EU’s Corporate Sustainability Reporting Directive (CSRD) Sets New Standard for ESG Transparency
March 21, 2025 – Brussels, Belgium
In a major shift towards corporate accountability, the European Union’s Corporate Sustainability Reporting Directive (CSRD) has officially come into effect, requiring thousands of companies to enhance their environmental, social, and governance (ESG) disclosures. The directive, which replaces the Non-Financial Reporting Directive (NFRD), is set to reshape corporate sustainability reporting across Europe and beyond.
Expanding the Scope of ESG Reporting
The CSRD significantly broadens the range of companies subject to mandatory ESG disclosures. Previously, under the NFRD, only large public-interest entities with more than 500 employees were required to report. Now, the CSRD applies to:
- All large companies meeting at least two of the following: €40 million in revenue, €20 million in assets, or 250+ employees.
- Listed small and medium-sized enterprises (SMEs), with a transition period until 2026.
- Non-EU companies generating over €150 million in revenue within the EU.
What Companies Must Disclose
Businesses must now provide detailed sustainability reports covering:
- Climate impact and carbon emissions.
- Social policies, including labor rights and diversity.
- Governance practices, including risk management and corporate ethics.
- Forward-looking sustainability targets and action plans.
The reports must follow the European Sustainability Reporting Standards (ESRS) to ensure consistency and comparability across industries.
A Global Impact
With its stringent requirements, the CSRD is expected to influence sustainability reporting worldwide. Non-EU companies with significant European operations must also comply, leading to broader global adoption of ESG reporting standards.
“Transparency is the foundation of a sustainable economy,” said Mairead McGuinness, European Commissioner for Financial Services. “The CSRD will help investors, consumers, and stakeholders make informed decisions based on credible sustainability data.”
Challenges and Opportunities
While the directive poses compliance challenges, it also presents opportunities for companies to enhance their ESG performance and attract responsible investors. Experts suggest that early adoption and integration of sustainability strategies will be key to long-term business success.
Looking Ahead
The CSRD’s phased rollout means that companies must start preparing now. The first reports, covering the 2024 financial year, will be due in 2025. As businesses adapt, the directive is expected to drive significant improvements in corporate sustainability practices across Europe and beyond.
References
- European Commission. “Corporate Sustainability Reporting Directive (CSRD).” EU Official Website.
- European Financial Reporting Advisory Group (EFRAG). “European Sustainability Reporting Standards (ESRS).” EFRAG Website.
- McGuinness, M. (2024). Sustainability and Corporate Responsibility in the EU. Brussels: EU Publications.
