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Important Update (2026):
The EU Omnibus I package significantly revised the CSRD timeline, scope and reporting thresholds. This article has been updated to reflect the latest requirements, including revised company thresholds, delayed reporting timelines and ESRS simplification efforts.
The CSRD ensures that sustainability reporting moves beyond voluntary disclosure to a standardized, compliance-driven process. The directive implements double materiality, requiring companies to report on how sustainability issues affect their financial performance and how their operations impact society and the environment:
CSRD requirements are implemented through EU and Member State legislation. Applicability depends on company size, listing status, group structure, consolidation, EU turnover and national transposition. Organizations should confirm obligations with legal, finance or sustainability reporting advisors and should also complete a double materiality assessment to determine material topics.
Before we take a closer look at who will be impacted by these CSRD reporting standards, let’s look at a timeline for how we arrived here in the first place.
2014 – The European Commission adopts Directive 2014/95/EU. This Non-Financial Reporting Directive (NFRD) requires qualifying companies to include in their annual reports, or separate filings, and non-financial statements their impact on a number of environmental, social and governance (ESG) issues, including treatment of employees, diversity on company boards, respect for human rights, environmental protection and social responsibility.
2019 – The European Commission endorses the Green Deal, an ambitious strategy to transition Europe to a circular economy to reduce waste and pollution and reach carbon neutrality by 2050. Fostering sustainable economic growth is considered a critical element of the Green Deal’s success, so emphasis is placed on funding economic activities supporting ESG activities. To identify companies that are actively supporting ESG activities, the EC also shares its intention to review the NFRD.
2020 – The EU Taxonomy Regulation comes into effect to address greenwashing. Taxonomy is a complex science-based classification system for identifying activities that can be considered environmentally sustainable. The European Union (EU) Taxonomy’s definitions and rules enable market participants to identify and invest in sustainable assets with more confidence.
2022 – The European Commission adopts the Corporate Sustainability Reporting Directive (CSRD), which will replace and improve upon the NFRD. Not only does the CSRD mandate more detailed reporting by establishing a double materiality threshold which applies to both financial and impact materiality, but it also applies to more companies. The European Financial Reporting Advisory Group (EFRAG) is tasked with identifying the specific reporting standards needed. Emphasis is placed on developing a set of standards that align with various global standards already in place. The CSRD also includes references to the EU Taxonomy.
2023 – On July 31, 2023, The European Commission (EC) made a significant stride toward fulfilling the goals of the European Green Deal by officially embracing the European Sustainability Reporting Standards (ESRS). These standards define the mandatory sustainability data that companies participating in the Corporate Sustainability Reporting Directive (CSRD) must disclose and provide clear guidance on the reporting methodologies.
2025 – On February 26, the EU proposed an Omnibus package of regulatory changes, which includes adjustments to the CSRD framework aimed at “easing” compliance burdens. Key proposals include extending reporting deadlines for certain companies, simplifying disclosure requirements and providing more flexibility in how sustainability data is reported. Regardless of the outcome of the proposal, organizations should still be prepared to report on sustainability requirements.
2026 –Following the adoption of the Omnibus I simplification amendments , the CSRD scope was narrowed and certain application dates were delayed, subject to Member State transposition and applicable national implementation.
This largely removed listed SMEs from mandatory CSRD scope and reduced the number of in-scope mid-market companies. There is now a two-year delay for certain reporting waves (see “New CSRD Timeline”). A Voluntary Sustainability Standard for SMEs (VSME) was also introduced, allowing companies no longer in scope to report voluntarily.
Under the revised Omnibus I framework, CSRD applicability is significantly narrower than originally proposed. The revised threshold generally applies to companies with:
Non-EU parent companies may still fall within scope depending on EU-generated revenue and subsidiary presence.
| Pre-Omnibus CSRD | Post-Omnibus CSRD |
| Broad applicability | Narrower applicability |
| ~50,000 companies impacted | Significantly fewer companies impacted |
| 250+ employee threshold | ~1,000+ employee threshold emphasis |
| Listed SMEs included | Many SMEs removed from mandatory scope |
| Earlier phased rollout | Delayed rollout (“stop-the-clock”) |
| Extensive ESRS datapoints | Simplified ESRS underway |
| Heavy value-chain requests | Reduced SME burden |
| Stronger due diligence expectations | Narrowed CSDDD obligations |
| Wave | Companies in scope | First reporting FY | First report published |
| Wave 1 | Existing NFRD large public-interest entities. “Quick Fix” reliefs apply | FY 2024 | 2025 |
| Wave 2 | Large companies >1,000 employees AND >€450M turnover | FY 2027 | 2028 |
| Wave 3 | Certain non-EU parent companies | FY 2028 | 2029 |
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The EC wants stakeholders to clearly understand impacts, risks and opportunities a company is facing as it relates to ESG issues. This includes both the potential negative and positive impacts an organization has on the community and environment, as well as any sustainability related risks and opportunities faced by the organization.
To make an honest, informed assessment, this requires information related to a company’s governance structure, its internal control and risk management system, as well as its strategy and approach to ESG issues, including policies, procedures, processes, and performance.
ESRS 1 addresses the mandatory concepts and principles to be followed by companies when preparing sustainability statements under the CSRD.
ESRS 2 addresses specific disclosures related to companies’ general business, as well as their compliance and governance strategy. Additionally, their impact on ESG and the risks and opportunities faced under ESG (often referred to double materiality) are required.
ESRS E1: Climate change
ESRS E2: Pollution
ESRS E3: Water and marine resources
ESRS E4: Biodiversity and ecosystems
ESRS E5: Resource use and circular economy
ESRS S1: Own workers
ESRS S2: Workers in the value chain
ESRS S3: Affected communities
ESRS S4: Consumers
ESRS G1: Business conduct
While the ESRS can feel intimidating at first glance, companies with a robust automated process in environmental, health, safety and sustainability in place will be able to leverage their expertise to comply with ESRS requirements more efficiently.
By following the below steps, you can help prepare your company for CSRD reporting:
Whether your organization remains in mandatory CSRD scope or is responding to growing stakeholder expectations, centralized sustainability data management remains critical for operational resilience and reporting readiness.
Is your organization in scope?
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