Skip to main content
Back to Glossary
Definition

Corporate Sustainability Reporting Directive (CSRD) Definition

The Corporate Sustainability Reporting Directive (CSRD) requires qualifying EU undertakings and groups, plus certain non-EU groups, to publish assured sustainability information under European Sustainability Reporting Standards (ESRS).

What is the Corporate Sustainability Reporting Directive (CSRD)?

The CSRD is Directive (EU) 2022/2464. It added sustainability-reporting duties to the EU Accounting Directive. If your company or group is in scope, Articles 19a and 29a require a dedicated sustainability statement in the management report using ESRS. The statement covers material impacts on people and the environment and material financial risks and opportunities.

Directive (EU) 2026/470 changed scope and timing. From financial years starting on or after 1 January 2027, Articles 19a(1) and 29a(1) require more than 1,000 employees and net turnover above EUR 450 million, consolidated for groups. Check the Germany reporting guide against the national law that applies to your reporting year.

Why does the CSRD matter to you?

If your company crosses both Article 19a thresholds, or your group crosses both Article 29a thresholds, its management report needs the sustainability statement. Article 34(1)(aa) requires a limited-assurance opinion, so unsupported numbers, missing methods, or an undocumented materiality decision can delay sign-off.

Article 19a(3) also covers upstream and downstream value-chain information. A reporting customer may need your site energy, metric tonnes of CO2e, workforce data, pollution controls, or product inputs. After the 2026 amendments enter national law, a supplier or other value-chain company with no more than 1,000 employees can decline a CSRD reporting request that asks for more than the EU voluntary standard.

How does the CSRD work?

  • Confirm scope and year: test the entity and group against Articles 19a(1), 29a(1), and 40a(1), then record the financial year and national law.
  • Assess double materiality: ESRS 1 requires you to identify material impacts on people or the environment and material financial risks or opportunities for the undertaking.
  • Prepare disclosures: Article 19a(2) covers the business model, targets, governance, policies, actions, due diligence, impacts, risks, opportunities, and indicators. The ESRS currently in force use E1-6 for gross Scope 1, Scope 2, Scope 3, and total GHG emissions in metric tonnes of CO2e. The Commission's 3 July 2026 revised ESRS act was not yet in force on 19 August 2026; its adopted text renumbers this disclosure as E1-8 for financial years from 2027.
  • Publish and support assurance: put the statement in the management report, retain source records, and prepare the Article 34(1)(aa) limited-assurance file.

What mistakes should you avoid?

  • Using the old 250-employee, EUR 40 million turnover, or EUR 20 million balance-sheet tests after Directive (EU) 2026/470 changed scope.
  • Assuming a supplier questionnaire means your company must prepare a complete ESRS sustainability statement.
  • Reporting only climate data when Article 19a(2) and the materiality assessment identify material social, environmental, or governance matters.
  • Sending figures without the reporting period, organisational boundary, unit, calculation method, source record, and approval owner needed for limited assurance.

Does the CSRD apply to non-EU companies?

Yes, if the EU subsidiary or branch and its non-EU parent cross the Article 40a thresholds. From financial years starting on or after 1 January 2028, the EU subsidiary or branch can have to publish the parent's group report. The parent must exceed EUR 450 million in EU net turnover in each of two financial years, and the subsidiary or branch must exceed EUR 200 million in the preceding year.

What can a customer ask a supplier for under the CSRD?

Ask for the exact ESRS requirement, entity, site, product, metric, unit, and period. Article 19a(3) permits requests needed for material value-chain disclosures. If you have no more than 1,000 employees, test the request against the voluntary-standard cap before accepting a full ESRS dataset.

Is the CSRD the same as ESRS?

No. The CSRD and the amended Accounting Directive determine scope, placement, publication, and assurance. Commission Delegated Regulation (EU) 2023/2772 contains ESRS, which specify the information an in-scope reporter discloses. Record the ESRS version and any transitional relief used for the financial year.

Worked example

Illustrative Canadian scenario: Suppose a construction materials producer headquartered in Canada generated EUR 520 million of EU net turnover in both 2026 and 2027. Its German subsidiary generated EUR 225 million in 2027. The figures exceed the Article 40a(1) tests of EUR 450 million in EU turnover for each of two consecutive years and EUR 200 million for the EU subsidiary in the preceding year.

For the financial year starting 1 January 2028, the German subsidiary checks the applicable German implementing law and prepares to publish the Canadian parent's group-level sustainability report. The reporting team maps kiln fuel and process emissions to Scope 1, purchased electricity to Scope 2, and purchased clinker and inbound freight to relevant Scope 3 data. It records metric tonnes of CO2e, the factor and method used, the reporting boundary, source invoices, meter files, and named data owners.

The team also documents its ESRS 1 double-materiality assessment for climate, pollution, water, workforce, and community effects. This scenario does not assume that EU sales alone create the duty. The EU turnover, subsidiary turnover, reporting year, national implementation, and any exemption must all be confirmed.

Where you'll meet it

CSRD individual and group reporting scopeAccounting Directive Articles 19a(1) and 29a(1), as amended by Directive (EU) 2026/470CSRD sustainability information in the management reportAccounting Directive Article 19a(1)-(2)CSRD value-chain information limit for protected undertakingsAccounting Directive Articles 19a(3) and 29a(3)CSRD limited assurance opinionAccounting Directive Article 34(1)(aa)CSRD reporting for qualifying third-country groupsAccounting Directive Article 40a(1); CSRD Article 5(2), point (14), from financial years starting on or after 1 January 2028

Related terms

Sustainability Reporting

Sustainability reporting is the process of publishing evidence-backed information about a company's environmental, social, and governance impacts, risks, opportunities, policies, targets, and performance for a defined period and business boundary.

Materiality

Materiality is the test a company uses to decide which sustainability topics matter enough to manage or report because they could affect its finances, reflect significant impacts on people or the environment, or both.

Scope 3 Emissions

Scope 3 emissions are the indirect greenhouse gas emissions from goods, services, transport, product use, investments, and other upstream and downstream activities outside your company's Scope 1 and Scope 2 boundary.

Corporate Sustainability Due Diligence

Corporate sustainability due diligence is an ongoing, risk-based process for finding and addressing harm to people or the environment connected to a company's operations and business relationships.

Sources

  • EUR-Lex

    Current Accounting Directive Articles 19a, 29a, 34, and 40a on scope, disclosures, value-chain information, assurance, and third-country reports

    2026-08-19

  • EUR-Lex

    2026 scope, timing, value-chain cap, third-country threshold, and transposition amendments

    2026-08-19

  • EUR-Lex

    ESRS double materiality, general disclosures, topical standards, value-chain coverage, and ESRS E1-6 GHG disclosures

    2026-08-19

Last verified 2026-08-19

Ready to start?

Tell us what you need.

Bring us the sustainability request, reporting deadline, or strategy question you are facing. We will read it and suggest a practical first step, and the first conversation is free.

Get in touch
Corporate Sustainability Reporting Directive (CSRD) Definition | Keslio