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CSRD: Another (big) step forward

What an amazing series of regulations from the EU in these very last weeks: ensuring that there're no carbon leaks (CBAM), requesting clear proofs against deforestation, implementing the first Product Passport (Battery Act) and last but not least compulsory the Corporate Sustainability Reporting Directive (CSRD) pushing for more transparency and harmonised disclosure requirements.

On 16 Dec. 2022, “the Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting” has been published in the Official Journal of the EU.

As part of the European Union’s Sustainable Finance Package, which aims to enhance the flow of money towards sustainable activities, the Corporate Sustainability Reporting Directive (CSRD) makes it mandatory for many companies to disclose sustainability information in their financial reports.

By enlarging the scope of reporting companies, introducing double materiality, new common standards and including scope 3, CSRD creates a common reporting framework that improves the content and quality of sustainability information in the EU.

The Directive will apply progressively between 2025 and 2029.

Who is subject to the CSRD?

The Directive widens the scope of the Non-Financial Reporting Directive (NFRD) adopted in 2014, that only applies to large listed companies, banks and insurance companies with more than 500 employees, i.e. approximatively 11,600 companies in EU in 2021.

The CSRD applies to:

The CSRD won’t apply to:

  • Listed SMEs with financial assets on growth markets or multilateral trading facilities

  • Non-listed SMEs

  • Listed micro-enterprises which meet at least two of the following criteria

10 and less employees on average during the financial year

< 700K€ in net turnover

< 350K€ in total assets

The excluded firms can and are encouraged however use the developed standards voluntarily. At eolos, we do work with companies aligning to these standards although they are not requested to. This is a great journey to mobilise the teams and trigger improvements.

What is new with the CSRD (compared to NFRD)?

Double Materiality

Companies will have to report on how sustainability issues affect their business and development (“outside-in” perspective) and on the impact their activities have on people and the environment (“inside-out” perspective)


CSRD creates a common reporting framework that improves the content and quality of sustainability information: the European sustainability reporting standards (ESRS).

These standards have been developed by the European Financial Reporting Advisory Group, (EFRAG), that delivered 12 drafts to the EU Commission at the end of November:

  • 2 Cross-cutting & 1 Governance:

  • Draft ESRS 1 General requirement

  • Draft ESRS 2 General disclosures

  • Draft ESRS G1 Business conduct

  • 5 Environmental:

  • Draft ESRS E1 Climate change

  • Draft ESRS E2 Pollution

  • Draft ESRS E3 Water and marine resources

  • Draft ESRS E4 Biodiversity and ecosystems

  • Draft ESRS E5 Resource use and circular economy

  • 4 Social:

  • Draft ESRS S1 Own workforce

  • Draft ESRS S2 Workers in the value chain

  • Draft ESRS S3 Affected communities

  • Draft ESRS S4 Consumers end users

The EU Commission will adopt the first standards by June 2023.

How to report?

ESG Indicators

Companies will be required to track and share their social and environmental impacts, as well as their governance practices. They will have to report on what they have put in place to contribute to the ecological transition with metrics.

Standards and digital format

The reports will have to respect precise standards, including in digital format, to facilitate the use and sharing of the information.


The reports will have to be audited and certified by an independent structure, which will verify the sincerity of the information and the presence of sustainability objectives.


Penalties for infringements are not yet specified but will be defined by each Member State. However, the EU Commission indicated that they must be effective, proportionate and dissuasive.


Next steps

The new rules will need to be implemented by member states in the following 18 months and the CSRD will become a reality starting from 2025.

An application in 4 stages

The directive will come into force in 2025 and its application will take place in 4 stages:

  1. First reporting in 2025 (on the financial year 2024) for companies already subject to the NFRD

  2. Reporting in 2026 (on the financial year 2025) for large companies that are not currently subject to the NFRD

  3. Reporting in 2027 (on the financial year 2026) for listed SMEs (except micro undertakings), small and non-complex credit institutions and captive insurance undertakings

  4. Reporting in 2029 (on the financial year 2028) for 3rd-country undertakings with net turnover above 150 M€ in the EU if they have at least one subsidiary or branch in the EU exceeding certain thresholds.



Baptiste Grüss | Environmental Policies & Regulations Expert

Helene Isermeyer | Sustainability Governance & Performance Practice Lead

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