The plain-English explainer

What is the CSRD?

The CSRD is the EU Corporate Sustainability Reporting Directive, the law that puts sustainability reporting on the same footing as financial reporting. After the 2026 Omnibus, it now applies mainly to companies with more than 1,000 employees and over EUR 450 million turnover, who must report under the ESRS standards, run a double materiality assessment and get their statement assured. Directive (EU) 2022/2464 sets it out; this page explains it without the legalese.

TL;DR

  • What: the Corporate Sustainability Reporting Directive, Directive (EU) 2022/2464. It replaced the older NFRD.
  • Who (post-Omnibus): EU companies with more than 1,000 employees AND more than EUR 450m net turnover. Listed SMEs are out.
  • When: newly in-scope companies report for FY2027, first reports in 2028; non-EU groups FY2028, reports in 2029.
  • What you report: the ESRS standards, scoped by a double materiality assessment, plus EU Taxonomy KPIs.
  • How: limited assurance and digital tagging (Inline XBRL) in the management report.
Check if you are in scopeWhat the Omnibus changed

Post-Omnibus, at a glance

1,000 + EUR 450m

Employees AND net turnover. Both thresholds must be exceeded to be in scope.

FY2027 to 2028

Newly in-scope companies report for FY2027, with first reports published in 2028.

~80% out

The Commission estimates the Omnibus removed about 80% of previously-covered companies.

Confirmed by the final Omnibus I Directive (EU) 2026/470, in force 18 March 2026. Council of the EU. See the full timeline.

What the CSRD is, and what it replaced

The Corporate Sustainability Reporting Directive, CSRD for short, is Directive (EU) 2022/2464, adopted on 14 December 2022 and in force from 5 January 2023. It requires large companies to publish detailed, standardised, audited and machine-readable information about their environmental, social and governance impacts, risks and opportunities. It is a cornerstone of the European Green Deal and the EU sustainable finance agenda. European Commission

The CSRD replaced and dramatically expanded the older Non-Financial Reporting Directive (NFRD), Directive 2014/95/EU. The NFRD covered roughly 11,700 large public-interest entities and asked only for high-level, largely unstandardised disclosure. The CSRD added detailed standards (the ESRS), double materiality, third-party assurance and digital tagging. Technically, both operate as amendments to the Accounting Directive (2013/34/EU).

In plain terms: if you are a big company doing business in the EU, you must report, in your management report, in a standardised format, checked by an auditor and digitally tagged, how your business affects people and the planet, and how sustainability issues affect your business.

Who must report now

After the Omnibus, the CSRD applies to an EU company only if it exceeds both of these thresholds: more than 1,000 employees (average over the financial year) and more than EUR 450 million net turnover. This is a cumulative AND test on two metrics, replacing the old two-of-three test (250 employees / EUR 50m turnover / EUR 25m balance sheet); the balance-sheet criterion was dropped entirely. BDO, post-Omnibus scope

Large EU companies

In scope if they exceed more than 1,000 employees AND more than EUR 450m net turnover, at individual or group level.

Non-EU groups

Caught with more than EUR 450m EU net turnover (was EUR 150m) plus an EU subsidiary that is a large undertaking or a branch with more than EUR 200m turnover.

Listed SMEs and smaller firms

Removed from mandatory scope. They can report voluntarily using the VSME standard and are protected by the value-chain cap.

A value-chain cap protects smaller suppliers: an in-scope company may not demand sustainability data beyond the VSME standard from value-chain partners with fewer than 1,000 employees. If you are an SME receiving a sprawling questionnaire, you can push back. See our guide for suppliers being asked for data.

Not sure where you land? Use the scope checker for a plain-English answer including your first reporting year.

AND, not two-of-three

Some older summaries still describe scope using the Accounting-Directive two-of-three large-undertaking test. The operative CSRD gate after the Omnibus is the cumulative 1,000-employee AND EUR 450m-turnover combination. Use the AND test.

The Omnibus reset

The single biggest change to the CSRD came from the EU Omnibus I simplification process. The final Omnibus I Directive, Directive (EU) 2026/470, was approved by the Council on 24 February 2026, published in the Official Journal on 26 February 2026 and entered into force on 18 March 2026. Member States must transpose the CSRD parts by 19 March 2027. Council of the EU

It raised scope thresholds (removing an estimated 80% of previously-covered companies), took listed SMEs out, raised the non-EU thresholds, added the value-chain cap, kept limited assurance as the ceiling and mandated a sharp cut in ESRS datapoints. There are really three separate Omnibus things, and they are easy to confuse: the February 2025 proposal, the stop-the-clock Directive (EU) 2025/794, and the final Directive (EU) 2026/470. We keep them straight on the Omnibus explainer.

When you report

The Omnibus collapsed the old four-wave structure. Newly in-scope companies (more than 1,000 employees and more than EUR 450m turnover) report for financial years beginning on or after 1 January 2027, with first reports published in 2028. Non-EU groups meeting the higher thresholds start with FY2028, reporting in 2029. PwC Viewpoint

Companies already reporting since FY2024 (the former Wave 1 of large public-interest entities with more than 500 employees) that remain above the new thresholds keep reporting. Those now below may get a Member-State-optional pause for FY2025 and FY2026, with a mandatory exit from FY2027. The full picture, with sources for every date, is on the deadlines page.

What you report: the ESRS and double materiality

CSRD companies report against the European Sustainability Reporting Standards (ESRS): 12 standards made up of ESRS 1 and ESRS 2 (cross-cutting) plus E1 to E5 (environment), S1 to S4 (social) and G1 (governance). The first set was adopted as Delegated Regulation (EU) 2023/2772, applicable from FY2024. Delegated Regulation (EU) 2023/2772

Which topical standards apply is decided by a double materiality assessment (DMA). A sustainability matter is material, and must be reported, if it is significant from either an impact perspective (your effect on people and the planet) or a financial perspective (its effect on your enterprise value). ESRS 2 general disclosures apply to every reporter regardless of materiality.

The revised ESRS are still in flux

The ESRS are being simplified. EFRAG delivered technical advice on 3 December 2025; the Commission published a draft revised delegated act for public consultation from 6 May to 3 June 2026, with adoption targeted around 17 September 2026 and application from FY2027 (voluntary early use for FY2026). Mandatory datapoints are expected to fall by around 60 to 70%, and sector-specific ESRS have been dropped. Treat the current ESRS 2023/2772 as the law until the revision is adopted. Commission consultation

Assurance and digital tagging

The sustainability statement must obtain limited assurance from a third party, a statutory auditor or, where a Member State allows it, an independent assurance services provider. The CSRD originally envisaged a later move to reasonable assurance; the Omnibus removed that escalation, so limited assurance is now the permanent ceiling. A common EU assurance standard, expected to align with ISSA 5000, is anticipated around 1 July 2027. Sidley

Reports must be prepared in XHTML and digitally tagged using Inline XBRL under the European Single Electronic Format (ESEF), making them machine-readable and feeding the future European Single Access Point (ESAP). EFRAG published the ESRS XBRL taxonomy to enable tagging.

Penalties

The CSRD is a directive, so enforcement and sanctions are set by each Member State during transposition and must be effective, proportionate and dissuasive. There is no single EU-wide penalty, which produces meaningful variation: public-procurement exclusion, administrative fines (commentary references up to around 5% of global annual turnover in some national regimes), and criminal liability in countries such as France. Always check the specific Member State. European Commission

By the numbers

The CSRD in a few figures

2022/2464

The CSRD directive number; in force since 5 January 2023.

12

ESRS standards: ESRS 1 and 2 (cross-cutting) plus E1-E5, S1-S4, G1.

EUR 450m

Net turnover threshold, combined with more than 1,000 employees (AND test).

FY2027

First reporting year for the newly in-scope population (reports in 2028).

Scope and timeline confirmed by the Omnibus I Directive (EU) 2026/470. Council of the EU

FAQ

People also ask

What is the CSRD?
The CSRD is the EU Corporate Sustainability Reporting Directive, Directive (EU) 2022/2464, in force since 5 January 2023. It requires large companies to publish standardised, audited, digitally tagged information about their environmental, social and governance impacts, risks and opportunities, using the ESRS standards and a double materiality assessment.
Who has to comply with the CSRD now?
After the Omnibus I Directive (EU) 2026/470, the CSRD applies to EU companies that exceed BOTH thresholds: more than 1,000 employees AND more than EUR 450 million net turnover. Listed SMEs are removed from mandatory scope. Non-EU groups are caught with more than EUR 450m EU turnover plus a qualifying EU subsidiary or branch.
When does the CSRD apply?
Newly in-scope companies (more than 1,000 employees and more than EUR 450m turnover) report for financial years beginning on or after 1 January 2027, with first reports published in 2028. Non-EU groups start with FY2028, reporting in 2029. Wave 1 companies already reporting since FY2024 that remain above the thresholds continue.
What is the difference between the CSRD and the NFRD?
The CSRD replaced the older Non-Financial Reporting Directive (NFRD, Directive 2014/95/EU). The NFRD covered roughly 11,700 large public-interest entities with high-level, unstandardised disclosure. The CSRD mandates detailed ESRS standards, double materiality, third-party assurance and digital tagging, though the Omnibus then narrowed how many companies are caught.
Does the CSRD require assurance?
Yes. The sustainability statement must obtain limited assurance from a third party, such as a statutory auditor or, where a Member State allows it, an independent assurance services provider. The previously planned move to reasonable assurance was removed by the Omnibus, so limited assurance is now the permanent ceiling.
Are SMEs in scope of the CSRD after the Omnibus?
Most are not. Listed SMEs were removed from mandatory scope, and the new threshold (more than 1,000 employees AND more than EUR 450m turnover) excludes the vast majority of smaller companies. SMEs can report voluntarily using the VSME standard, and a value-chain cap limits the data larger customers can demand from them.
What standards do CSRD companies report against?
CSRD companies report under the European Sustainability Reporting Standards (ESRS): 12 standards made up of ESRS 1 and ESRS 2 (cross-cutting) plus E1 to E5 (environment), S1 to S4 (social) and G1 (governance). A double materiality assessment determines which topical standards apply; ESRS 2 applies to everyone.
What are the penalties for not complying with the CSRD?
The CSRD is a directive, so penalties are set by each Member State and must be effective, proportionate and dissuasive. These can include exclusion from public procurement, administrative fines (up to around 5% of turnover in some states) and, in countries such as France, criminal liability. Always check the rules in the relevant Member State.
Did the Omnibus cancel the CSRD?
No. The Omnibus narrowed and simplified the CSRD; it did not cancel it. It raised the scope thresholds, removed listed SMEs, delayed not-yet-reporting waves by two years, cut the ESRS datapoints sharply and softened assurance. The core obligations, double materiality, the ESRS and digital tagging, remain in place.

This is guidance, not legal advice

This is guidance to help you understand the CSRD, not legal advice. For decisions specific to your business, confirm with the official sources we link or a qualified adviser. We cannot guarantee compliance, and you should be wary of anyone who says they can.

Sources

  1. [1]Directive (EU) 2022/2464, the CSRD (EUR-Lex)retrieved 8 Jun 2026
  2. [2]European Commission: Corporate sustainability reportingretrieved 8 Jun 2026
  3. [3]Council of the EU: final sign-off of the Omnibus simplification (24 Feb 2026)retrieved 8 Jun 2026
  4. [4]BDO: CSRD post-Omnibus revised scope and requirementsretrieved 8 Jun 2026
  5. [5]PwC Viewpoint: the Omnibus directive finalisedretrieved 8 Jun 2026
  6. [6]Delegated Regulation (EU) 2023/2772 (ESRS Set 1)retrieved 8 Jun 2026
  7. [7]European Commission: consultation on revised ESRS (6 May 2026)retrieved 8 Jun 2026
  8. [8]EFRAG: technical advice on simplified ESRS (3 Dec 2025)retrieved 8 Jun 2026
  9. [9]Sidley: stop-the-clock directive and ESRS simplification processretrieved 8 Jun 2026

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