Understanding CSRD: a smart move for your business
Adopted in response to mounting social and environmental challenges, the CSRD (Corporate Sustainability Reporting Directive) establishes a clear and structured framework for non-financial reporting by companies. By revealing the environmental and social impact of their operations, businesses contribute to a more sustainable and transparent economy. This European directive, ambitious yet demanding, is redefining the rules of the game for companies across Europe and beyond.
1. Context: Why was the CSRD created?
To understand the CSRD, it’s essential to start with the reason behind it. The CSRD (Corporate Sustainability Reporting Directive) is a direct response to the growing demand for greater transparency and sustainability in business.
Previously, the NFRD (Non-Financial Reporting Directive) attempted to fill this role but fell short. It failed to provide a clear, consistent framework, making it difficult to compare company reports. As a result, many reports were vague, incomplete, or too subjective to be actionable.
Imagine a company highlighting its environmental efforts in a glossy report, yet offering no concrete data or measurable outcomes. For investors or consumers, that makes it nearly impossible to assess the credibility or actual impact of those initiatives. The CSRD addresses this gap by setting strict rules for ESG (Environmental, Social, and Governance) reporting.
In practice, this means companies must disclose not only how they impact the environment and society, but also how these factors, in turn, influence their financial performance. For instance, a company investing in renewable energy could explain how that strategy reduces long-term costs and improves resilience against fluctuating energy prices.
The goal is simple: make sustainability disclosures more understandable, reliable, and decision-useful for all stakeholders. The CSRD pushes companies to move beyond vague commitments and show real, tangible progress.
Embracing the CSRD is not just about compliance, it’s about committing to meaningful progress and aligning with a world that increasingly demands corporate accountability and purpose.
2. What are the goals of the CSRD?
The CSRD aims to transform non-financial reporting into a true strategic asset for companies. Here are its main objectives:
- Standardization: Establish a single, harmonized ESG reporting framework across the European Union to improve comparability of sustainability data.
- Increased Transparency: Deliver clear, accessible, and understandable information to meet the expectations of investors, consumers, and stakeholders.
- Accountability: Encourage companies to fully integrate environmental and social considerations into their core strategy, not treat them as external constraints.
- Digital Accessibility: Ensure reports are made available in digital formats, making them easier to access, analyze, and audit.
Here’s a practical example: thanks to standardization, a publicly traded company in Germany can be directly compared to one in France. This consistency is particularly valuable for international investors and stakeholders making cross-border decisions.
But the CSRD isn’t just about compliance and controls. It offers a real opportunity for companies to prove their commitment to sustainable development, strengthen their market credibility, and build trust with both internal and external audiences.
3. Who does the CSRD apply to, and when?
The CSRD applies gradually to different categories of companies based on their size, revenue, and legal status. Here’s how to know if your organization is affected:
- Fiscal Year 2024 (published in 2025) Large companies meeting at least two of the following criteria:
- Revenue > 40 M€
- Total assets > 20 M€
- More than 500 employees
- Fiscal Year 2025 (published in 2026). Mid-sized companies meeting at least two of the following criteria:
- Revenue > 40 M€
- Total assets > 20 M€
- More than 250 employees
- Fiscal Year 2026 (published in 2027). Publicly listed SMEs (excluding micro-enterprises with fewer than 10 employees and either total assets below €350,000 or net revenue under €700,000).
- Fiscal Year 2027 (published in 2028).
Both EU-based and non-EU-listed SMEs (excluding micro-enterprises).
- Fiscal Year 2028 (published in 2029):
Non-European companies with significant business in the EU, defined as generating more than €150 million in revenue within the EU.
For non-EU companies, compliance also depends on the presence of subsidiaries or branches within the European Union. This phased timeline gives businesses time to prepare and implement CSRD-compliant sustainability reporting systems.
Asking the right questions today, like “Where do we currently stand with our ESG reporting?”, is a critical first step to anticipate and meet regulatory deadlines.
4. Double Materiality: explained
The concept of double materiality is a cornerstone of the Corporate Sustainability Reporting Directive (CSRD). It pushes companies to assess their operations from two distinct but complementary angles:
- Impact Materiality: This refers to how a company’s activities affect the environment and society at large. For example, a food production company might examine how its agricultural practices impact local biodiversity or greenhouse gas emissions.
- Financial Materiality: This perspective looks at how environmental, social, and governance (ESG) issues impact the company’s own financial performance. For instance, a construction firm might assess how new environmental regulations could increase operational costs or affect its supply chain.
By adopting this dual approach, companies gain a holistic view of both their societal responsibilities and related financial risks. For example, a company reducing its plastic waste (impact materiality) might also enhance its brand reputation and customer loyalty (financial materiality).
This broader perspective enables companies to anticipate future challenges and show genuine commitment to long-term sustainability. It recognizes that understanding how your business affects the world, and how the world affects your business, are equally important to building resilient, responsible strategies.
To illustrate further: imagine a textile company switching to eco-friendly production methods that cut water use and reduce pollution (impact materiality). These same initiatives could also lead to cost savings and increased appeal to ethical consumers (financial materiality).
In short, double materiality encourages companies to embed ESG factors directly into their business models, acknowledging that sustainability and profitability are deeply interconnected.
5. The importance of starting with the right tools and resources
Implementing effective reporting right now is essential. Today, many online tools offer comprehensive solutions to help you calculate your carbon footprint while integrating the principles of double materiality. These tools allow you to assess both your company’s impact on the environment and society, as well as the financial risks linked to these issues.
For example, platforms like Portail RSE provide educational resources and key indicators to support businesses in complying with CSRD requirements. These tools also make it easier to build practical and realistic action plans to reduce your environmental footprint, while actively involving your stakeholders.
If you’re feeling overwhelmed by the complexity of CSRD compliance, you’re not alone, and you’re not stuck. You can absolutely outsource this work to specialized experts. They can support you with tailored services adapted to your specific needs and industry sector.
Whether you choose to equip yourself with the right tools or work with experienced professionals, the key is to turn this regulatory challenge into a strategic opportunity for sustainable growth.
Understanding CSRD is your first step toward future-proofing your business.
Act now: measure your impact, build an ambitious roadmap, and make the most of the resources available to turn this regulatory shift into a long-term advantage, for your organization and for the planet.
