The EU CSRD: what businesses need to know

01What the CSRD requires

• A sustainability statement inside the management report, prepared under the European Sustainability Reporting Standards (ESRS).
• A double materiality assessment to decide which topics to report: how the company affects people and the environment, and how sustainability matters affect the company.
• Disclosure on environment (climate, pollution, water, biodiversity, circular economy), social topics (own workforce, value-chain workers, communities, consumers) and governance.
• Digital tagging of the report so that it can be read by machines and collected in the European single access point.
• Independent assurance, initially limited assurance, provided by an authorised auditor or assurance provider.

02What changed: the Omnibus simplification

In response to concerns about the burden on business, the EU adopted the “Omnibus I” package, published in the Official Journal on 26 February 2026 (Directive (EU) 2026/470). The main changes to the CSRD are:

• A much narrower scope. EU companies with more than 1,000 employees and net turnover above EUR 450 million are in scope. A large share of the companies originally covered no longer have to report.
• Non-EU groups are in scope when their ultimate parent has more than EUR 450 million of net turnover in the EU and there is an EU subsidiary or branch with net turnover above EUR 200 million.
• Timeline. Reporting starts for financial years beginning in 2027 (reports published in 2028) for EU companies, and for financial years beginning in 2028 for non-EU groups. Member States have until 19 March 2027 to transpose the amendments, and may give relief to companies that were due to report earlier for financial years 2025 and 2026.
• A value-chain cap. Companies in scope cannot require companies in their value chain with fewer than 1,000 employees to provide more than the voluntary standard for SMEs (VSME) for CSRD purposes.
• Simplified standards. The Commission is due to adopt revised, streamlined ESRS by delegated act, with fewer data points and clearer guidance. Harmonised limited-assurance standards are due by 1 July 2027.

03Is my company in scope?

Work through these questions:

1. Are you an EU-incorporated company, or a non-EU group with significant EU turnover?
2. Do you exceed the employee and turnover thresholds above, on a consolidated basis where applicable?
3. If you are a subsidiary, does a parent’s consolidated report cover you?
4. Are you a supplier or customer of an in-scope company? You may be outside the law but still receive data requests, which are now capped and tied to the VSME standard.

Scope depends on the national law that each Member State adopts, so confirm your position with a qualified adviser.

04How to prepare

1. Confirm scope and timing for each entity in your group.
2. Run a double materiality assessment and document stakeholder input and the methodology.
3. Do a gap analysis against the ESRS data points that your assessment shows as material.
4. Build the data process: owners, controls, systems and an audit trail, as for financial reporting.
5. Calculate your greenhouse gas inventory (Scopes 1, 2 and 3) using the GHG Protocol or ISO 14064-1, and document transition-plan information if you have one.
6. Dry-run the report internally before the first reporting year, then discuss assurance expectations with your assurance provider.

05Relationship to other frameworks

• GRI: widely used, and interoperable with the ESRS in many areas; companies often reuse GRI data.
• ISSB (IFRS S1 and S2): the global baseline focused on investors; the ESRS and ISSB standards have been aligned in many climate disclosures.
• EU Taxonomy: disclosure of taxonomy-aligned activities remains part of the reporting picture for companies in scope.
• CSDDD: the due diligence directive, now applying from 2029 to the largest companies, shares data needs with the CSRD.

06Why it still matters if you are out of scope

Banks, insurers, large customers and investors continue to ask for ESG data. Companies that have a clear, well-documented approach, even a voluntary one, find it easier to win contracts and financing. The VSME standard offers a proportionate way to do this.