Corporate Sustainability Reporting Directive

The Corporate Sustainability Reporting Directive (CSRD)² is a regulation under the European Green Deal. The directive answers to investors’ need for harmonised ESG disclosures and is meant to help drive capital to sustainable investments. This directive levels the playing field of publicly disclosed sustainability information across the value chain and is designed to drive profound transformation in companies across all ESG areas.

The CSRD is much more detailed than other reporting frameworks, such as its predecessor, the Non-Financial Reporting Directive (NFRD)³ . Data and claims must be included in the annual management report and require third-party limited assurance. The data must be digitally tagged to enable investors to scrape and collect it efficiently. Consequently, this is driving organisations to include non-financial information in their decision-making processes.

CSRD drives transparency and has detailed requirements for all key aspects of sustainability

The CSRD entered into force in January 2023. It amends the 2014 Non-Financial Reporting Directive (NFRD) and expands the scope of companies that must report on sustainability topics in a more regulated manner.

The growing demand for non-financial information has led to the development of the CSRD. The CSRD will expand the scope and increase the specificity of sustainability reporting requirements for companies in the EU as well as third-country companies that have significant activity in the EU market.

Companies subject to the CSRD will have to report according to the 12 European Sustainability Reporting Standards (ESRS). There are overlapping reporting standards and frameworks, but CSRD will require more companies to report and will be less flexible and more detailed than the NFRD to meet investor demand, e.g. requiring third-party limited assurance. Companies must report on material aspects, and the number of mandatory data points to report on is significantly expanded compared to the previous NFRD directive. The CSRD introduces the concept of double materiality: the business’ impact on people and the planet, and the financial impact on the business model⁴ .

The Omnibus Package simplifies and streamlines various EU regulations, with delays and scope adjustments to the CSRD

The Omnibus Package refers to a set of regulatory updates and technical amendments designed to simplify and streamline EU regulations such as the CSRD, EU Taxonomy and CSDDD.

The Omnibus proposal includes significant changes to CSRD, scaling down the scope of mandatory sustainability reporting from companies with 250 employees to companies with 1,000 employees, potentially exempting approximately 80% of companies. The proposal also includes scaling down the number of mandatory data points, revision of EFRAG’s European Sustainability Reporting Standards (ESRS), cancellation of sector-specific standards as well as the adoption of a proportionate standard for voluntary use, which would be based on the VSME standard developed by EFRAG.

In April 2025, the EU Commission adopted a "Stop the Clock" proposal, delaying CSRD reporting requirements to give companies and regulators more time to adapt. This means that companies included in the second wave, which were supposed to report for the first time in 2026 using 2025 information, now need to report for the first time in 2028 using 2027 information. However, if the other parts of the Omnibus proposal are adopted, many of these second-wave companies will be completely exempted from mandatory CSRD reporting.

In June 2025, the EU Commission proposed to increase the CSRD reporting employee threshold to 1,000 employees and to remove listed SMEs from the scope completely. In its mandate, the Council also added a net turnover threshold of over €450 million to reduce the scope of mandatory CSRD reporting further.

Additionally, the Council’s position introduced a new “review clause” that considers potential expansions to the CSRD’s scope. This review will be based on an assessment of the demand for sustainability data to support private investment aligned with EU Green Deal objectives, the impact of sustainability reporting on the competitiveness of EU businesses, and the readiness of companies to deliver such disclosures.

The Omnibus package has received criticism for weakening the ambition level and transparency of sustainability work in the EU. At AFRY, we believe that compliance is just the first step in an organisation’s sustainability journey. Gaining transparency and deeper ESG impact insights will remain a driver for competitiveness.

How can companies make the most of the additional time provided by the Omnibus regulation?

As the CSRD reporting of second-wave companies was postponed by two years by the Omnibus’ “Stop the Clock”, companies have more time to set their ambition level and prepare for sustainability reporting.

Companies can take the following steps to gain the most benefits from the extra time:

• Take time to carry out CSRD-related projects, such as the Double Materiality Assessment (DMA) and gap analysis, in a robust and high-quality way
• Prepare for CSRD reporting by developing internal KPIs, data collection and data management
• Plan and strategise future sustainability work, including focus points for sustainability work, targets, policies, action plans and sustainability governance
• Practice for CSRD reporting by producing a sustainability statement in accordance with the requirements to identify development areas

How can the CSRD affect your company?

At its core, the CSRD aims to standardise ESG performance reporting for companies. However, the CSRD is about more than closing the reporting gap. It answers to the rising demand for sustainability and represents a significant shift in the financial market, promoting transparency, accountability and environmental awareness.

Regulations, such as the CSRD, give rise to the importance of non-financial performance indicators, allowing for more data-driven decision-making on all levels within organisations. Therefore, the CSRD is more than a legal obligation: it provides an opportunity for companies that want to improve their ESG performance and stakeholder engagement while creating long-term value. It ultimately empowers those who lead the transition to a sustainable and socially responsible economy through substantiation and tailored change management.

Through AFRY’s unique CSRD approach, we build a strong organisational understanding to support clients in their transformation strategy. Using our multi-step approach, we assess the organisation’s high-level CSRD readiness to identify potential future opportunities and challenges, while the double materiality assessment (DMA) provides deeper insights into business activities and processes.

By combining these findings, we assist our clients in prioritising during the CSRD gap analysis by categorising and flagging potential challenges early on. This enables us to provide organisations with insight-driven, well-founded transformation journeys tailored to their specific business and organisational needs.

We also support companies in their sustainability reporting, a process that can be time-intensive, particularly in the first year. With AFRY's expertise, companies can produce a high-quality first report and establish the necessary internal processes for future reporting.

We combine sustainability reporting with actionable solutions to achieve measurable impact and real, lasting change

At AFRY, we assist clients across sectors with ESRS gap analyses, double materiality assessments, tailored action plans for their implementation journey and concrete reporting support. In addition, we provide guidance to clients seeking to embed sustainability into their strategies and daily operations, positioning them at the forefront of sustainable practices.

With comprehensive expertise in sustainability, technical, commercial, financial and project management fields spanning various industries, we leverage this diverse skill set to empower companies to adopt and implement a broad range of sustainable solutions. We deliver actionable strategies and solutions that surpass compliance and reporting to drive measurable impact to ensure measurable impact and real, lasting change.