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The Corporate Sustainability Reporting Directive, or CSRD, is here as part of the European Union (EU) Green Deal strategy to reach climate neutrality by 2050, and it’s shifting the way companies think about sustainability reporting. If you’re working in compliance, you've probably noticed that CSRD is unlike any other directive. It’s not just about ticking boxes; it's about embedding a new mindset and a set of rigorous standards that make sustainability reporting more accurate, consistent, and meaningful.
So, how can compliance professionals get ready for this? We’ve written down key points to make your preparation for CSRD more manageable. (Look for a quick cheat sheet below!)
Even non-EU companies with significant operations in the EU-regulated markets may be subject to CSRD requirements, particularly if they have substantial net turnover within the EU.
The European Sustainability Reporting Standards (ESRS) lay out detailed requirements for each category under CSRD. These are your guidelines for which metrics and data points to track, and they’re structured to increase transparency and comparability of reports across industries.
You’ll want to map out the specific data requirements in each ESG area (environmental, social, and governance) and determine who is responsible for gathering each data point internally. This might be new territory, but it’s key for ESRS alignment.
The CSRD’s phased implementation began in 2024, starting with companies already covered under the Non-Financial Reporting Directive (NFRD), impacting around 11,000 firms. In 2025, all other large EU companies will be required to comply, expanding the scope to include more organizations across the EU. By 2026, listed small- and medium-sized enterprises (SMEs) will also need to begin CSRD reporting; however, they have the option to opt out until 2028, allowing additional time for these smaller entities to prepare for full compliance. This staggered timeline gives companies the chance to gradually adapt to CSRD requirements and implement necessary reporting processes.
Before tackling CSRD compliance, start with a gap analysis to assess your current non-financial reporting setup and see how close (or far) it is from what the CSRD will require.
Under CSRD, the focus shifts to double materiality—evaluating not just how sustainability issues impact your company (financial materiality), but also how your company impacts people and the environment. This double-pronged approach will likely require deeper data collection and tracking systems than you may already have in place.
The CSRD’s wide-ranging requirements mean that compliance won’t be achieved by any one department. You’ll need a cross-departmental team from finance, HR, operations, legal, and sustainability to get all the information and oversight you need.
Creating a CSRD task force ensures a coordinated effort to gather data, assess policies, and implement necessary changes. Having buy-in from senior management is also essential for securing resources and support, making compliance a company-wide priority.
Given the CSRD’s requirements, a structured reporting framework is essential. The CSRD mandates that reports be published in XHTML format, with digital tagging to facilitate data processing through the European Single Access Point (ESAP).
Investing in reporting software that supports structured data collection, XHTML formatting, and digital tagging is key. Not only does it make your reporting process smoother, but it also ensures compliance with these technical standards, reducing manual effort and human error.
With CSRD’s complexities, purpose-built technology is no longer just a nice-to-have; it’s critical. Regulatory intelligence platforms can offer significant advantages in managing these new requirements effectively:
One of CSRD’s unique requirements is mandatory third-party assurance on your sustainability reporting. Unlike other frameworks, this adds an extra layer of verification to ensure data reliability and accuracy.
Engaging with an assurance provider early on will help you get a feel for their requirements, plus it builds a relationship that can support you over the long term. Ensure internal controls and audit trails are in place for all reported data, as these will facilitate the assurance process and help avoid issues during verification.
Compliance is a team effort, and CSRD requires that key stakeholders understand the ins and outs of the directive. Establishing a basic training program will help people at all levels understand what’s changing, why it matters, and their role in ensuring compliance.
Also, as with any directive, there may be refinements or expansions as CSRD implementation progresses. Make sure your team is set up to stay updated with the latest guidelines and actively adapts as things evolve.
CSRD aligns with global frameworks, including the Global Reporting Initiative (GRI) and the International Sustainability Standards Board (ISSB). If your company already reports under these or operates outside the EU, aligning these standards with CSRD requirements can make compliance easier and increase global comparability.
Staying up-to-date with changes in these global standards is also a good strategy for ensuring your reports are well-regarded, not just within the EU but globally. This also helps avoid redundant work if you’re balancing CSRD with other requirements.
CSRD mandates annual reporting and continuous tracking, so think of this as an opportunity to set and track ESG performance targets that align with your business strategy.
Instead of viewing CSRD as a one-off compliance hurdle, consider it a pathway toward meaningful sustainability improvements. You’re setting the stage for continuous improvement in ESG performance, which adds strategic value beyond mere compliance.
With features designed to ensure audit readiness, Regology helps compliance teams remain transparent and fully prepared for external assurance, enhancing the credibility of sustainability reports. Here's how it can help with CSRD compliance:
To fully leverage Regology's capabilities for CSRD compliance, consider the following steps:
