On 28 November 2022, the Council of the EU (the “Council”) announced its adoption of the corporate sustainability reporting directive (the “CSRD”) (here).


The CSRD will amend the Non-Financial Reporting Directive1 (the “NFRD”) to introduce more detailed reporting requirements in respect of sustainability issues such as environmental rights, social rights, human rights and governance factors. The CRSD will oblige in scope companies to disclose information on their societal and environmental impact connected with their own operations and with their value chain.

Our earlier briefing (here) provides detail on the key aspects of the CSRD which companies should be aware of. In addition, our briefing (here) covers the European Sustainability Reporting Standards (the “ESRS”) which will underpin the CSRD and which were recently delivered to the European Commission for consideration.

Application of the CSRD

The CSRD will apply on a phased basis:

  • reporting in 2025 on the financial year 2024 for companies already subject to the NFRD;
  • reporting in 2026 on the financial year 2025 for companies that are not currently subject to the NFRD;
  • reporting in 2027 on the financial year 2026 for listed SMEs except micro undertakings, small and non-complex credit institutions and captive insurance undertakings. An opt-out will be possible for in scope SMEs for the first two years; and
  • reporting in 2029 on the financial year 2028 for in scope third-country undertakings.

Comment and Next Steps

The Council’s approval of the CSRD represents the final hurdle in the European legislative process. The adoption of the CSRD represents a significant milestone in European sustainability reporting and in scope companies should begin preparations for compliance as soon as possible.

The next step is for the CSRD to be signed by the President of the European Parliament and the President of the Council, after which it will be published in the Official Journal of the European Union and will enter into force 20 days afterwards. The CSRD will need to be implemented by Member States 18 months later.