Scope and phase-in
The CSRD applies in waves defined by company size and listing status rather than to every business at once. Large public-interest entities already subject to the NFRD were the first wave, reporting for financial year 2024. Other large undertakings meeting at least two of the size thresholds set in EU accounting law follow for financial year 2025. Listed small and medium-sized enterprises are brought in for financial year 2026, with an option under the directive to defer to 2028. Non-EU parent companies with substantial turnover generated in the EU are brought in from financial year 2028. Each wave reports the following year, so the first CSRD sustainability statements under the directive were published in 2025 covering FY2024.
What the directive requires
In-scope companies must include a sustainability statement within the management report, prepared under the ESRS rather than as a free-standing voluntary document. The statement must be based on a double materiality assessment, tagged digitally in a structured electronic format consistent with the European Single Electronic Format used for financial statements, and subject to external assurance. The directive also extends reporting obligations along parts of the value chain indirectly, since in-scope companies must gather relevant data from suppliers and business partners to meet their own disclosure requirements.
How the ESRS are structured
The ESRS are organised into cross-cutting standards and topical standards. ESRS 1 sets out general requirements, including the double materiality principle and reporting boundaries. ESRS 2 sets out general disclosures that apply regardless of which topics are material, covering governance, strategy and the materiality assessment process itself. The topical standards cover environmental matters (climate change, pollution, water and marine resources, biodiversity and ecosystems, resource use and circular economy), social matters (own workforce, workers in the value chain, affected communities, consumers and end-users) and one governance standard covering business conduct. A company only reports against the topical standards its materiality assessment identifies as material, rather than all of them by default.
Assurance obligations
The CSRD requires external assurance on the sustainability statement. The directive sets limited assurance as the starting requirement, a narrower level of scrutiny than the reasonable assurance given on financial statements, and includes a review clause under which the European Commission is to assess whether to move to reasonable assurance at a later date. The detail of what limited assurance involves, and how a company prepares for it, is covered separately.
Building a CSRD programme
A CSRD programme typically starts with a gap assessment against the ESRS to identify which topical standards are likely to be material and where existing data collection falls short. The double materiality assessment follows, engaging stakeholders across the value chain and documenting the process as ESRS 2 requires. Data governance work then assigns ownership for each disclosure, aligns collection cycles with the financial reporting calendar, and builds the internal controls an assurance provider will later test. Drafting the sustainability statement and preparing for assurance are the final stages, ideally completed with enough lead time to allow the assurance provider to raise and resolve findings before the statement is finalised.