European Union CSRD regulation reshapes sustainability reporting

The European Union’s Corporate Sustainability Reporting Directive (CSRD) is establishing new standards for how companies disclose their environmental, social, and governance (ESG) impacts. The regulation aims to ensure sustainability claims are verifiable and comparable across the board, reducing the risk of greenwashing.

Under the directive, EU companies and groups with more than 1,000 employees and a net turnover exceeding €450 million are required to report. For these entities, reporting for the 2027 financial year will begin in 2028. Non-EU groups meeting specific turnover thresholds in the EU must begin reporting in 2029 for the 2028 financial year. Recent legislative adjustments, including the Omnibus I directive, have raised thresholds, meaning fewer companies fall within the immediate scope.

While listed small and medium-sized companies are no longer directly in scope, smaller suppliers may still face data requests from large customers. The directive also places increased pressure on corporate communications, as companies must ensure their public sustainability claims align with the data disclosed under the European Sustainability Reporting Standards (ESRS) to avoid legal repercussions.