Corporate Sustainability Reporting Directive (CSRD)

UK Companies with EU Revenue or Operations

UK-headquartered companies must comply with CSRD if they:

·      Generate more than EUR 450 million in net turnover within the EU (increased from EUR 150 million)

·      AND have either:

o            An EU subsidiary that qualifies as a large undertaking

o            OR an EU branch with turnover exceeding EUR 50 million (increased from EUR 40million)

These rules apply regardless of whether the UK company is listed. If both conditions are met, CSRD reporting is mandatory from FY2028 (reports due in 2029).

This change is part of the Omnibus Simplification Proposal (Feb 2025) and is not yet legally binding.

EU Companies

A. Listed SMEs

·      Definition: SMEs listed on EU-regulated markets.

·      No size threshold – listing alone triggers it.

·      Reporting starts: FY2028 (report due 2029).

·      Uses simplified ESRS standards (being finalised).

·      Opt-out allowed for 2 years with explanation.

B. Non-listed SMEs

Not in scope for CSRD.

No current or proposed legal requirement.

Still face soft pressure via:

·      Scope 3 requests from buyers.

·      ESG certifications (B Corp, EcoVadis).

·      UK public contracts (PPN 06/21).

C. Non-listed, Larger EU Companies

Must report if meeting 2 of 3 thresholds:

·      Employees: 1,000+ (was 250+).

·      Turnover: EUR 50 million+ (was EUR 40 million+).

·      Total assets: EUR 25 million+ (was EUR 20million+).

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The EUR 450 million threshold applies only to non-EU parent companies.

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1. What does CSRD stand for?

Corporate Sustainability Reporting Directive.

2. Who must comply with CSRD?

Large EU companies, listed SMEs (except micro), and non-EU companies with substantial EU activity.

3. When does CSRD come into effect?

Starting from fiscal year 2024 (reporting in 2025), in phased stages depending on company size and status.

4. What information must be reported?

Companies must report on environmental, social, and governance (ESG) matters using European Sustainability Reporting Standards (ESRS).

5. What are the ESRS?

The European Sustainability Reporting Standards provide detailed guidelines on what and how to report under the CSRD.

6. How is "double materiality" defined in CSRD?

Companies must report on how sustainability issues affect them and how their activities impact society and the environment.

7. Is CSRD only for EU-based companies?

No. Non-EU companies with EU revenues over EUR 450 million and an EU branch/subsidiary must also comply.

8. How does CSRD differ from NFRD?

CSRD has broader scope, stricter assurance requirements, and mandates digitally tagged (XBRL) data.

9. Will CSRD require third-party assurance?

Yes, limited assurance is required initially, with the possibility of reasonable assurance in the future.

10. What are the penalties for non-compliance?

National authorities will enforce the CSRD, with potential fines, reputational damage, and legal consequences for non-compliant companies.

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