International · 20 March 2026
Understanding CSRD: What European Businesses Must Do by 2025
The EU Corporate Sustainability Reporting Directive (CSRD) is the most significant expansion of sustainability reporting requirements in European history. Here is what businesses need to know.
What Is the CSRD?
The Corporate Sustainability Reporting Directive (CSRD) is EU legislation that significantly expands the scope and detail of sustainability reporting requirements for companies operating in Europe. It replaces the Non-Financial Reporting Directive (NFRD) and introduces mandatory reporting against the European Sustainability Reporting Standards (ESRS).
Who Is Affected?
The CSRD applies in phases, starting with large public-interest companies in 2024, expanding to all large companies in 2025, and extending to listed SMEs and non-EU companies with significant EU operations by 2026–2028. Ultimately, it will affect approximately 50,000 companies — a tenfold increase from the NFRD.
What Must Be Reported?
Under the CSRD, companies must report on a wide range of environmental, social, and governance (ESG) topics, including climate change (both transition and physical risks), biodiversity, water, circular economy, and social matters. The climate reporting requirements are closely aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework.
The Double Materiality Principle
A distinctive feature of the CSRD is its double materiality principle, which requires companies to report on both the impact of sustainability issues on the business (financial materiality) and the impact of the business on the environment and society (impact materiality). This represents a more comprehensive approach than purely financial materiality.
