Skip to main content

CSRD – A simple step-by-step guide

Implications and considerations for reporters

With the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD) on the horizon, companies must consider how the directive will apply to them and question the relevant timelines, scope, and reporting requirements. According to the European Commission, approximately 50,000 companies are expected to be impacted by the requirements, and the first companies will have to apply the new rules from as early as 2025, for financial years beginning on or after 1 January 2024.

As part of the European Green Deal, the CSRD will transform how companies report on sustainability matters. It aims to improve the availability and reliability of sustainability information whilst creating a culture of transparency around companies’ impact on people and the environment.

One of the central pillars of the CSRD is the requirement for in-scope companies to produce disclosures in accordance with the European Sustainability Reporting Standards (ESRS), which will involve reporting on a broad range of sustainability topics applying a “double materiality” approach. The directive will also make it mandatory for reported sustainability information to be assured.

This simple step-by-step guide aims to help you navigate the new requirements, answer some of the most frequently asked questions, and consider the next steps for your organisation.

Step 1: Is your company impacted?


As well as applying to non-EU undertakings listed on an EU-regulated market, the CSRD extends to certain non-EU undertakings not listed on an EU-regulated market but have significant activity in the EU. If a company has significant activity in the EU, it may be required to disclose the information covering its entire operations, including its EU and non-EU operations. Exemptions may be available for subsidiaries, provided they are considered at the consolidated level.

We have produced the following in-depth article which can help you understand how your company may be impacted and when you will be expected to comply. However, scoping may be complex, and consultation with an expert is generally recommended.

Step 2: When do you need to report?


The reporting timeline will depend on various factors, such as the size of your business or whether you are listed on a regulated market in the EU. A helpful synopsis, including definitions and criteria, can be found in this article. Here is a summary:

  • Large EU public interest entities with transferable securities traded on an EU-regulated market (including non-EU companies based on EU-regulated markets) and with more than 500 employees must report from 2025 for financial years starting on or after 1 January 2024.
  • Large EU undertakings and EU parent undertakings of large groups, and other non-EU large companies listed on a regulated market in the EU, must report from 2026 for financial years starting on or after 1 January 2025.
  • EU and non-EU small and medium-sized undertakings ("SMEs") listed on EU-regulated markets must report from 2027 for financial years starting on or after 1 January 2026.
  • Non-EU companies with EU large or listed subsidiaries or an EU branch must report from 2029 for financial years starting on or after 1 January 2028 (noting that the reporting burden falls on the subsidiary/branch located in the EU).

Step 3: What disclosures need to be made?


Companies will be required to disclose material information regarding sustainability-related impacts, risks, and opportunities in accordance with the ESRS. Like financial reporting standards, the ESRS aims to increase the accuracy, consistency and comparability of corporate sustainability reporting.

Unlike previously adopted frameworks, such as the Taskforce on Climate-related Financial Disclosures (TCFD), which focuses on climate only, the ESRS will encompass quantitative and qualitative disclosures across a wide range of sustainability topics. They are expected to cover environmental, social and governance matters, including accompanying management commentary and data on the company’s strategy, governance, materiality assessment, and performance metrics.

The CSRD takes a double materiality perspective, in which the risks and opportunities of the undertaking and the impacts of the undertaking represent a separate materiality perspective.This is an important distinction from other frameworks, such as the International Sustainability Standards Board (ISSB) and TCFD. While interoperability between the requirements of CSRD and other sustainability reporting frameworks is expected, CSRD may require disclosures over and above what other frameworks require. We will publish more information on ESRS following the adoption of the final standards by the European Commission.

Step 4: Where should the disclosures be made?


The CSRD requires the disclosure of sustainability information in a dedicated section within the management report. This is important to note, as it differs from other reporting frameworks, such as TCFD, which allows companies to make disclosures outside of the annual report.

Companies must digitally tag reported sustainability information in accordance with a digital taxonomy, which will help users quickly locate the information they need.

Step 5: Is there a requirement for independent assurance?


The CSRD introduces a more robust approach toward the assurance of sustainability information. From the first year of a company including CSRD disclosures, they will be required to obtain limited assurance over their compliance with the sustainability reporting standards, their underlying materiality assessment process, and certain reported indicators. The level of assurance needed may move towards reasonable assurance if assessed as feasible in the future.

To ensure consistency and connectivity of financial and sustainability information, a statutory or financial auditor will need to provide an assurance opinion over the sustainability report. Member States, however, can allow an independent assurance services provider, other than the company’s statutory auditor, to express this assurance opinion if the Member States’ set assurance quality standards are complied with. The assurance report issued must be publicly disclosed with the annual financial report.

Taking Action


The reporting requirements of CSRD and supporting ESRS are extensive, and the lead time for companies to prepare is minimal, especially for those required to report for financial years starting on, or after, 1 January 2024. Early preparation is critical to ensure smooth implementation of the requirements based on recent experience with companies reporting against frameworks such as TCFD (here is a summary of TCFD lessons learned).

As companies move towards mandatory assurance over their sustainability disclosures, key common challenges will include the following:

  • Significant time and resources may be required for specific disclosure requirements to be met – especially where changes to data processes, systems and controls are needed to effectively meet the sustainability disclosure requirements.
  • The quality and transparency of disclosures will be subject to data quality, availability and volume. Furthermore, for third parties to perform assurance procedures in line with CSRD, datasets must be well organised and evidence available to support the disclosures made.

In preparation for the upcoming requirements, an excellent place to start is to assess your current material sustainability topics, compare them with the CSRD’s double-materiality requirements, and then evaluate whether your data processes and controls are fit-for-purpose. You could also consider a gap analysis or assurance readiness assessment. This would help you identify areas that require immediate focus, determine the resources needed, and ultimately help ensure your company is prepared for assurance when the time comes.

Please get in touch if you want to understand how we can help you on your CSRD journey.

Get the latest updates from the Deloitte Audit & Assurance blog