trust with investors, customers and regulators. Investors increasingly consider ESG performance in decision-making.
For example, a manufacturing firm recognising its Scope 3 emissions (supplier and customer impacts) may find more efficient sourcing, reduced inputs or branding benefits. Also, preparing early positions you ahead of many competitors, especially third-party supply chains. If you are a supplier to a large EU firm, your clients may demand CSRD-aligned data through the CSRD reporting process. Even if you are not in-scope today, being ready gives you a competitive edge. This readiness shows an understanding of CSRD impact on business strategy and reflects the benefits of CSRD compliance.
Key take-away for business leaders
Here is what matters most: commit early, be systematic and view CSRD compliance as a driver not just a requirement. Start by understanding scope, then build governance, shore up CSRD data management systems and integrate sustainability into your core business flow. The task may appear daunting, but organisations that treat it as strategic rather than just regulatory will benefit.
What this really means is that the future is about transparent business, where your sustainability disclosure is credible, verifiable and aligned with strategy. That mindset shift will carry you beyond compliance into performance. To succeed, learn how to prepare for CSRD compliance through a detailed step-by-step guide to CSRD reporting, understand who must comply with CSRD, and manage CSRD for businesses efficiently. Address CSRD reporting challenges and solutions early, recognise the benefits of CSRD compliance, and strengthen your approach to ESG compliance and Corporate Sustainability Reporting Directive alignment under the European Sustainability Reporting Standards.
The realization of CSRD compliance leads to the unlocking of long-term value as the ultimate goal. Being well-prepared for CSRD compliance means non-EU companies will also be especially ready for CSRD compliance, and it gives a thorough understanding of the Corporate Sustainability Reporting Directive objectives. Reporting on sustainability in line with double materiality, developing the company’s reporting in accordance with the CSRD standards, and making the CSRD impact on the business strategy all apart of the process will cause an atmosphere of clarity, trust, and growth to coming into being.
To sum up, it is this approach that reconciles the Corporate Sustainability Reporting Directive with substantial corporate transformation. Following the above-mentioned directions, your business will be able to deal with CSRD reporting obstacles and solutions with full confidence and thus change CSRD for companies into a sustainable advantage.
