Understanding CSRD: A new era of Corporate Sustainability

Guest editorial by Richard Collins

Corporate sustainability reporting is entering a new era. What was once voluntary under frameworks like the EU’s Non-Financial Reporting Directive (NFRD) is now mandatory under the Corporate Sustainability Reporting Directive (CSRD)—a major regulatory shift reshaping how companies report on environmental and social issues.

Replacing the NFRD, the CSRD significantly broadens the scope and depth of reporting obligations. From 2024, large and listed EU companies must disclose not only how sustainability risks affect their business (financial materiality), but also how their activities impact people and the environment (impact materiality)—a concept known as double materiality.

How their activities impact people and the environment (impact materiality)
How sustainability issues impact their business (financial materiality)

Companies must report on governance, ESG strategy, climate change, pollution, biodiversity, and social impacts across their value chains, using the European Sustainability Reporting Standards (ESRS). Key standards include ESRS 1 (general requirements) and ESRS 2 (disclosures), with specific environmental (E1) and social (E2) standards also in focus.

Reporting must be digital, aligned with the European Single Electronic Format (ESEF), and subject to third-party assurance. Initially requiring limited assurance, the directive aims for more rigorous standards over time.

The CSRD will roll out in phases through 2029, eventually covering large non-EU companies operating within the EU. To ease the transition, the EU has recently revised thresholds, delayed deadlines, and introduced flexibility on taxonomy and assurance obligations.

Scope reduced: Companies must now meet higher thresholds (e.g., 1,000+ employees) to be in scope.
Postponed deadlines: Reporting obligations for many companies have been delayed by two years.
Eased Taxonomy reporting: Now voluntary for smaller companies, and materiality thresholds introduced.
Assurance flexibility: The mandate for reasonable assurance is dropped, with new guidance expected by 2026.

Despite a harmonised EU framework, individual member states have room for stricter rules, adding complexity but reinforcing accountability.

The CSRD marks a pivotal step in making sustainability core to corporate strategy and transparency. Businesses that act now not only meet compliance, but also lead in a world demanding responsible growth.

Richard Collins is co-founder of CSR Accreditation and a member of the APPG on ESG's Advisory Board. CSR-A provides Sustainability Consultation, Trining, Reporting and Accreditation.