CSRD compliance: what every EU company must know before 2025

What is CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is the EU's landmark regulation replacing the Non-Financial Reporting Directive (NFRD). It represents the most significant overhaul of corporate sustainability disclosure requirements in a generation — expanding scope from roughly 11,000 large public-interest entities to approximately 50,000 EU companies.

It also reaches beyond EU borders. Non-EU companies generating over €150 million in EU-market revenue are in scope, meaning multinationals headquartered in the US, UK, or Asia cannot assume they are exempt.

Reporting must follow the European Sustainability Reporting Standards (ESRS), developed by EFRAG. These standards require a double materiality assessment: you must disclose how sustainability issues affect your business (financial materiality) and how your business affects the environment and society (impact materiality).

The rollout timeline

CSRD rolls out in waves. Large public-interest entities already subject to NFRD (500+ employees) report for financial year 2024, with first disclosures published in 2025. Large companies not previously in scope (250+ employees, €40M+ turnover, or €20M+ assets) follow for FY2025. Listed SMEs begin for FY2026, with an opt-out until 2028. Non-EU companies with €150M+ EU revenue enter scope for FY2028.

These are hard deadlines. The European Commission has not indicated that extensions are available for the initial cohorts, and enforcement is being built into national law across member states.

What must be reported

CSRD requires disclosure across four pillars: Environment, Social, Governance, and Cross-Cutting. Within environment, companies must report Scope 1, Scope 2, and Scope 3 greenhouse gas emissions by activity. Scope 3 is not optional — it is mandatory under ESRS E1.

Beyond emissions, ESRS E1 covers climate transition plans, physical risk exposure, and carbon removal targets. ESRS E2–E5 address pollution, water, biodiversity, and circular economy. ESRS S1 covers your own workforce; S2 covers workers in the value chain. ESRS G1 covers business conduct and anti-corruption.

Each disclosure must include comparative prior-year data and be subject to third-party limited assurance, rising to reasonable assurance by 2028. Your auditor will need access to your underlying data systems — not just your finished report.

Practical steps to prepare

Start with a double materiality assessment. Map potentially material sustainability topics using both impact and financial lenses. This assessment determines which ESRS disclosures are mandatory for your company — not all apply to everyone.

Conduct a data audit. Identify gaps between ESRS requirements and what your current systems capture. Scope 3 is almost always the largest gap: most companies lack primary data for upstream purchased goods and downstream product use.

Invest in tooling early. Manual consolidation across spreadsheets will not meet the audit-trail and version-control requirements of ESRS. You need a system that documents data sources, methodology choices, and calculation logs — and can export them in XBRL-compatible formats for ESEF filing.

How TerraLedger supports CSRD compliance

TerraLedger's CSRD module maps your emissions data directly to ESRS E1 disclosure requirements. Every Scope 1, 2, and 3 entry carries an auditable calculation trail: emission factor source, activity data timestamp, methodology version, and reviewer sign-off.

Our materiality assessment tool guides you through the EFRAG double-materiality workflow, generating a documented matrix your auditor can review. When your first CSRD report is due, your data is export-ready in the formats your assurance provider needs.