CSRD Directive and its Mandatory Application in 2025
Sustainability has become a central issue on corporate agendas worldwide, driven by a growing demand for transparency and accountability from investors, customers and regulators.
In this context, the European Union has taken the lead with the Corporate Sustainability Reporting Directive (CSRD), a regulation designed to ensure that companies comprehensively report their sustainability impact. SOCOTEC, as a leader in assurance and verification services, plays a key role in helping companies navigate these new regulatory requirements. Its expertise in managing and processing sustainability reports ensures that companies meet the highest standards of transparency and accuracy.
What is the CSRD?
The Corporate Sustainability Reporting Directive (CSRD) is a European Union regulation that seeks to unify and improve the quality of sustainability information to be provided by companies. This directive replaces the previous Non-Financial Reporting Directive (NFRD) and responds to the need to direct capital flows towards a more sustainable economy, manage financial risks associated with climate change and promote transparency in economic activities. The CSRD establishes a standard reporting framework, providing investors and stakeholders with reliable and comparable data.
Which companies will be required to report?
Which companies will be required to report?
The CSRD significantly expands the scope of companies required to report. It will apply to:
- All companies listed on the EU regulated market, including listed SMEs, excluding micro companies.
- Large companies exceeding two of the following three criteria: 250 employees, €20 million in assets, or €40 million in net revenues.
- Companies outside the EU that generate a net turnover of more than EUR 150 million and have significant operations within the EU.
- Small and non-complex financial institutions and captive insurance companies, provided they are large companies or listed SMEs (except micro companies).
The CSRD significantly expands the scope of companies required to report. It will apply to:
- All companies listed on the EU regulated market, including listed SMEs, excluding micro companies.
- Large companies exceeding two of the following three criteria: 250 employees, €20 million in assets, or €40 million in net revenues.
- Companies outside the EU that generate a net turnover of more than EUR 150 million and have significant operations within the EU.
- Small and non-complex financial institutions and captive insurance companies, provided they are large companies or listed SMEs (except micro companies).
When does it become mandatory for companies?
The timeline for mandatory CSRD is as follows:
- From January 1, 2024 for large public interest companies with more than 500 employees, who will be required to report in 2025.
- From January 1, 2025 for large companies meeting two of the three criteria mentioned above, with reporting in 2026.
- From January 1, 2026 for listed SMEs (not micro companies) and other companies, with reporting in 2027.
- From January 1, 2028 for non-EU companies with significant branches, with reporting in 2029.
What must companies provide?
Companies bound by the CSRD must submit a detailed annual report that includes:
- Description of the business model, strategy and resilience to sustainability risks.
- Sustainable objectives and progress towards achieving them.
- Board roles and expertise in sustainability.
- Sustainability policies and related incentive systems.
- Due diligence and risk management processes.
- Information on its value chain and operations.
These reports must follow the standards established by the European Sustainability Reporting Standards (ESRS) and be presented in a publicly accessible electronic format, marked for inclusion in the European Single Access Point (ESAP).
Do you want more information about this mandatory requirement that comes into force in 2025?
Who should perform the verification of the information?
The information reported under the CSRD must be verified by an independent third party. This can be the company's annual accounts auditor or an independent verification service provider, such as SOCOTEC, which offers specialized CSRD audits. Verifiers must meet training, ethics and independence requirements equivalent to those of statutory auditors and must be officially registered. Verification ensures that reports are accurate, reliable and objective, which is crucial to maintaining the confidence of investors and other stakeholders.
Relevant additional points
- Omission of information: In exceptional cases, companies may omit information if disclosure would adversely affect their commercial position, provided that this does not impede a proper understanding of the results.
- Standards and formats: Reports must follow ESRS standards and be presented in an electronic format that is publicly accessible and marked for inclusion in the European Single Access Point (ESAP).
- Supervision and sanctions: There is a supervision and sanctions regime for verifiers, similar to that for financial auditors, elevating the importance of verification to that of auditing accounts.
The implementation of the CSRD marks a milestone on the road to greater sustainability and corporate responsibility within the European Union and beyond. Companies face the challenge of adapting their internal processes to meet the transparency and reporting requirements established by this directive.
SOCOTEC positions itself as a key facilitator in this process, providing expertise and innovative solutions to ensure effective compliance with the CSRD. With its support, companies can not only comply with the regulations, but also strengthen their reputation and competitiveness in a market increasingly focused on sustainability.
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