The Corporate Sustainability Reporting Directive (CSRD) is a European directive that requires companies in the European Union to produce a detailed report on the consideration of environmental, social and governance (ESG) issues in their activities.
Coming into force in January 2024, it results from an evolution of the NFRD, of which it considerably broadens the scope and level of detail. Its objective: to make sustainability reports more transparent in all sectors.
The CSRD is a tool of the European Green Deal that enables the publication of reliable information on sustainability issues, aimed at stakeholders in society such as investors or the general public.
Understanding why the CSRD was created
Who is behind the CSRD?
Sustainability reporting is far from new. Indeed, for the past 10 years, thousands of European companies have been required to transparently report on their environmental, social, and governance (ESG) impacts under the Non-Financial Reporting Directive (NFRD).
This directive requires large listed European companies (> 500 employees) to publish with their annual report a DPEF, Declaration of Extra-Financial Performance, highlighting their actions in favor of the environment and society.
The problem? The NFRD is no longer ambitious enough today and does not adequately frame the content expected in the extra-financial report, giving way to hollow reports often accused of greenwashing.
It is to raise the ambition of extra-financial reporting (now called sustainability ) that the CSRD (Corporate Sustainability Reporting Directive) was approved by the European Commission on July 31, 2023[1] to replace the NFRD, for implementation in January 2024.
What are the objectives of the CSRD?
The CSRD is based on 3 main objectives:
- Information that meets current challenges : Companies must address ESG issues in a manner that reflects their responsibility. With the CSRD, companies will be required to publish all their significant impacts on the environment or society.
- Sufficient information for all stakeholders : With the CSRD, all information is grouped in one place, and the sustainability report becomes the single source of information to share with stakeholders questioning your ESG practices.
- Comparable information : By providing a very precise framework on all the information to be published in the sustainability report, the CSRD ensures comparability of data between companies.
Who is affected by the CSRD?
The CSRD has a progressive implementation schedule, allowing more and more companies to comply year after year. In total, more than 50,000 companies in Europe are affected , across all sectors of activity.
The first companies affected are European companies that were already subject to the NFRD : listed companies with more than 500 employees. They will have to publish their sustainability report in 2025 for the 2024 financial year. To support them, credit institutions and companies subject to state control (insurance companies, mutual insurance companies, pension funds, etc.) have been included.
Next come all other large European companies for publication in 2026. Listed SMEs , small credit institutions and captive insurance companies are expected to publish in 2027. Finally, non-European companies with at least €150 million in turnover on the European market will have to publish a CSRD report in 2029.
What are ESRS, the standards that make up the CSRD?
The CSRD is a set of 12 documents, the ESRS (European Sustainability Reporting Standards), mapping the information to be published in the sustainability report, and divided into the 3 ESG themes.
Summary of ESRS
General standards : ESRS 1 and 2 bring together general information on the concept of reporting (methodologies, definitions, main principles, etc.), as well as general information to be published on your company: general information on governance, on your strategy and business model, and on your impact analysis.
Thematic standards : The 10 other ESRSs making up the CSRD explain the information to be published for each theme:
- Environment: Climate change; Pollution; Water and marine resources; Biodiversity; Circular economy and resource use
- Social: Own employees; Employees in the value chain; Affected communities; Consumers and end users
- Governance: Conduct of business
What is double materiality analysis?
Dual materiality analysis is the major new feature of the CSRD. Before meeting the reporting requirements, you must determine the themes that concern your company . These themes correspond to those on which you have significant environmental or social impacts, or those on which your activity depends (generating risks or opportunities for your financial performance). These are the IRO (Impact, Risk, Opportunity) included in the concept of dual materiality :
- Impact materiality: the impacts of your company on its environment
- Financial materiality: the financial risks and opportunities generated by the environment on your business
You will then only need to publish information related to topics that are material to you. Through this exercise, the CSRD requires companies to have a more comprehensive view of their business to gain transparency on all relevant ESG issues.
Conclusion
The CSRD is therefore the new essential European directive that improves corporate transparency on ESG issues. Its scope, more ambitious than the NFRD, is expanding over the years, increasing the number of companies concerned to up to 50,000. These companies will have to publish a sustainability report based on the ESRS, the reporting standards describing the requirements to be met for the report. To define the scope of reporting themes, companies will have to undergo a double materiality analysis and identify their material issues.
Above all, the CSRD is an opportunity for companies to transform their business models towards greater sustainability. Need help tackling the CSRD issue head-on? At Kiosk, we'll help you achieve compliance with complete peace of mind. Don't hesitate to contact our team!
Source :
[1] Publication of the CSRD in the official journal
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FAQs
Find answers to common questions about CSRD and Kiosk
The CSRD or Corporate Sustainability Reporting Directive is the new European directive which aims to impose and better regulate corporate sustainability reports.
It makes companies more transparent, with standardized ESG reporting standards called ESRS (European Sustainability Reporting Standards)
The application of the Corporate Sustainability Reporting Directive is progressive. Here is a summary table.
| Effective year | Businesses impacted | Standard |
|---|---|---|
| 2025 (over the financial year 2024) | Listed companies with more than 500 employees | ESRS |
| 2026 (sur l’exercice 2025) | Autres grandes entreprises de plus de 1000 salariés | ESRS |
| 2026 (over the financial year 2025) | Businesses that meet two out of three criteria: | VSME |
| 2027 (over the year 2026) | SMEs listed on the stock exchange | VSME |
| 2029 (over the fiscal year 2028) | Non-European companies with at least €150M in turnover on the European market | ESRS |
Want to know when your business is impacted? Use our regulatory monitoring tool to find out.
The "omnibus" bill is a recent initiative by the European Commission aimed at reducing the scope of the CSRD directive. It proposes, in particular, to raise the application thresholds: only companies with more than 1,000 employees would be affected, compared to 250 previously.
It promotes the adoption of the VSME framework to reduce the reporting burden on SMEs and mid-cap companies.
The VSME (Voluntary Sustainability Reporting Standard) is a voluntary European standard designed to help unlisted small and medium-sized enterprises (SMEs) structure and communicate their sustainability initiatives. Developed by EFRAG, this standard offers a lighter framework compared to ESRS standards, covering ESG aspects. It allows in particular to:
- Harmonizing sustainable reporting practices in Europe
- Facilitate the response to the expectations of business partners
- Improving access to responsible financing
It aims to harmonize sustainable reporting practices, facilitate meeting the expectations of business partners, and improve access to responsible financing. Although not mandatory, adopting VSME allows SMEs to demonstrate their commitment to sustainability and anticipate future regulatory developments.
- Complete the preliminary steps for the CSRD
These steps are dual materiality analysis and gap analysis. They will help you understand the material issues, impacts, risks, and opportunities for your business. They will also allow you to create a roadmap based on what you have already achieved.
Check out our article on double materiality here.
- Compile your data and produce your indicators
Centralizing sustainability data is essential for your compliance, particularly to facilitate understanding and consistency when producing quantitative indicators.
- Produce your detailed report in XHTML format with XBRL tags
Thanks to its tagging and visualization technologies, Kiosk guarantees a very high level of consistency.
Find our article on XBRL tagging here .
- Audit your data
At the end of these steps, your sustainability report is ready to be audited by an Independent Third Party Organization (ITO).
Kiosk supports your compliance journey throughout this process. For more information on these steps, we invite you to contact our team.
CSRD compliance requires companies to:
- understanding the 12 ESRS and 82 disclosure requirements
- the collection of more than 1,000 data points
- the calculation of 50-147 quantitative indicators
- tagging 4,000 items in the final report
Kiosk is a software that allows companies to save 5 months on the preparation of their CSRD report by automating the most time-consuming steps.
- First of all, the security of your data is our priority.
- All data is stored in France, in Paris, via our French hosting provider.
- During transit, your data is encrypted in SSL/TLS from the user's browser to our servers guaranteeing the security of communications.
- Data is also encrypted at rest, both on the database and on file storage, protecting the data in the event of a leak or attempted theft.
- Kiosk's technical teams are the only ones who can access your data.
- Kiosk is in the process of ISO27001 certification.
- Our technical support is available 24/7.