The way companies report on their business has just changed scale. For years, non-financial reporting stayed marginal: a few pages in the annual report, broad commitments, little verified data. The CSRD (Corporate Sustainability Reporting Directive) ends that era. It turns environmental, social, and governance disclosure into a structured, standardized, and audited obligation. For CSR, HR, and executive leadership teams, it marks the new stage of European non-financial reporting. This article explains the essentials without legal jargon: what the directive says, who it covers, what it requires, and how to prepare your organization. To place this obligation within a broader approach, you can also read our complete guide to corporate CSR.
Contents
What is the CSRD?
The CSRD is a European directive adopted in late 2022. It sets the rules companies must follow to publish sustainability information: their impact on the environment and society, plus the risks and opportunities these topics create for their business. Its goal is simple to state and ambitious to deliver: let investors, customers, employees, and regulators compare companies on reliable, detailed, verified data.
The directive replaces an earlier framework, the NFRD on non-financial disclosure, adopted in 2014. In France, the extra-financial performance statement (DPEF) was until now the main instrument of this reporting. The transposition of the CSRD, completed in late 2023 by ordinance, replaced the DPEF with the new European requirements. If you knew the DPEF, remember this: the logic stays the same, but the level of detail, the method, and the oversight change scale. Our article on the extra-financial performance statement (DPEF) details what it covered.
At the heart of the directive lies a key principle: double materiality. The idea comes down to two questions. First question: what effect does my activity have on the world, meaning on climate, resources, health, or communities? Second question: what effects does the world have on my company, for example through rising energy costs, new regulations, or shifting customer expectations? A company must address both dimensions. An industrial site releasing pollutants illustrates the first question. A company dependent on fossil fuels whose price will rise illustrates the second. In some cases, one topic falls under both at once. This analysis then determines the entire content of the report.
Who is affected, and from when?
The CSRD was designed to apply progressively, in successive waves: first large companies already subject to the NFRD, then other large European companies, listed SMEs, and finally certain groups outside the European Union with significant activity in Europe. This staggered timeline aimed to give organizations time to build capability.
That initial design has since been revised. In late February 2025, the European Commission presented the Omnibus package, a set of texts designed to simplify several regulations, including the CSRD. The stated goal is to reduce administrative burden and refocus the obligation on the largest companies. Thresholds, deadlines, and exemptions have been debated and adjusted since. In practice, the final scope and exact timeline depend on how far these revisions have progressed.
This uncertainty should not lead to inaction. At least two reasons justify preparing now. First, even companies that may fall outside direct scope remain exposed to the ripple effect described below. Second, structuring sustainability data takes time, and organizations that start late pay for that delay in the quality of their first publication. To review the full framework that applies to you, also read our article on legal CSR obligations.
What the CSRD requires you to publish
The expected content is defined by the ESRS, the European Sustainability Reporting Standards. These standards were prepared by EFRAG, a European technical body, then adopted by the Commission. They work as a common framework: the same topics, the same definitions, the same indicators from one company to the next.
The ESRS are organized into three blocks. The first sets out general principles and cross-cutting information: sustainability governance, strategy, materiality analysis, quantified targets. The second covers the environment: climate change, pollution, water resources, biodiversity, circular economy. The third addresses social and governance matters: own workforce, value chain workers, affected communities, consumer relationships, and finally business conduct, which includes ethics and anti-corruption.
One point deserves emphasis: the CSRD does not ask everyone to publish everything uniformly. The double materiality analysis determines which topics matter for your business. A digital services company and a chemical manufacturer will not produce the same report. However, the analysis method must be documented and justified.
On form, three requirements change daily team routines. The report is integrated into the management report, at the same level of formality as the financial statements. It is published in a tagged electronic format, which makes data automatically comparable. And it undergoes verification by an independent third party, initially as limited assurance, meaning a consistency check less thorough than a full audit, but real nonetheless. Loose declarations no longer have a place here.
The ripple effect: when the CSRD reaches companies outside its scope
Even outside its scope, your company will feel the CSRD. The first channel runs through major clients. A large in-scope company must document its own value chain, including the impacts of its suppliers. Concretely, its procurement teams send questionnaires: carbon footprint of delivered products, working conditions, environmental policy, social compliance. Answering in a structured way becomes a commercial selection criterion, on par with price or quality.
The second channel runs through funders. Banks are gradually integrating sustainability risks into credit analysis, and insurers do the same for pricing. Over time, the quality of your ESG data can influence access to financing and its cost. Investors, finally, use these disclosures to guide their allocation decisions.
Facing this pressure, Europe is also working on simplified voluntary frameworks, aimed notably at SMEs that must answer client requests without being in scope themselves. The spirit is this: offer a light, proportionate format that large accounts can recognize. Anticipating these requests, rather than absorbing them tender after tender, turns a constraint into a sales argument.
How to prepare concretely
Preparing for the CSRD is less about law than about project management. Four workstreams structure the approach.
Structure governance
Appoint a sponsor at executive level. Build a steering group that brings together CSR, finance, HR, and procurement, because the required data sits across these functions. Set an internal timeline with clear milestones: materiality analysis, data inventory, drafting, review, external verification. Without explicit governance, the project stalls between departments.
Map the data
List the information the standards require and identify where it lives today. Energy and travel on the operations side, supplier emissions on the procurement side, headcount, training, health and safety, absenteeism, turnover on the HR side. For each data point, note its owner, update frequency, and reliability. This mapping almost always reveals gaps: better to find them early and launch missing measurements now, rather than during the year of the first publication.
Choose useful indicators
Resist the temptation to measure everything. Select a small number of indicators aligned with your material issues, and guarantee their stability from one fiscal year to the next. Document the calculation method: reproducible data beats impressive but unverifiable data. These indicators will also serve as an internal dashboard to steer the transition, not just to fill in a report.
Mobilize employees
The social pillar of the CSRD rests on living data: quality of life at work, cohesion, safety, training, engagement in transformation. These signals do not come out of an annual spreadsheet. They emerge from programs that genuinely activate teams day to day. This is precisely United Heroes' territory: our app mobilizes employees around four use cases, workplace well-being and quality of life, cohesion and social connection, solidarity and CSR engagement, and support through transformation. Challenge mechanics, daily streaks, and short events create measurable participation, and therefore usable social data for your reporting and internal steering. Used by more than 1,000 organizations across 150 countries, certified B Corp and ISO/IEC 27001 for data security, the platform bets on collective action: everyone participates, and the company gains credible indicators.
One last recommendation: treat the CSRD as the consequence of a strategy, not as a documentation exercise. Some companies even choose to go beyond the obligation, for example by becoming a purpose-driven company to embed their purpose in their articles of association.
The CSRD thus marks the shift from declarative reporting to proven reporting. For leadership teams, the stakes go beyond compliance: build a foundation of reliable data, mobilize teams around the transition, and turn a European obligation into lasting trust among clients, funders, and talent.
FAQ
Does the CSRD apply to SMEs?
Directly, most SMEs are not targeted, especially after the adjustments introduced by the Omnibus package, which aim to concentrate the obligation on the largest organizations. Indirectly, however, they are all exposed: their large in-scope clients will ask them for data, and their banks will factor sustainability risks into their analyses. Simplified voluntary frameworks exist to meet these requests without disproportionate means. The right reflex is to prepare a standard response to client questionnaires rather than improvise at every tender.
What is the difference between the CSRD and the EU green taxonomy?
The taxonomy is a classification system: it defines which economic activities can be considered sustainable according to precise technical criteria. The CSRD is a disclosure obligation: it governs how and what to report on sustainability. The two texts converge for in-scope companies, which must publish the share of their revenue, investments, and spending aligned with the taxonomy. In other words, the taxonomy qualifies activities, and the CSRD organizes transparency around those qualifications.
What happens to the French DPEF?
It disappears in favor of the European requirements. The transposition ordinance adopted in late 2023 replaced the extra-financial performance statement with the obligations arising from the CSRD and the ESRS standards. Companies already familiar with the DPEF start with an advantage: the documentation logic remains similar, but the level of detail, data granularity, and external oversight increase sharply. Archives of former DPEFs also make a useful starting point for building your materiality analysis.
Will published data be verified?
Yes. The CSRD requires verification by an independent third party, initially in the form of limited assurance, meaning a consistency and compliance check less thorough than a full financial audit. European workstreams envisage a gradual strengthening of this level of assurance. In practice, this means your collection processes must be traceable and documented: a verifier must be able to trace back from the published indicator to its source.
Where to start concretely?
Start with a gap analysis between your current practices and the ESRS requirements. Then build the steering group bringing together CSR, finance, HR, and procurement, and commission the double materiality analysis, since it determines the entire content of the future report. Next, prioritize making your most critical data reliable, starting with the ones you know are fragile. Finally, open the workstream on employee engagement: credible social indicators are built over time, not in the last quarter before publication.
Product Marketing Manager @United Heroes