Corporate Sustainability Reporting Directive (CSRD)

What is the Corporate Sustainability Reporting Directive (CSRD)?

The Corporate Sustainability Reporting Directive (CSRD) is an EU directive that impacts large  companies, requiring them to disclose information on how they monitor a wide range of ESG issues and their impact on our planet.

The primary objective of the CSRD is to foster transparency and accountability while advancing sustainable practices and investments. With heightened stakeholder scrutiny and expanded reporting obligations, companies are compelled to disclose a broader spectrum of ESG metrics, offering stakeholders unparalleled insight into their sustainability endeavours.

Beyond regulatory compliance, the CSRD presents a unique opportunity to deepen your organisation's understanding of sustainability risks and opportunities. By integrating reporting into your business strategy, you can unlock the dual benefits of profit and purpose, safeguard your reputation, and drive sustainable growth. Ensuring compliance and staying ahead of the curve are imperative for success in today's evolving landscape.

Who is impacted by the CSRD?

The Corporate Sustainability Reporting Directive (CSRD) has been significantly updated as part of the EU Omnibus Simplification Package ivoted in December 2025, resulting in key changes to its scope, timelines, and requirements.

'Stop-the-clock' directive and extended timelines 

The "stop-the-clock" directive introduced a two-year delay for companies in waves 2 and 3 to begin their CSRD reporting:

Wave 1 (First wave):

• Applies to companies previously under the Non-Financial Reporting Directive (NFRD), such as large listed companies and public interest entities with over 500 employees.
• Compliance deadline remains unchanged, applying to fiscal years starting on or after January 1, 2024, with reports due in 2025.

Wave 2 (Second wave):

• For larger companies with at least 250 employees.
• Reporting is postponed to fiscal years starting on or after January 1, 2027, with reports due in 2028.

Wave 3 (Third wave):

• For listed Small and Medium Enterprises (SMEs) and certain smaller institutions.
• Reporting is postponed to fiscal years starting on or after January 1, 2028, with reports due in 2029. It is to be noted that following the revised scope, wave 3 has been removed.

Revised scope and criteria

The CSRD originally sought to cover around 50,000 companies globally, requiring them to report on environmental, social, and governance. Following the Omnibus directive voted on December 16th 2025,  the scope was significantly narrowed:

• Reporting primarily applies  to large companies with over 1,000 employees and reaching at least a turnover of € 450 million.. Smaller entities are now removed from the mandatory scope but highly encouraged to use voluntary reporting options.
• Non-EU companies generating turnovers above €450 million in the EU, with substantial EU-based operations (large subsidiaries or branches with more than €200 million in turnover), remain subject to CSRD reporting obligations.

These changes reflect an effort to ease the compliance burden on smaller businesses while focusing regulatory attention on larger entities.

Simplification of reporting requirements

The Omnibus Package also included a request to EFRAG  to streamline reporting content. Based on the technical advice that it delivered to the EU Commission on December 3rd, 2025, the following was achieved:

• A substantial reduction in mandatory data points and improved consistency with other EU legislation.
• Clarifications on how to perform the Double Materiality assessment
• Better interoperability with other standards like IFRS-S
• Clarification of the ESRS structure
• More options for the presentation of the sustainability statements (executive summary, use of appendix…)
• More burden-reliefs.

These simplified ESRS will be applicable to all entities subject to the CSRD once the EU Commission has formalised them in a delegated act.

EU taxonomy simplification 

• Companies with less than €450 million in turnover will be exempted from mandatory EU Taxonomy reporting, with the option to adopt the EU Taxonomy reporting on a voluntary basis.
• The reporting templates have also been heavily simplified by Delegated act 2026/73 that enables companies to use simplified reporting for their 2025 reporting
• Simplification of the technical screening criteria, in particular the Do No Significant Harm (DNSH).

These revisions aim to simplify compliance, reduce administrative burdens, and enhance the usability of sustainability data for both reporting entities and stakeholders.

Implications for supply chains and SMEs

While reporting obligations have eased for smaller entities, businesses operating within the value chains of companies still required to report under CSRD face continued pressure to provide transparent data on sustainability practices. The EU has developed a Voluntary Reporting Standard for SMEs (VSME) to guide disclosure efforts of SMEs and limit excessive data requests from larger entities in their supply chain. 

Voluntary Reporting Standard for SMEs (VSME)

The Voluntary Reporting Standard for SMEs,  provides small and medium-sized enterprises with a simplified yet robust approach to sustainability reporting. Its purpose is to enable SMEs to align with evolving transparency demands without the resource-intensive complexities of the full directive. 

For clients, this standard ensures increased transparency regarding their supply chain partners while encouraging alignment with broader corporate sustainability goals. By adopting the standard, SMEs can effectively demonstrate their commitment to ESG principles, fostering stronger partnerships and enhancing credibility with larger organisations and stakeholders.

What actions should businesses impacted by CSRD take now?

The Corporate Sustainability Reporting Directive presents both challenges and opportunities for businesses striving to enhance their sustainability practices. By understanding the requirements, assessing current practices, and implementing robust reporting frameworks, organisations can navigate the complexities of CSRD and unlock the benefits of transparent and impactful sustainability reporting. However, given the evolving landscape of sustainability regulations, seeking expert advice is paramount. Consulting with sustainability professionals can provide invaluable guidance tailored to your business's specific needs, ensuring compliance with CSRD while driving meaningful progress towards a more sustainable future, lasting value and confidence.

Get CSRD ready with RSM

Internationally, we collaborate directly with regulators to mould and refine the reporting framework, ensuring our team of specialists remains at the forefront of ESG legislation. Our experts span various aspects of sustainability disclosure requirements. From initial scoping and readiness assessments to gap analyses, we provide a streamlined and coherent response to the CSRD and broader sustainability disclosure ecosystem, including the EU Taxonomy.Our technology-driven approach prioritises integration, allowing our clients to harness value while fulfilling both current and future regulatory obligations.

Our team of sustainability experts constructs and integrates ESG processes, effectively mitigating risks, dismantling barriers, and realising economic and environmental objectives. Through cohesive collaboration, we instil confidence in our clients to drive sustainable growth while enhancing their environmental and social impact.

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