Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) is an EU regulation that requires companies to produce comprehensive sustainability reports. These reports cover environmental, social, and governance (ESG) aspects and will apply to a wide range of medium-sized companies starting in 2025.

The CSRD expands on the previous Non-Financial Reporting Directive (NFRD) and mandates that companies report in detail on their sustainability activities. A core element of the directive is the concept of double materiality, requiring companies to disclose both the impact of their operations on the environment and society, as well as how sustainability risks affect their business.

A key update within the CSRD is the obligation to submit reports in a standardized digital format (XHTML). These reports must be prepared according to established ESG criteria and are subject to strict auditing requirements to ensure transparency. This applies not only to large, publicly traded companies but also to many medium-sized businesses that were not previously required to report.

The tracking of Scope 3 emissions—indirect emissions across the entire supply chain—is particularly challenging. Companies must provide comprehensive, annual reports with a focus on emissions reduction and regulatory compliance.

The CSRD is especially relevant for industrial companies in manufacturing. Starting in 2025, companies with more than 250 employees and revenues exceeding 50 million euros will need to comply with CSRD requirements. These reports include CO₂ emissions across the entire value chain, including Scope 3 emissions. For businesses with complex supply chains, meeting CSRD requirements is crucial not only to avoid regulatory penalties but also to build trust with investors and stakeholders.

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