CSRD / ESRS Reporting

CSRD is the EU directive that requires undertakings in scope to report on sustainability matters following mandatory European Sustainability Reporting Standards. It replaces the Non-Financial Reporting Directive (NFRD), expands the scope by an order of magnitude, raises the assurance bar from voluntary to limited (then eventually reasonable), and integrates the disclosures into the management report so investors and lenders read them alongside financial statements.

The directive entered into force 5 January 2023 and was to be transposed by Member States by 6 July 2024. Transposition has been uneven — some states transposed on time, others slipped to late 2024 or early 2025.

An undertaking is 'large' if it exceeds two of three thresholds: €50m net turnover, €25m balance sheet, 250 employees (thresholds revised by Delegated Directive 2023/2775).

In February 2025 the Commission proposed the Omnibus I package, which (subject to co-decision) raises the CSRD scope threshold to 1,000 employees, defers Wave 2 and 3 application by two years, and trims the ESRS data points. The package is in legislative process through 2025-2026; until it is adopted, the existing thresholds and dates remain operative. Operators should track the trilogue outcomes carefully and not yet rely on the relaxed thresholds.

ESRS Set 1 was adopted by Commission Delegated Regulation 2023/2772 in July 2023 and comprises 12 standards: two cross-cutting (ESRS 1 General Requirements, ESRS 2 General Disclosures) and ten topical: E1 Climate, E2 Pollution, E3 Water & Marine, E4 Biodiversity, E5 Resource Use & Circular Economy, S1 Own Workforce, S2 Value-Chain Workers, S3 Affected Communities, S4 Consumers, and G1 Business Conduct.

Topical standards are subject to a double materiality assessment — disclose only if material to the undertaking either from an impact-on-people-and-planet view (impact materiality) or from a financial-effects-on-the-undertaking view (financial materiality). ESRS 2 General Disclosures and parts of ESRS E1 Climate are mandatory regardless of materiality.

Double materiality is the central methodological commitment of CSRD. The undertaking must assess each sustainability matter from two perspectives — impact and financial — and disclose where either is material. The assessment process itself must be disclosed: who was consulted, what evidence was used, what thresholds were applied. Auditors test the process, not just the conclusion.

ESRS disclosures extend across the value chain — upstream suppliers and downstream customers — for impact assessment and for many specific disclosures (Scope 3 GHG, value-chain workers under S2, raw material origins under E5). This is the practical hardest part: the entity must collect data it does not own, from counterparties that have no contractual obligation to provide it. The first-year transition allowed estimates and reduced value-chain disclosures; that relief tapers over the first three reporting cycles.

Sustainability information must be assured by a statutory auditor (or independent assurance services provider authorised by the Member State). The initial standard is limited assurance; the Commission will assess feasibility of moving to reasonable assurance by 2028.

The disclosures must be tagged in XBRL using the ESRS taxonomy and embedded in the management report — the same machine-readable format that already governs the financial statements (ESEF). Tagging is not optional; preparers need a vendor or in-house tagging tool aligned to the published taxonomy.

• EU Taxonomy (Regulation 2020/852) — eligibility and alignment KPIs feed E1 Climate and ESRS 2.
• CSDDD (Directive 2024/1760) — due-diligence outcomes are disclosed under CSRD; CSDDD is the operational obligation, CSRD is the disclosure layer.
• EUDR (Regulation 2023/1115) — deforestation-free supply-chain data feeds E4 Biodiversity / S3 Affected Communities.
• EU Pay Transparency Directive — pay-gap data feeds S1 Own Workforce.
• CBAM — embedded-emissions data feeds Scope 3 Category 1 under E1.

• Skipping the double-materiality process and disclosing everything 'just in case' — auditors will challenge an assessment that did not actually assess.
• Treating CSRD as a comms/marketing exercise rather than an auditable financial-report annex.
• Underestimating data lineage — every disclosed metric needs an evidenced source.
• Assuming Omnibus simplification will save you — it has not yet adopted.
• Value-chain data gathered ad-hoc rather than built into supplier contracts and onboarding.
• Late selection of XBRL tagging tool — taxonomy evolves and integration is non-trivial.