Who Needs to Comply with CSRD? CSRD applies to companies that meet any of the following criteria:

Large EU Companies meeting two out of three conditions:

• €40 million or more in net turnover
• €20 million or more in total assets
• 250 or more employees

• All EU-listed companies, including small and medium-sized enterprises (SMEs), except micro-enterprises.
• Non-EU companies with EU subsidiaries or branches that generate over €150 million in annual revenue within the EU.

Key Changes from NFRD to CSRD

• Previously, under the NFRD, only around 11,000 companies had reporting obligations.
• With CSRD, this number increases to over 50,000 companies across the EU and beyond.
• CSRD introduces detailed sustainability reporting requirements, aligned with the European Sustainability Reporting Standards (ESRS).

Why Should Companies Outside the EU Care?

• Global Impact: Non-EU companies with significant operations in Europe will be required to comply.
• Investor Expectations: Investors globally are aligning with ESG-focused decision-making, making compliance an advantage.
• Supply Chain Pressure: Even businesses not directly covered by CSRD may feel indirect pressure from EU-based clients and partners requiring CSRD-aligned disclosures.

CSRD Implementation Timeline: CSRD compliance will be phased in over the next few years:

• 2024 (Reports in 2025): Large companies already under NFRD
• 2025 (Reports in 2026): Large companies not previously covered under NFRD
• 2026 (Reports in 2027): Listed SMEs, small banks, and insurance companies
• 2028 (Reports in 2029): Non-EU companies with EU operations exceeding €150 million in revenue

Coming Next Week:

The Concept of Double Materiality in CSRD: CSRD requires companies to assess and report on sustainability risks through the double materiality lens—considering both the impact of sustainability factors on the company and the company’s impact on sustainability. Join us next week as we explore how this concept shapes sustainability reporting.