In this article, we consider the EU's new Corporate Sustainability Reporting Directive (CSRD) (DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting), which will require certain companies and groups operating in the EU to report on a broad range of environmental, social and governance (ESG) matters.


In 2021, the European Commission made the CSRD proposal as part of the “European Green Deal” and the “Sustainable Finance Agenda”. Final EU approval was given at the end of November and the directive has now been adopted. It will enter into force during the course of this month and the new rules will need to be implemented by member states 18 months later.

In practical terms, the CSRD will require companies to “report on how their business model affects their sustainability, and on how external sustainability factors (such as climate change or human rights issues) influence their activities.” The aim is to create EU corporate sustainability reporting standards, thereby enabling investors and other stakeholders to make informed decisions on sustainability issues. The CSRD also updates the provisions of the existing Non-Financial Reporting Directive as it was not considered fit for the EU's transition to a sustainable economy.

How does it affect non-European countries?

For non-European companies, the requirement to provide a sustainability report applies to all undertakings generating a net turnover of €150 million in the EU and which have at least one subsidiary or branch in the EU generating more than €40 million net turnover. These companies will be required to report in 2029 on the financial year 2028.

Where and how will information need to be reported?

Sustainability information must be reported in an undertaking’s management report (prepared in an electronic reporting format), which should be made accessible free of charge to the public. It is worth noting that a subsidiary undertaking will be exempt from reporting if it is included in its parent company’s consolidated management report.

What information will need to be reported under the CSRD?

The CSRD requires reports to include forward-looking, retrospective, qualitative and quantitative information, which should also take into account short, medium and long-term time horizons. The information must contain a description of an undertaking’s:

  • business model and strategy
  • time-bound sustainability targets and their progress (and a statement of whether the undertaking’s targets related to environmental factors are based on conclusive scientific evidence)
  • sustainability governance (administrative, management and supervisory bodies and their expertise/skills)
  • policies in relation to sustainability matters
  • incentive schemes linked to sustainability matters offered to members of administrative, management and supervisory bodies
  • due diligence of sustainability matters and the process to conduct it
  • principal actual or potential adverse impacts connected with the undertaking’s own operations and with its value chain (and any actions taken by the undertaking to prevent, mitigate, remediate or bring an end to actual or potential adverse impacts, and the result of such actions)
  • principal risks to the undertaking related to sustainability matters

Must the report be audited?

Limited assurance is required. The CSRD provides that, “in order to ensure the quality and reliability of the reporting, the sustainability reports of third-country undertakings should be published accompanied by an assurance opinion expressed by a person or firm authorised to give an opinion on the assurance of sustainability reporting, either under the national law of the third-country undertaking or of a Member State… [or]… a statement indicating that the third-country undertaking did not provide the necessary assurance opinion.”


The CSRD introduces more detailed sustainability reporting obligations for undertakings falling within the scope of the directive. It is the most recent addition to reporting requirements for businesses on ESG matters. Since businesses are increasingly being held to account for any sustainability statements they make, they need to carefully consider their reporting requirements and the wider implications of any such statements (e.g. as risks of litigation or regulatory investigation from greenwashing).