Corporate Sustainability Reporting Directive

What is the CSRD?

The Corporate Sustainability Reporting Directive or CSRD, which entered into force on the 5th of January 2023, is a law of the European Union, is a proposal published by the European Commission to replace the previously applicable Non-Financial Reporting Directive (NFRD). The NFRD was the basis for the CSR reporting obligation. The European Union’s new CSRD will fundamentally expand and standardize European sustainability reporting. Based on the CSRD, the German implementation of the NFRD, the CSR Directive Implementation Act (CSR-RUG), will also receive a comprehensive update.

The legal framework of the CSRD is filled in by the European Sustainability Reporting Standards (ESRS). Following consultation and revision phases, the final sector-independent ESRS (Set 1) were adopted by the European Commission on July 31, 2023.

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Important changes to reporting as a result of the CSRD

The non-financial reporting obligation (NFRD – CSR reporting obligation) from 2014 will be substantially renewed by the law on CSRD, which came into force on the 5th of January 2023.

The CSRD will bring some innovations:

  • While different reporting formats were applicable under the NFRD, the CSRD provides for a reporting obligation exclusively in the management report in accordance with uniform EU reporting standards, which are based on the Sustainable Finance Disclosure Regulations (SFDR) and the EU taxonomy regulations.
  • The materiality principle changes from single materiality from the NFRD to double materiality. This means that matters are considered material if they are material to business performance OR from an environmental/social perspective. This will lead to a significant increase of material matters to be reported.
  • The CSRD introduces an audit requirement which is gradually increased from a “Limited Assurance” to a “Reasonable Assurance”. Thus, an external critical audit will be deepened.
  • It is no longer only retrospective content that is mandatory in sustainability reporting, but also future content/topics, in particular the assessment of opportunities and risks of sustainability aspects on business activities.

Target Group & Shedule

Who is affected by the CSRD?
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The CSRD significantly expands the group of companies affected. While the NFRD affected around 12,000 companies, the new directive will affect around 50,000 companies – including around 15,000 in Germany alone. After the CSRD comes into force in January 2023, the law must be transposed into national law by the member states by the 6th of July 2024 at the latest. The current plan provides for introduction in a phased model.

On October 17, 2023, the European Commission amended the Accounting Directive 2013/34/EU due to inflation. This defines thresholds for company sizes, which form the basis for the CSRD thresholds. The adjustment leads to a redefinition of small, medium, large and micro-enterprises and consequently exempts some companies from the financial and sustainability reporting obligation.

The companies affected by the CSRD are:

Beginning January 1, 2024, with a reporting deadline of 2025:

Listed large companies already subject to the Non-Financial Reporting Directive (NFRD). The adjacent criteria apply here:

  • > 500 employees and
  • > 40 Mio. € turnover or > 20 Mio. € balance sheet total

Beginning January 1, 2025, with a reporting deadline of 2026:

Large companies that are not currently subject to the Non-Financial Reporting Directive. Here, two of the three adjacent criteria for large companies must be met:

  • > 250 employees (independent of capital market orientation)
  • > 50 Mio. € turnover
  • > 25 Mio. € balance sheet total

Beginning January 1, 2026, with a reporting deadline of 2027:

For listed SMEs, small and non-complex credit institutions and captive insurance companies (excl. micro-enterprises). Here, two of the three adjacent criteria must be met. SMEs can be exempted from the obligation until 2028.

  • > 10 employees
  • > 900.000 € turnover
  • > 450.000 € balance sheet total

What is the situation with subsidiaries?

European companies that report at group level in accordance with the CSRD sustainability reporting requirement thereby exempt their subsidiaries from their own reporting obligations. For the exemption, the subsidiary only has to refer in its management report to the Group report via a link and state the name and registered office of the parent company. However, capital market-oriented subsidiaries are not exempt from the reporting obligation.

The CSRD additionally includes companies that are not headquartered in the EU; more comprehensive rules apply to these non-EU companies.

Starting from January 1, 2028 with a reporting deadline until 2029:

Non-European companies with net sales of > €150 million IN THE EU must prepare a CSRD-compliant sustainability report at the consolidated level of the top third country company if:

At least one subsidiary in the EU meets the following criteria:

  • Large companies. Here, two of the following three criteria must be met:
    • > 250 employees
    • > 50 million € turnover or
    • > 25 million € balance sheet tota
  • Listed companies. Here, two of the following three criteria must be met:
    • > 10 employees
    • > 900,000 € turnover or
    • > 450,000 € balance sheet total

Or if at least one branch in the EU meets the following criteria:

  • > 40 million € net sales
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Development of the CSRD & Next Steps

What happened so far?

A lot has happened in the past months and years leading up to the final adoption of the CSRD and the creation of the uniform EU reporting standards. The most important milestones are listed below:

What happens next?

The decisive steps towards uniform European sustainability reporting have been taken and the CSRD is officially in force. Read below to find out what will happen in the coming months:

Development of CSRD


October 2014: Entry into force of NFRD (Directive 2014/95/EU)


March 2017: Entry into force CSR-RUG


  • March 2021: Structural proposal for EU reporting standards by EFRAG.
  • [CSRD DRAFT #1] April 21, 2021: Publication of CSRD proposal by the European Commission.
  • April – July 14, 2021: Consultation period on CSRD proposal
  • June 2021: European Council (EC) consultation period on CSRD begins.
  • [CSRD DRAFT #2] November 16, 2021: Publication of draft report on CSRD proposal with proposed amendments.
  • December 2021: EC consideration of a first compromise text for the CSRD.


  • January 2022: Publication of first working papers on the substantive specification of the “European Sustainability Reporting Standards” (ESRS) by the EFRAG working group PTF-ESRS
  • January 2022: Presentation of a revised compromise text on CSRD by the EC Chair.
  • [CSRD DRAFT #3] February 24, 2022: EC publication of proposed amendment to CSRD.
  • March 2022: Publication of 4-column document by the EC comparing the three CSRD drafts.
  • April 2022: Publication of the 13 draft CSRD standards by EFRAG and start of the consultation phase on the CSRD
  • June 2022: Preliminary political agreement on the CSRD between the EC and the European Parliament (EP) in trialogue
  • June 2022: Publication of the draft law on the CSRD including the trilogue amendments.
  • August 2022: End of consultation phase on draft standards
  • August 2022: Information on the development of the sector-specific standards stretched over three years.
  • September 2022: Publication of statistical evaluation of the CSRD consultation phase.
  • November 2022: Final approval of the EU-parliament to the CSRD
  • November 2022: Delivery of revised ESRS drafts by EFRAG to the European Commission
  • November 2022: Final approval of the Council to the CSRD
  • December 2022: CSRD Publication in the EU Official Journal


  • 5th of January 2023: Entry into force of the CSRD
  • 09 June 2023: Publication of revised ESRS Draft Delegated Acts (public consultation until July 07, 2023)
  • 31 July 2023: Adoption of Set 1 ESRS (EU Cross-Sector Reporting Standards) as a delegated act

Next Steps

  • This first set of draft standards only includes the general, sector-independent standards. In addition to this, the European Commission is planning to develop supplementary guidelines for implementation. The specific standards for different sectors as well as those tailored to small and medium-sized enterprises (SMEs) are currently still in the development phase.
  • It was originally intended that the second set of sector-specific and SME-related standards should come into force in June 2024 through the EU. However, a delay in this schedule is very likely. However, the introduction was postponed to June 30, 2026.
  • By July 6, 2024 at the latest: Implementation of the CSRD into national law by EU member states [Art.5, Para.1; p.63]
  • Publication of further guidelines on the implementation of the CSRD

(Status November 2023)


What are the contents of the CSRD?

The proposed CSRD directive introduces uniform and binding European reporting standards (European Sustainability Reporting Standards – ESRS), which consist of sector-independent (core standards), sector-specific and organization-specific standards.

The core standards include reporting requirements on environmental targets, social aspects and governance aspects.

The sector-specific standards will be developed in three packages over a period of three years. In November 2023, the publication of the first package of sector-specific standards was expected, which will include the following sectors: agriculture, coal, mining, oil and gas extraction and processing, power generation, road transport, automotive production, textiles and footwear, and jewelry, food and beverages. Organization-specific SME standards will also be included. The remaining two packages of sector-specific standards will follow in the next two years. However, the sector-specific and SME standards (Set 2 of the ESRS) have been postponed to mid-2026.

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Central contents

The ESRS published with the help of the CSRD specify the content on which companies must report:

Report on the six environmental objectives of the EU

  • Climate protection (mitigation)
  • Adaptation to climate change (adaptation)
  • Water and marine resources
  • Resource use & Circular economy
  • Environmental pollution
  • Biodiversity and ecosystems

Report on social/societal aspects

  • Respect for human rights, democratic principles and international standards.
  • Equal opportunities, including gender equality and appropriate, fair and balanced pay. Inclusion and employment of people with disabilities.
  • Information on working conditions, job security, pay and collective bargaining, work-life balance, workplace safety and employee health, and social dialogue.
  • Information on the impact of business activities on the company in relation to the protection of affected communities
  • Information on the protection and safety of consumers and end users

Report on governance aspects

  • Information on the structure and duties of the company’s administrative, management and supervisory bodies, including focus on sustainability aspects.
  • Anti-corruption and anti-bribery policies embedded in corporate ethics and culture.
  • Information on the company’s political commitment, incl. lobbying activities.
  • Information on business partner relationships, incl. manager quality and payment practices.
  • Information on the company’s internal control and risk management system.
  • Animal welfare information

European Sustainability Reporting Standards (ESRS)

EFRAG, responsible for the introduction of uniform reporting standards, has developed core reporting standards for each of the sector independent topics, which have already been published as delegated acts. The ESRS define the content of the CSRD and are based on international frameworks such as GRI, SASB and TCFD:

Further Information



Who is EFRAG and what is its mission?

The European Financial Reporting Advisory Group (EFRAG) was established in 2001 with the support of the European Commission. European stakeholders as well as national and civil society organizations are among its member organizations. EFRAG’s mission is to promote European financial and sustainability reporting in the public interest.

Within its accounting activities, EFRAG supports the European Commission in the development and adoption of International Financial Reporting Standards (IFRS). On the other hand, in the area of sustainability reporting, through its new role in the CSRD, EFRAG not only develops fully elaborated draft EU sustainability reporting standards, but also provides technical advice to the European Commission during the implementation process of the CSRD through its Sustainability Reporting Technical Expert Group (TEG).[1]


Further information on EFRAG

EFRAG is divided into Technical Expert Groups (TEGs), Working Groups and Advisory Committees within the two pillars of the Financial Reporting Board and the Sustainability Reporting Board. In the consultation process, EFRAG takes into account all stakeholder input and specific European circumstances. Transparency, governance, due process and public accountability strengthen EFRAG’s legitimacy and make it a compelling European voice in corporate reporting. EFRAG is funded by its members and the European Union.

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Current EU Directive vs. CSRD

Significant changes at a glance

Current EU Directive 2014/95/EU


Affected companies

All capital market-oriented companies, insurance companies and credit institutions

  • > than 500 employees AND
  • > € 40 million in sales OR
  • > 20 million € balance sheet total

Companies, independent of capital market orientation

From 2025 for FY 2024:

  • > 500 employees AND
  • 40 Mio. € turnover OR 20 Mio. € balance sheet total

From 2026 for FY 2025 for which 2 of the 3 criteria are met:

  • 250 employees
  • > € 50 million in sales
  • > 25 million € balance sheet total

All SMEs listed on the stock exchange (excl. micro-enterprises):

From 2027 for FY 2026 for which 2 of the 3 criteria are met:

  • 10 employees
  • > € 900.000 in sales
  • > € 450.000 balance sheet total

Number of companies affected

  • Approx. 12.000
  • Approx. 50,000 – 15,000 in Germany alone


  • Simple materiality
  • Matters are considered material if they are essential to business success AND from an environmental / social perspective.
  • Double materiality
  • Matters are considered material if they are essential for business success OR from an environmental / social point of view.

Reporting Format

  • Different report formats possible
  • Exclusively in the management / sustainability report

Testing obligation

  • No testing obligation (voluntary)
  • Duty of verification
  • Successive increase from “Limited Assurance” to “Reasonable Assurance
Support from the DFGE

With foresight to the demanding new regulations of the EU CSR Directive, we as DFGE focus on the most important requirements that companies will have to fulfill in the future. With a scientific approach and efficient solutions, we support you in achieving your goals. To prepare for the CSRD reporting content and to identify your material topics, we help you carry out a double materiality analysis. In addition to calculating the corporate carbon footprint, we build the foundation for CSRD with a comprehensive ESG strategy and show you the synergies with other standards such as the GRI standard or a risk and opportunity analysis according to TCFD. Make your company CSRD-ready already now!

Contact DFGE!

+49 8192 99 7 33-20