INTRODUCTION
Exploring readiness and roadmaps for the EU Corporate Sustainability Reporting Directive
The European Union (EU) enacted the Corporate Sustainability Reporting Directive (CSRD) in January 2023, requiring organisations to disclose information on how their activities impact people and the planet—and how social and environmental factors can impact the company’s financial performance.
EU CSRD centres on the concept of double materiality, which highlights that risks and opportunities can be relevant from both a financial and non-financial standpoint. The EU CSRD gives special attention to defining a set of comprehensive and relevant data around non-financial matters.
This depth requires additional effort when it comes to compliance. Companies will need to determine how to adapt their current processes, policies, and tools to not only be able to comply but also identify new opportunities for enhancing their sustainability strategies, making targeted investments, and meeting evolving market expectations. A majority indicate they have already started leveraging consultancies and software to support this process.
This report will address key questions:
- How are EU CSRD regulations perceived by corporate leaders in ESG, Sustainability, Finance, Operations, EHS, and Strategy?
- How are companies preparing for EU CSRD compliance?
- Where are organisations most commonly struggling with EU CSRD compliance initiatives?
- What processes and technologies are organisations exploring to meet EU CSRD requirements?
Based on responses, here are the key themes that emerged:
- Risk of penalties is driving investment in additional resources for sustainability
- Sustainability budgets are set to increase within two years
- Greenhouse gas accounting is a common challenge — and one of the top 3 requirements organisations struggle with
- Organisations see potential with EU CSRD, and expect it to drive meaningful sustainability improvements
- Most organisations prefer software covering multiple ESG aspects, though some still favour tools specialised in one area
- Sustainability is a boardroom priority
Who needs to comply with the CSRD—and when?
The EU CSRD will roll out in phases from 2024 to 2029, impacting around 50,000 companies which are trading across the EU. Compliance deadlines will depend on company size, listing status, and number of employees.
PHASE 1
Large EU public interest entities and issuers
Large undertakings* with 500 or more employees including EU public interest entities, as well as non-EU companies with securities listed on EU-regulated markets, must start reporting in 2025 for the 2024 financial year.
PHASE 2
Other large EU entities and issuers
Other large undertakings* including EU companies which are large undertakings, as well as non-EU companies with securities listed on an EU regulated market must report in 2026 for the 2025 financial year.
PHASE 3
Small and medium-sized EU public interest entities and issuers (excluding micro-enterprises)
Listed EU small and medium-sized enterprises and non-EU small and medium-sized enterprises with securities on EU-regulated markets must report in 2027 for the 2026 financial year, with an option to delay until 2029.
Subsequent phases
Non-EU companies must report in 2029 for the 2028 financial year if they derive over €150M in turnover in the EU for at least two financial years and have either including large undertaking EU subsidiaries, EU SME subsidiaries with securities listed on an EU regulated market; or an EU branch generating net turnover >€40M in the EU.
*Large undertakings must meet two of the following criteria: more than €25M total assets, more than €50M net revenues or more than 250 employees