November 16, 2023

CSRD: The Complete Guide

Rémi Legorrec

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Rémi Legorrec


CRO et Cofondateur

CSRD: The Complete Guide
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The European CSRD (Corporate Sustainability Reporting Directive) aims to establish new, more demanding obligations regarding sustainability reporting. Scheduled to come into force in 2024, it will have significant implications for many businesses across Europe.

What is the CSRD Directive?

The CSRD was adopted to meet the growing demand for transparency and reliable information on the environmental and social impact of companies. Before the CSRD, the NFRD established reporting principles for large companies, but it was found that the information provided was insufficient and difficult to compare from one company to another.

The CSRD aims to address these shortcomings by establishing clear and standardized requirements for sustainability reporting, enabling consumers and investors to make informed decisions based on reliable and comparable information.

Main Provisions of the CSRD

The CSRD introduces several important provisions. In addition to expanding the scope, the directive requires companies to publish detailed information on their impacts, risks, and opportunities related to environmental, social, and governance issues.

A major innovation of the CSRD is the introduction of the concept of "double materiality." This requires companies to report both on the impact of their activities on society and the environment, and on the impact of these issues on the company itself.

  • Financial materiality (also called simple materiality) only takes into account the positive (opportunities) and negative (risks) impacts generated by the economic, social, and natural environment on the development, performance, and results of the company.
  • Impact materiality (also called socio-environmental materiality) takes into account the negative or positive impacts of the company on its economic, social, and natural environment.

Companies will therefore be required to adopt an approach focused on the risks and impacts related to sustainability throughout their entire value chain. They will need to transparently share information regarding their ESG strategy and set objectives to reduce greenhouse gas emissions in line with the Paris Agreement.

Which companies are affected?

The scope of the CSRD is notably broader compared to the NFRD, quadrupling the number of companies concerned. While the NFRD targeted about 10,000 companies, the CSRD will encompass more than 50,000.

The novelty lies in the expansion of the inclusion criteria: beyond companies with more than 500 employees, the scheme now also covers a large number of companies with more than 250 employees as well as a majority of listed companies, including many SMEs that were previously exempt.

The CSRD will apply to listed companies meeting at least two of the following criteria.

For large listed companies

A workforce of 250 employees,A balance sheet total of 20 million euros,A net turnover of 40 million euros.

For listed SMEs

A workforce between 10 and 250 employees,A balance sheet total between 350 K€ and 20 M€,A net turnover between 700 K€ and 40 M€.

For non-European companies

The CSRD will also apply to non-European companies operating in European territory, with a criterion based on net turnover generated in Europe, set at more than 150M€.

For non-listed companies

The European Union also encourages other companies (such as SMEs, PMEs, or unlisted entities) to adopt extra-financial reporting practices. In this regard, the text notably mentions the EFRAG, which proposes reporting standards adapted to these organizations.

CSRD Implementation Timeline

The CSRD will apply to a wide range of companies across Europe. According to the application schedule, about 50,000 companies should be covered by the directive.

  • from January 1, 2024, for large companies within the scope of the current European NFRD directive;
  • from January 1, 2025, for all other large European companies, i.e., those meeting 2 of the following 3 criteria: more than 250 employees, a turnover of more than 40 million euros, or a balance sheet total of more than 20 million euros;
  • from January 1, 2026, for SMEs listed on a regulated market, except for micro-enterprises.
  • from January 1, 2028, for certain large non-European companies with a European turnover of more than 150M€ and a subsidiary or branch based in the European Union.

European Sustainability Reporting Standards (ESRS)

Another major innovation introduced by the CSRD is the creation of the European Sustainability Reporting Standards (ESRS). These standards will provide a framework for corporate sustainability reports and contribute to harmonizing published data.

Universal Standards

The universal standards will be applicable to all companies, regardless of their sector of activity. They will cover cross-cutting issues as well as all socio-environmental themes. These standards are included in a delegated act of June 2023.

Sectoral Standards

The sectoral standards will be specific to each sector of activity. They will be adopted by a second delegated act planned for June 2024.

Specific Standards for SMEs

There are also specific standards for SMEs listed on regulated markets. These standards will be lighter than those applicable to large companies and will also be adopted in June 2024.

How to Prepare for CSRD Obligations?

With the implementation of the CSRD, it is essential for companies to understand and prepare for its requirements. Here are some key steps for effective preparation:

  1. Understand the Directive:Read and understand the text of the CSRD directive as the first crucial step. It is essential to understand the scope, reporting requirements, and deadlines associated with the directive.
  2. Current State Assessment:Assess where your company stands in terms of non-financial reporting. Identify gaps between current and future requirements, and determine the resources needed to bridge these gaps.
  3. Establish a Dedicated Team:Form a cross-functional team dedicated to managing the transition to CSRD compliance. This team should include members of management, experts in sustainability, reporting, and compliance.
  4. Training and Awareness:Organize training for internal and external stakeholders to raise awareness of CSRD requirements and implications for the company.
  5. Technology and Systems:Invest in technologies and systems that can facilitate the collection, management, and disclosure of data in accordance with CSRD requirements.
  6. Supplier and Partner Engagement:Engage your suppliers and partners to ensure they understand your reporting requirements and are capable of providing the necessary information.
  7. Policy and Procedure Review:Review and, if necessary, update your policies and procedures to ensure ongoing compliance with the CSRD.
  8. Audit and Assurance:Implement internal and external audit processes to ensure the accuracy and completeness of disclosed information.
  9. Communication:Develop a communication strategy to inform stakeholders of your efforts to comply with the CSRD and demonstrate your commitment to transparency and sustainability.
  10. Regulatory Monitoring:Set up regulatory monitoring to stay informed of future regulatory developments that could affect your non-financial reporting obligations.

Preparing for the CSRD directive requires a collaborative and proactive effort from companies to ensure compliance and take advantage of the opportunities it offers in terms of transparency and sustainability.

A Sustainable Finance Issue

This directive has a financial objective. The European Union, through this harmonization, seeks to increase the value of extra-financial rating for investors. Consequently, it is part of the trend of democratizing more sustainable finance that has developed in recent years.


The European CSRD Directive represents a major evolution in sustainability reporting regulation. It promises to transform the corporate reporting landscape and improve the quality of information available on companies' sustainability performance.

However, compliance with the CSRD will also represent a major challenge for many companies. To succeed, it will be crucial to understand the requirements of the directive, assess its impact on your company, and establish a solid action plan.

With proper preparation, the CSRD can represent an opportunity for companies to demonstrate their social and environmental commitment and improve their long-term performance.

Rémi Legorrec
Rémi Legorrec
CRO et Cofondateur

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