Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) is the European Union directive that sets sustainability reporting requirements for companies. Its goal is to improve the transparency and comparability of sustainability information so that investors and other stakeholders can make better-informed decisions. It replaced and significantly expanded the earlier Non-Financial Reporting Directive (NFRD) and requires reporting against the European Sustainability Reporting Standards (ESRS).

What the CSRD requires

Companies in scope report on sustainability matters using a double materiality approach, covering both how sustainability issues affect the business and how the business affects people and the environment. Disclosures span:

• Governance: how sustainability is embedded in strategy and oversight.
• Strategy: sustainability-related risks, opportunities and transition plans.
• Impacts: environmental and social impacts, including the carbon footprint.
• Metrics and targets: key indicators and the company's sustainability goals.

Reports must be digitally tagged and are subject to assurance, initially limited assurance.

The Omnibus reform: who must report now

The CSRD's scope and timeline were substantially changed by the EU's Omnibus simplification package. First, a "stop the clock" measure (Directive (EU) 2025/794, April 2025) postponed reporting for companies not yet reporting. Then the substantive Omnibus I Directive (EU) 2026/470, published in the Official Journal on 26 February 2026 and in force from March 2026, narrowed the scope considerably.

Under the revised rules, mandatory reporting is focused on large undertakings with more than 1,000 employees that also exceed a financial threshold (a net turnover above EUR 450 million, or a balance-sheet threshold). This removes a large share of the smaller companies the original directive would have captured. The amended requirements apply to financial years beginning on or after 1 January 2027, with the first reports due in 2028, and a transition exemption relieves companies that would otherwise have reported on 2024 or 2025 data while the new rules were being finalised.

Carbon footprint and the CSRD

The carbon footprint is a central disclosure under the climate standard (ESRS E1). Companies report greenhouse gas emissions across the three scopes of the GHG Protocol:

• Scope 1: direct emissions from owned or controlled sources.
• Scope 2: indirect emissions from purchased electricity, heat or steam.
• Scope 3: other indirect emissions across the value chain.

Why measuring it matters

Measuring the carbon footprint allows a company to identify its main emission sources and reduction opportunities, set and track targets, communicate performance credibly and meet growing regulatory and market expectations.

How the CSRD relates to other frameworks

The CSRD and the ESRS were designed to interoperate with global frameworks, including the Global Reporting Initiative (GRI) and the climate-focused IFRS S2 standard issued by the ISSB. This reduces duplication for companies that report under more than one regime.

How to prepare

1. Confirm whether you fall within the revised thresholds, or whether you report voluntarily or as part of a value chain.
2. Run a double materiality assessment to scope your disclosures.
3. Build reliable processes to collect ESG and emissions data.
4. Track the simplified ESRS so your reporting reflects the final requirements.

The CSRD continues to reshape corporate sustainability reporting in Europe, even after simplification. At Manglai we help companies measure their carbon footprint, manage sustainability data and prepare CSRD and ESRS-aligned reports. Discover how Manglai can help you.