Understanding the CSRD: Key Deadline, Impact and How To Prepare
The Corporate Sustainability Reporting Directive (CSRD), introduced by the European Union, is revolutionising how companies disclose sustainability information. Building on the Non-Financial Reporting Directive (NFRD), the CSRD adopts a more rigorous and expansive approach to environmental, social, and governance (ESG) reporting, aiming to create a more transparent and sustainable economy.
With the January 2025 compliance timeline fast approaching, businesses need to prepare for the significant changes and understand whether they fall within the scope of this regulation.
What is the CSRD?
The CSRD is a regulation that requires qualifying companies to report on their environmental, social, and governance (ESG) performance. It aims to elevate sustainability reporting to the same level of importance as financial reporting, offering a standardised framework to help investors and stakeholders evaluate companies’ sustainability performance.
Under the updated directive, the following entities fall under its scope:
All large EU companies, regardless of whether they are listed. A company is classified as “large” if it meets two of the following criteria:
More than 250 employees
€40 million or more in annual revenue
€20 million or more in total assets
Listed small and medium-sized enterprises (SMEs), except micro-enterprises.
Non-EU companies with substantial business in the EU, defined as generating €150 million or more in annual revenue and having at least one EU-based subsidiary or branch meeting certain thresholds.
Key Regulatory Changes
1. Expanded Scope
The CSRD vastly broadens the range of companies required to report, including non-EU businesses with significant EU operations. Compared to the NFRD, which applied only to large, listed companies, the CSRD creates a more inclusive and comprehensive regulatory framework.
2. Standardized Reporting Framework
Companies must adopt the European Sustainability Reporting Standards (ESRS) to ensure uniformity and comparability in ESG disclosures. This shift will help streamline reporting across industries and geographies, enhancing clarity for stakeholders.
3. Detailed ESG Disclosure Requirements
The directive mandates reporting on:
Environmental: Climate change, water, biodiversity, and resource use
Social: Human rights, labour practices, diversity, and community engagement
Governance: Anti-corruption measures, leadership accountability, and board diversity
Additionally, the double materiality principle requires companies to disclose both:
How sustainability factors impact their business (financial materiality)
How their operations impact the environment and society (impact materiality)
4. Digital Reporting
Reports must be submitted in the European Single Electronic Format (ESEF), ensuring accessibility and machine readability for enhanced comparability and analysis.
5. Independent Assurance
To enhance credibility, companies are required to have their ESG data independently verified, marking a significant step toward treating sustainability information with the same rigour as financial audits.
Key Timeline: January 2025 – Immediate Compliance Requirements
The Corporate Sustainability Reporting Directive (CSRD) introduces sweeping changes starting in January 2025, significantly broadening its scope. Large companies that were not previously subject to the Non-Financial Reporting Directive (NFRD) must now comply with the directive's enhanced sustainability reporting requirements.
This expansion means that thousands of organizations will need to prepare for:
Comprehensive Reporting Standards: Companies must align their sustainability disclosures with the European Sustainability Reporting Standards (ESRS), covering areas such as environmental impact, social responsibility, and governance practices.
Data Collection and Validation: Organizations must implement systems to collect, verify, and disclose detailed sustainability data, ensuring accuracy and consistency with CSRD requirements.
Strategic Integration: Sustainability reporting must become an integral part of business strategy, with clear links to risk management, operational decisions, and long-term goals.
For companies entering the CSRD scope in 2025, the timeline is tight. Preparations must be well underway, including:
Assessing Reporting Readiness: Conducting a gap analysis to understand where current reporting practices fall short of CSRD standards.
Building Internal Capacity: Establish cross-functional teams and train staff to manage the complexities of sustainability reporting.
Leveraging Expert Support: Partnering with external consultants or technology providers to navigate regulatory requirements and streamline reporting processes.
The 2025 deadline represents a significant shift, emphasising transparency and accountability in corporate sustainability. Companies must act immediately to ensure compliance and avoid potential penalties while positioning themselves as leaders in sustainable business practices.
Implications for Businesses
The CSRD introduces both challenges and opportunities for affected companies:
Increased Accountability: Businesses must improve their sustainability strategies and demonstrate transparent ESG practices to all stakeholders.
Higher Costs: New reporting standards, third-party verification, and digital compliance will require investments in resources and systems.
Strategic Opportunities: Forward-looking companies can use compliance to differentiate themselves, showcasing leadership in sustainability and appealing to socially conscious investors.
How Can Yordas Group Help?
Navigating the complexities of the CSRD is no small task. Yordas Group offers tailored solutions to support your journey to compliance and position your business as a leader in sustainability.
CSRD Compliance Assessments: Evaluate your current reporting practices and develop a roadmap for alignment with ESRS standards.
ESG Data Management: Streamline the collection, verification, and reporting of ESG data for accuracy and efficiency.
Independent Assurance: Ensure the credibility of your sustainability reports with third-party verification.
Training and Support: Equip your team with the tools and knowledge to meet regulatory expectations.
The January 2025 deadline is a critical milestone. Let our team guide you in turning compliance into a competitive advantage. Contact us today to get started!
About our expert
Damon Waterworth
Senior Sustainability Consultant
Damon leads Yordas’ sustainability division encompassing the delivery of life cycle assessment, ecolabelling, management systems and auditing services. He is a member of the BSI committee for LCA ISO standards and has recently developed the Royal Society of Chemistry accredited e-learning course: “A Practical Guide to Conducting a Life Cycle Assessment”. Damon holds a Master of Science degree in Energy and Environmental Management from Lancaster University and a Bachelor’s degree in Geography from the University of Chester.