On January 1, 2024, the European Commission implemented one of the world’s most ambitious pieces of legislation on ESG reporting: the CRSD.
Positivéco explains how to align with CSRD requirements for companies and ESRS standards governing European sustainability reporting. On January 1, 2024, the European Commission implemented one of the world’s most ambitious ESG reporting legislations: the Corporate Sustainability Reporting Directive (CSRD).
In 2025, the European Commission launched a major project to reduce the administrative burden on European companies. In this context, the “stop the clock” directive was adopted in mid-April 2025. It postpones the implementation of the CSRD by two years for second- and third-wave companies.
The CSRD directive was initially intended to affect more than 50,000 companies in Europe with indirect repercussions across entire value chains.
Positivéco answers the six most frequently asked questions about CSRD obligations and ESRS standards.
We will update the rest of the provisions being simplified by Europe, such as the CSRD application threshold, the assurance level required for sustainability statements, and the new voluntary ESRS standards, once they are fully approved.
The CSRD expands the scope and the requirements for sustainability reporting.
With the CSRD, ESG information is subject to the same assurance standard as financial reports.
1. What is the CSRD?
The Corporate Sustainability Reporting Directive (CSRD) is the European standard for sustainability reporting. It prescribes how sustainability reporting should be prepared in terms of both content and form. In addition, the single electronic format adopted by Europe will allow for unlimited use of this new corporate data.
The European NFRD directive was replaced by the CSRD in early 2024. This change affected the Annual Non-Financial Performance Statement (DPEF), the French application of the NFRD.
The CSRD: an ambitious European directive on sustainability reporting
The ambitious CSRD reinforces the European Union’s sustainable finance objectives by promoting international convergence in sustainability reporting. It requires European companies to disclose a long list of non‑financial data aligned with a standardized electronic format. This regulatory change is part of the EU Action Plan for Sustainable Finance, whose main objective is to align the financial sector with the EU’s climate goals.
The new SFDR and Taxonomy regulations require investors to disclose extensive non‑financial information. However, most companies do not publish this data, making compliance difficult. By creating mandatory obligations for companies and ESRS standards to regulate sustainability reporting, the CSRD aims to provide standardized and reliable non‑financial data to investors.
The CSRD requirements represent a key step forward for ESG reporting
Its objective is to improve transparency and consistency in ESG reporting across Europe. Companies must publish annual sustainability reports, enabling investors to reorient capital toward more sustainable technologies and industries.
The CSRD extends the scope beyond the NFRD by introducing mandatory ESRS sustainability standards for all large companies. These companies must provide audited, formatted non‑financial reports based on double materiality.
With the CSRD, ESG information is now subject to the same assurance standards as financial reporting. Companies must treat sustainability data with the same level of rigor, with a medium‑ and long‑term perspective.
The scope of the CSRD significantly extends that of the NFRD.
2. Which companies are affected by the CSRD and the ESRS, and when?
| Entities concerned | Reference year | 1st reporting | Standards |
|---|---|---|---|
Large European and non-EU companies subject to NFRD Public-interest entities and non-European companies listed on European markets vmeeting the following 2 criteria:
|
2024 | 2025 | ESRS |
Other large European and non-EU companies European and non-EU companies listed on European markets meeting 2 of the following criteria:
|
2027 | 2028 | ESRS |
SMEs listed on European markets With the exception of micro-businesses not meeting 2 of the following criteria:
|
2028 | 2029 | Simplified ESRS |
Other large non-European companies Non-European companies meeting the following 2 criteria:
|
2028 | 2029 | Simplified ESRS |
The scope of the CSRD extends that of the NFRD: the directive was initially intended to gradually cover nearly 50,000 European companies, compared with 11,700 under the previous rules. The CSRD was also expected to affect around 10,000 foreign companies, mainly American.
Companies subject to the CSRD are required to adopt a double materiality perspective at the core of their management and reporting processes.
3. How to choose which data to report? What is double materiality?
Companies affected by CSRD requirements are required to adopt a double materiality approach at the heart of their management and reporting.
The Sustainable Finance Disclosure Regulation (SFDR) governs the publication of sustainability information in the financial services sector. This European regulation has defined the concept of double materiality:
- Financial materiality refers to the impact of ESG‑related risks and opportunities on a company’s results.
- Impact materiality refers to a company’s impact on its economic, social, and environmental environment.
For the AMF (the French Financial Market Supervisory Authority), the double materiality analysis should identify the main ESG risks, opportunities, and impacts related to a company’s activities and value chain. Double materiality enables companies to provide investors with a comprehensive view.
The CSRD marks the end of purely descriptive sustainability reports. Collecting data once a year, without strategic direction, is no longer sufficient.
Companies must now conduct a double materiality analysis to identify which ESG topics require data collection. Climate issues are automatically considered material for all entities by the European Commission. Companies claiming otherwise must provide a detailed justification.
To familiarize themselves with this exercise, companies can consult the EFRAG guide on double materiality analysis.
The CSRD’s ESRS standards specify the elements to assess, measure, and disclose, including relevant indicators and targets.
4. In what format should this sustainability data be presented? What are the CSRD’s ESRS standards?
The non-financial data required by the CSRD must be published in a dedicated section of the company’s annual report. It is therefore not possible to produce a separate sustainability report whose publication could be deferred. Four sections of information are required in a specific order: general, environmental, social, and governance.
Companies subject to CSRD requirements must align their reporting with European Sustainability Reporting Standards (ESRS).
12 European standards for sustainability reporting.
Two cross-cutting standards, ESRS 1 (general requirements) and ESRS 2 (general information), apply to all sustainability topics. Ten thematic standards address the three ESG pillars. Companies must therefore assess which topics are material to their business. The CSRD’s ESRS indicate what must be assessed, measured, and disclosed, including relevant indicators and targets.
5 environmental standards
- ESRS E1 – Climate change
- ESRS E2 – Pollution
- ESRS E3 – Water and marine resources
- ESRS E4 – Biodiversity
- ESRS E5 – Resource use and circular economy
4 social standards
- ESRS S1 – Workers
- ESRS S2 – Workers in the value chain
- ESRS S3 – Affected communities
- ESRS S4 – Consumers and end‑users
1 governance standard
- ESRS G1 – Business conduct
ESRS provisions ensure the credibility of ESG reporting
Certain CSRD and ESRS requirements aim to prevent deliberate and accidental greenwashing. Any company referring to “low‑carbon” or “sustainable” activities must demonstrate alignment with the European taxonomy.
In addition, companies must publish their management reports in a single European xHTML electronic format. Digital tags are embedded to facilitate reading, data comparison, and research.
Finally, an independent body must audit all data published under the CSRD ESRS standards. The auditor also reviews the double materiality analysis, as the assurance covers data selected through this process.
With the implementation of the CSRD ESRS standards, sustainability reporting is no longer reserved for very large companies and conglomerates.
5. Are SMEs affected by the European directive on sustainability reporting?
It is essential to understand that the size of the company is no longer an argument for inaction.
Only SMEs listed on European markets are directly affected by the CSRD. By 2029, these companies will have to comply with CSRD reporting based on simplified ESRS standards. However, European authorities recommend familiarizing with CSRD requirements as early as possible.
SMEs not listed on European markets also need to prepare, as they must now respond to customer requests related to supply‑chain impacts.
With the application of ESRS standards, sustainability reporting is no longer reserved for very large companies. SMEs are an integral part of the supply chain feeding into the sustainability reports of large companies. They must therefore prepare to collect the necessary non‑financial data and respond to requests or audits from partners. This transition is also an opportunity to demonstrate their ESG maturity.
Large listed companies are not the only ones concerned by alignment with the CSRD directive.
Anticipating customer demands and ensuring CSRD compliance is an opportunity for companies to stand out.
6. How to prepare your sustainability reporting and comply with the CSRD?
- Reviewing competitive positioning
Regulations on non-financial reporting are intended to affect the entire value chain of European companies. Anticipating customer demands and complying with the CSRD is therefore an opportunity for SMEs to stand out. Regulators also expect large companies to become increasingly strict in selecting suppliers and service providers.
- Conduct a comprehensive strategic analysis
CSRD reporting and the associated double materiality perspective constitute a comprehensive strategic analysis. By adopting a strategic approach to ESG reporting, SMEs can identify improvement areas, strengthen operational efficiency, and foster innovation. It is not just about ticking boxes, but about building a sustainable and resilient business model.
- Inform decision-making
Developing a sustainability report requires a detailed understanding of operations and supply chains. It helps companies better understand their social and environmental impact and provides relevant data for decision‑making, risk management, and cost‑reduction strategies.
- Build closer relationships with stakeholders
Working on ESG reporting is an opportunity to engage with stakeholders — customers, employees, investors, suppliers. Committing to transparency and acknowledging environmental and social impacts can help SMEs create new business opportunities and retain talent.
- Envision sustainability as a long-term strategy
By implementing regular non‑financial reporting, SMEs shift from a compliance mindset to a strategic approach. Integrating ESG into their strategy allows them to define a long‑term sustainability vision and meet their growing environmental and social responsibilities.
Large, medium, and small companies would be wise to start preparing now for this transition to ESG reporting
The European directive on sustainability reporting represents a real paradigm shift. The European Commission has introduced one of the world’s most ambitious ESG reporting legislations. This regulation has already directly affected many companies in Europe and indirectly impacted entire value chains.
A vast “simplification” movement is now aiming to reduce the scope of the exercise and the responsibility of companies. However, sustainability reporting remains necessary to ensure corporate transparency and visibility.
Large, medium, and small companies would be well advised to prepare for this transition now: the first step is to identify key ESG impacts, risks, and opportunities, perform a gap analysis to define the course of action, and mobilize staff and resources.
About Positivéco
At Positivéco, we see new national and international CSR regulations as vectors for positive growth.
Our job: to improve the readability of your activities for better valuation.
Since 2009, we have been supporting financial institutions, public players, and listed and unlisted companies in the evaluation of their CSR policies, the production of their extra-financial reporting and the implementation of their climate investment and aid projects. Development.
Make an appointment today and find out how to meet the new requirements of economic transparency while serving the project of your company.
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