The Corporate Sustainability Reporting Directive, or CSRD, is a regulatory framework in the European Union (EU).
The CSRD focuses on transparency and accountability and mandates that companies disclose comprehensive sustainability information, ensuring that stakeholders are well-informed about environmental, social, and governance, or ESG, impacts.
Understanding CSRD applicability is critical for businesses operating in or interacting with the EU market — but recent EU legislative developments have reshaped who is required to report and when.
While early CSRD estimates suggested that more than 50,000 companies would fall into scope, a Stop-the-Clock Directive and a provisional Omnibus simplification agreement approved by the European Parliament on December 16, 2025 have narrowed applicability and extended reporting timelines for many organizations. Once final amendments are published (expected in early 2026), CSRD reporting will generally apply to companies that meet revised thresholds, typically more than 1,000 employees and more than €450 million in net turnover within the EU.
Whether you're a business leader, compliance officer, or sustainability professional, this guide provides both the general requirements and the deeper insights needed to navigate the full scope of the CSRD.
2025 EU Omnibus Directive: What changed for CSRD, at a glance
- Raised thresholds: 1,000 employees + €50M turnover / €25M balance sheet
- Non-EU threshold now €450M EU turnover + qualifying branch/subsidiary
- No sector-specific ESRS
- Supplier exemptions for smaller entities (<1,000 employees)
- No shift to reasonable assurance—limited assurance remains
- Fewer ESRS data points; voluntary SME and Taxonomy reporting options
- Simplified Taxonomy templates and exemptions for non-material activities
How CSRD came to be
CSRD was introduced as a significant improvement to the Non-Financial Reporting Directive (NFRD), which the European Union adopted in 2014.
The NFRD was a foundational step in requiring large public-interest companies and medium-sized enterprises with over 500 employees to report on non-financial aspects like environmental and social matters.
As sustainability challenges grew more pressing, the need for more comprehensive and standardized ESG reporting became all the more obvious.
In response, the EU member states proposed the CSRD in April 2021 to expand and refine the scope of sustainability reporting. The directive aims to increase the quality, consistency, and comparability of sustainability information disclosed by companies.
The European Green Deal was a package of initiatives put forth to cut greenhouse gas emissions and create better sustainability disclosures. Within it, the first set of standards known as the CSRD was formally adopted in November 2022, with the European Financial Reporting Advisory Group (EFRAG) tasked with developing the European Sustainability Reporting Standards (ESRS). These standards underpin the CSRD and provide the framework of requirements.
The final version of the ESRS was released to the European Commission in July 2023, setting the foundation for a phased rollout of reporting requirements. However, subsequent EU policy developments in 2025 introduced adjustments to scope and timing, extending reporting runways for many companies while maintaining ESRS as the core disclosure framework.
What are the EU CSRD requirements?
CSRD mandates that companies report detailed non-financial and sustainability information.
These reporting obligations include disclosures on ESG metrics and cover things like climate change, resource usage, sustainable finance, value chain sustainability, and social impact.
3 key elements of CSRD reporting requirements
European Sustainability Reporting Standards (ESRS)
The cornerstone of CSRD reporting is compliance with the ESRS. These standards outline the specific information companies must disclose, divided into ESG categories. The ESRS ensures that reporting is both comprehensive and consistent across different sectors and regions.
Double materiality assessment
One of the CSRD's distinguishing features is the requirement for a double materiality assessment. Companies must report not only on how sustainability issues affect their financial performance (financial materiality) but also on their impact on the environment and society (impact materiality). This dual focus ensures a full view of corporate sustainability.
Specific reporting categories
Under the ESRS, reporting requirements are categorized into several key areas:
- Environmental: Companies must report on climate change, pollution, water and marine resources, biodiversity, ecosystems, and resource use.
- Social: Disclosures must cover workforce practices, impacts on local communities, and relationships with consumers and end-users.
- Governance: Companies need to provide information on business conduct, including anti-corruption measures and board diversity.
As part of CSRD reporting, companies also need to examine cross-cutting issues, or any specific issues that intersect all three aspects of ESG due diligence.
Future standards and proportionality: While early CSRD drafts envisioned mandatory sector-specific reporting standards and broad SME inclusion, recent EU agreements emphasize simplification and proportionality. Under the provisional Omnibus outcome, mandatory sector-specific ESRS are no longer required, and listed SMEs have been removed from CSRD scope.
Instead, the EU is prioritizing clearer guidance, reduced datapoint volume, and voluntary standards for smaller or non-EU entities to support alignment without imposing full reporting obligations.
Who does the EU CSRD apply to?
CSRD applicability has been significantly refined through recent EU legislative action. Under the provisional Omnibus agreement approved in December 2025, CSRD will generally apply to companies that meet both of the following criteria once finalized:
• More than 1,000 employees, and
• More than €450 million in net turnover within the EU
Non-EU companies may also be in scope if they meet these thresholds through EU operations. This represents a substantial narrowing compared with earlier CSRD drafts, while preserving the directive’s focus on large, systemically important enterprises.
What is the threshold for CSRD in the EU?
Under the provisional Omnibus agreement approved by the European Parliament in December 2025, CSRD reporting will generally apply to companies that meet both of the following thresholds once final legislation is published:
• More than 1,000 employees, and
• More than €450 million in net turnover within the EU
Listed SMEs have been removed from CSRD scope, and non-EU companies will be in scope only if their EU operations collectively meet these criteria.
Who’s exempt from CSRD?
While CSRD has massively broadened the scope of mandatory sustainability reporting, there are exemptions within EMEA (Europe, Middle East, and Africa) as well as the United States.
One notable exemption is for micro-undertakings or companies that do not exceed two out of the following three criteria:
- A balance sheet total of €300,000
- A net turnover of €700,000
- 10 full-time employees
Additionally, some subsidiaries may be exempt if their parent company provides consolidated sustainability reporting that covers the subsidiary’s activities.
These exemptions are designed to reduce the regulatory burden on smaller entities while maintaining comprehensive sustainability oversight for larger corporations.
CSRD applicability: Reporting mechanisms and disclosures
While we covered the main reporting requirements above, the following includes additional and more detailed disclosures you’ll be required to report on to meet necessary CSRD requirements.
General disclosures
Companies must provide information on their business model, strategy, policies, and the governance of sustainability-related matters. This includes describing the process used to identify and assess sustainability risks and impacts, as well as total assets earned throughout the year.
Performance metrics
The first set of ESRS will be revised to substantially reduce mandatory data points, removing those deemed least important, prioritizing quantitative over narrative, and further distinguishing between mandatory and voluntary disclosures.
Forward-looking statements
In addition to historical data, companies are required to provide forward-looking information on how they plan to address sustainability risks and leverage opportunities. This includes setting targets and outlining strategies to achieve them.
Preparing for compliance
To meet these comprehensive reporting requirements, companies should do the following:
- Assess applicability: Determine if the CSRD applies to their operations.
- Conduct a gap analysis: Evaluate existing reporting frameworks and identify areas for improvement.
- Conduct a double materiality assessment: Evaluate the financial and societal impact of your operations.
- Develop or source reporting capabilities: Implement or upgrade data collection systems to ensure accurate and timely reporting. Here’s a list of the best ESG reporting tools to consider.
- Engage stakeholders: Train employees and engage with external consultants to ensure thorough understanding and implementation of the CSRD requirements.
By following the CSRD's reporting rules, companies can stay compliant and boost their sustainability image, which can help them appeal to investors, customers, and others who care about sustainable practices.
Timeline and implementation
Updated CSRD implementation timeline (as of Dec 2025)
• 2024–2025: Companies previously subject to the Non-Financial Reporting Directive (NFRD) report under CSRD using FY 2024 data.
• 2027 (reports published in 2028): Most newly in-scope large companies begin reporting following the Stop-the-Clock delay.
• 2028–2029: Non-EU parent companies with qualifying EU turnover begin reporting.
These timelines reflect current EU law and political agreements and may be further clarified upon final publication of Omnibus amendments in early 2026.
Limited vs. reasonable assurance
Limited assurance
Limited assurance is a basic review of a sustainability report, checking for plausibility without deep verification. It's a less rigorous option, often used by companies new to detailed sustainability reporting.
Under the CSRD, companies are required to obtain limited assurance over sustainability disclosures. While earlier policy drafts contemplated a transition to reasonable assurance, recent EU agreements prioritize proportionality and guidance, without mandating a fixed progression timeline.
Reasonable assurance
Reasonable assurance offers a thorough review of a sustainability report, requiring evidence to support the findings, similar to a financial audit. This provides greater confidence in the report's accuracy and completeness.
The Omnibus Directive removes the obligation to move from limited to reasonable assurance. Companies will remain under limited assurance, and instead the Commission will issue targeted assurance guidelines by 2026, without increasing compliance costs.
Is your organization ready for CSRD?
Organizations must evaluate their readiness by assessing current reporting practices against CSRD application requirements.
This involves conducting a double materiality assessment and aligning internal processes with ESRS. Companies must ensure their data collection, reporting frameworks, and governance structures meet CSRD standards.
Prepare for CSRD with Pulsora
By learning and following these CSRD requirements, companies can handle the directive's challenges and ensure CSRD compliance to meet the EU's higher standards for sustainability reporting.
More importantly, by implementing the right solutions that help you meet these requirements correctly and efficiently, you’ll never miss a deadline as the CSRD becomes standard across the EU.
Pulsora supports organizations like ANWR, Socfin, and CompuGroup Medical in collecting, organizing, and complying with mandated CSRD reporting. Our streamlined sustainability management platform:
- Gathers and prepares data across your entire organization
- Ensures you meet critical deadlines
- Incorporates auditing and quality assurance
Learn more about our CSRD reporting capabilities, get a walkthrough of our platform, or set up a personalized demo of Pulsora for your company’s unique use case.
Editor’s note (Dec 2025): This guide has been updated to reflect EU legislative developments in 2025, including the Stop-the-Clock Directive and a provisional Omnibus simplification agreement approved by the European Parliament on December 16, 2025.
