CSRD, what is it—in 200 words

CSRD stands for Corporate Sustainability Reporting Directive. A directive is a legislative act that sets out a goal that EU countries must achieve. However, it is up to individual countries to devise laws to reach these goals. The CSRD came into force on January 5, 2023, and mandates that each EU member state implement it into national law by July 6, 2024.

CSRD is the successor to the Non-Financial Reporting Directive (NFRD), which currently applies to about 12,000 businesses in the EU and significantly extends its scope.

The CSRD requires companies meeting specific criteria—ultimately, CSRD will apply to nearly 50,000 entities in the EU (see our blog post' CSRD, who, and when—in 200 words')—to disclose their sustainability strategy and performance. For this purpose, the EU developed the European Sustainability Reporting Standards (ESRS). The EU adopted the final version of the ESRS on July 31, 2023.

The ESRS consists of two cross-cutting standards (ESRS 1 and ESRS 2)—general requirements and general disclosures—and three sets of topical standards (on environmental issues, ESRS E1 through ESRS E5, social, ESRS S1 through ESRS S4, and governance, ESRS G1). The reporting standards comprise qualitative disclosures in narrative form and quantitative disclosures in tables with numbers. Stay tuned for our blog post 'CSRD, how—in 200 words' for more details.