The CSRD is the EU’s Corporate Sustainability Reporting Directive, and it obliges companies within its scope to publish standardised information about their sustainability-related impacts, risks and opportunities. The directive is EU legislation rather than a general domestic UK reporting requirement, though certain British companies and groups are pulled in through EU subsidiaries, EU branches, EU-regulated market listings or substantial operations in Europe.
LEI24 works with companies whose reporting duties cross borders. How the CSRD and Legal Entity Identifiers relate is set out in a dedicated section below.
CSRD at a Glance
Three broad groups sit in very different positions under the directive.
| Who you are | Threshold test | First reporting period |
| EU undertakings and EU-listed issuers | More than 1,000 employees and net annual turnover above €450 million, applied as transposed into national law | Financial year 2027, published in 2028. Wave-one companies that still exceed the thresholds carry on reporting without a break |
| UK and other non-EU groups under Article 40a | More than €450 million of EU net turnover in each of the two preceding financial years, plus a qualifying EU subsidiary or branch above €200 million | Financial year 2028, with first statements expected in 2029 |
| Businesses affected only through value-chain requests | No threshold and no direct legal obligation. Requests arrive commercially from in-scope customers, investors or group companies | No reporting deadline. A statutory cap protects businesses with 1,000 employees or fewer |
This is a high-level summary. Actual scope depends on the applicable member-state legislation, group structure, listing status and transitional provisions.
How Did the CSRD Change Sustainability Reporting?
Before the directive, EU non-financial reporting ran on the Non-Financial Reporting Directive, which applied to a limited population of large public-interest entities and left the format largely to each company. Comparability suffered, and investors complained that two businesses in the same sector could publish disclosures with almost nothing in common.
The CSRD widened that population considerably and replaced free-form narrative with a defined reporting architecture. Four changes did most of the work:
- Double materiality became the basis of the assessment, covering both outward impacts and financial effects.
- The European Sustainability Reporting Standards, known as the ESRS, set out what has to be disclosed and how.
- Sustainability information moved into the management report, alongside the financial statements.
- Reported information became subject to assurance, with digital tagging to follow once the electronic format rules cover sustainability data.
ESG reporting is the broader field here, spanning voluntary frameworks, ratings submissions and investor questionnaires, and much of ESG reporting in the UK rests on frameworks a company chooses rather than on a statutory duty. The CSRD is one legal regime inside that field, so a company can produce plenty of ESG reporting without being anywhere near CSRD scope, and an in-scope company cannot satisfy the directive with a general ESG publication.
Reform came quickly. The Omnibus I package, adopted as Directive (EU) 2026/470 and in force since March 2026, cut the number of companies caught by the rules and triggered a rewrite of the standards themselves.
What Changed Under the 2026 CSRD Reforms?
Mandatory scope narrowed substantially. Companies that expected to report under the original design now fall outside the directive, with obligations concentrated on the largest undertakings and groups. Current figures live in the scope section below.
Five further changes matter for anyone reading older material on the subject:
- The third-country gateway was revised, raising the trigger for non-EU groups and tightening the conditions attached to the EU subsidiary or branch that brings a group into scope.
- Companies that started reporting in the first wave but sit outside the revised thresholds may be exempted by their member state for the 2025 and 2026 financial years.
- The Commission has adopted simplified ESRS, with fewer mandatory datapoints and a clearer structure, although the revised standards are not yet in force.
- The Commission has adopted a voluntary reporting standard for companies outside mandatory scope; once in force, it will provide smaller businesses with a proportionate way to answer sustainability questions.
- Value-chain protections were introduced for smaller suppliers by the same directive, explained in the section on businesses outside direct scope.
Reporting burden was the stated target throughout, and the revised standards carry a much shorter list of required datapoints than the original set.
On 3 July 2026, the European Commission adopted revised ESRS and a voluntary reporting standard for smaller companies, set out in its announcement of the revised reporting standards. They are not yet in force and will apply only after the scrutiny process and publication in the Official Journal, a status recorded against each act on the Commission’s page for CSRD delegated acts.
Material published on the CSRD before spring 2026 may therefore quote employee and turnover figures that no longer describe the revised mandatory scope.
Who Is Required to Report Under the CSRD?
Scope turns on where the reporting entity is incorporated, how large it is and how much activity it has inside the EU. Two separate tests exist: one for EU undertakings and EU-listed issuers, and one for non-EU groups trading in Europe.
EU Companies, Groups, and EU-Listed Issuers
The revised EU-level scope concentrates mandatory reporting on the largest companies and groups. Two figures define it:
- More than 1,000 employees
- Net annual turnover above €450 million
Both belong in the assessment of principal EU scope, and neither works as a standalone shortcut.
The CSRD is a directive, which gives each member state its own implementing legislation. Any company-specific conclusion has to be reached under the national law of the relevant member state, taking account of the exemptions and transitional provisions that state has adopted. Consolidated reporting by a parent, listing status and the treatment of subsidiaries all vary in the detail of national transposition.
UK Companies and Other Non-EU Groups
The Corporate Sustainability Reporting Directive can affect UK companies even though the UK is no longer an EU member state. Four routes account for most cases:
- An EU-incorporated subsidiary may fall within scope in its own right and report under the law of its member state.
- A UK parent may need to supply sustainability information to an in-scope EU subsidiary so that subsidiary can complete its own statement.
- A UK company with securities admitted to trading on an EU-regulated market needs a separate assessment at issuer level.
- A UK group may be caught by the third-country reporting framework where its EU activity is large enough.
Under Article 40a, a non-EU group is in scope only if it generated more than €450 million in EU net turnover in each of the previous two financial years and has a qualifying EU subsidiary or branch with more than €200 million in net turnover in the preceding financial year. That €200 million figure is the whole of the subsidiary test, because Directive (EU) 2026/470 as published in the Official Journal replaced the subparagraph that previously required the subsidiary itself to be a large undertaking or a listed SME. The branch route applies only where the group has no qualifying EU subsidiary.
First Article 40a sustainability statements are expected in 2029, covering the 2028 financial year.
CSRD Timeline: When Do the Rules Apply?
Reporting did not start everywhere at once, and the 2026 reforms added a transitional layer for companies already inside the regime. Wave-one reporting began with the 2024 financial year for the largest public-interest entities. Those companies continue reporting where they still meet the new thresholds. Former wave-one companies that fall below them may be exempted by their member state for the 2025 and 2026 financial years, and no sustainability statement is published for a year covered by that exemption; where a member state has not applied the relief, reporting carries on as before. The revised general scope starts with the 2027 financial year, and Article 40a reporting starts with the 2028 financial year.
| Company category | Relevant financial year | Expected publication year | Current status |
| Wave-one companies still above the revised thresholds | FY2024 onwards | 2025 onwards | Reporting continues without interruption |
| Former wave-one companies below the revised thresholds | FY2025 and FY2026 | 2026 and 2027, unless the exemption applies | Exempt where the member state has applied the relief, and no statement is published for those years. Reporting continues where it has not |
| EU companies and groups in the revised general scope | FY2027 | 2028 | Revised scope begins |
| Non-EU groups, including UK groups, under Article 40a | FY2028 | 2029 | First third-country statements |
National transposition, transitional relief and company-specific circumstances all feed into the first reporting year, so a date taken from a table alone should be confirmed against the applicable member state legislation before it goes into a reporting plan.
How Can CSRD Affect UK Businesses Outside Its Direct Scope?
A UK supplier with no EU entity or EU-regulated market listing generally has no direct CSRD reporting obligation, unless Article 40a applies through a qualifying EU branch. Sustainability questions still arrive, because in-scope companies have to describe material impacts, risks and opportunities across their value chains, and much of that information sits with suppliers rather than with the reporting company.
Requests usually take a familiar shape:
- Supplier and value-chain questionnaires issued as part of procurement or onboarding
- Direct requests from EU customers, investors, lenders or other group companies
- Emissions figures, workforce data, governance arrangements and due-diligence information
A CSRD value-chain request does not itself create a CSRD reporting, filing or assurance obligation for the supplier; any separate contractual or legal duties still need to be considered. The voluntary reporting standard adopted by the Commission, once in force, will give smaller businesses a recognised format for responding.
The reforms also capped what can be demanded. Under Directive (EU) 2026/470, an in-scope CSRD company generally cannot seek from a value-chain undertaking with 1,000 employees or fewer information beyond the applicable voluntary-standard cap. Additional sustainability information commonly shared between undertakings in the relevant sector may still be collected, subject to the conditions in the directive.
The cap does not oblige an out-of-scope company to prepare a voluntary sustainability report, and no smaller supplier has to produce one because a customer sends a questionnaire.
CSRD vs UK Sustainability Reporting Standards
Two frameworks now sit side by side for UK companies with European activity. The CSRD is EU legislation. The UK has its own UK Sustainability Reporting Standards, UK SRS S1 and UK SRS S2, based on IFRS S1 and IFRS S2. Final versions were published on 25 February 2026 and are currently available for voluntary use, as set out in the UK government guidance on the UK Sustainability Reporting Standards.
Mandatory application is still being settled. The FCA has consulted on requiring listed issuers to report against UK SRS, and its consultation on listed issuers’ sustainability disclosures closed earlier in 2026. A policy statement is expected in autumn 2026, with the proposed rules taking effect from January 2027.
A UK company may therefore face CSRD-related obligations through its EU activities while separately working through UK SRS and existing UK disclosure rules. Sustainability reporting under one framework does not automatically discharge the other. The two have different legal bases, different scope tests and different reporting approaches, and equivalence should never be assumed without a legal decision that says so.
What Are the European Sustainability Reporting Standards?
Companies subject to the CSRD prepare their disclosures using the European Sustainability Reporting Standards, usually shortened to ESRS. The division of labour is straightforward:
- The CSRD creates the legal reporting obligation.
- The ESRS specify the disclosures and the reporting principles used to fulfil it.
- EFRAG develops the technical advice and the draft standards.
- The European Commission adopts the ESRS through delegated acts.
Subject matter runs across environmental, social and governance topics: climate change, pollution, water and marine resources, biodiversity and ecosystems, resource use and the circular economy, the company’s own workforce, workers in the value chain, affected communities, consumers and end-users, and business conduct. Each standard sets out disclosure requirements. ESRS 2 General Disclosures applies generally, while topical disclosures depend on the outcome of the materiality assessment.
What Is Double Materiality?
Materiality under the ESRS is tested from two directions.
- Impact materiality looks outward at how the company affects people and the environment, through its own operations and its value chain.
- Financial materiality looks inward at how sustainability matters affect the company’s financial position, performance, prospects and access to finance.
A sustainability matter qualifies for reporting when it is material from either perspective, which is why climate frequently qualifies on both counts while a topic such as affected communities may be reported purely on impact grounds.
Double materiality works as an assessment process rather than a checklist. Companies map their activities and business relationships, engage with stakeholders, identify actual and potential impacts, risks and opportunities, apply thresholds and document the reasoning behind every conclusion. Assurance providers look closely at that reasoning, so the working papers behind the assessment matter as much as the conclusion itself.
What ESG Information Must Be Disclosed?
ESG reporting under the CSRD follows the structure of the standards rather than the shape of a corporate sustainability brochure. The principal categories are:
- Governance and board-level oversight of sustainability matters
- Business model and strategy, including resilience to sustainability risks
- Material impacts, risks and opportunities identified through the materiality assessment
- Policies and action plans addressing those matters
- Targets, metrics and progress against them
- Due-diligence processes applied across operations and business relationships
- Environmental and climate information, including emissions and transition planning
- Workforce and human-rights matters
- Business conduct and governance practices
- Relevant upstream and downstream value-chain information
CSRD-based ESG reporting forms part of regulated corporate reporting. Compared with a standalone sustainability report, it is broader in subject matter, more structured in format, subject to assurance and published where investors already look for financial information.
How Does CSRD Reporting Work?
Preparation follows a fairly consistent sequence, whether the reporting entity is an EU subsidiary of a British group or a large listed issuer.
| Step | What it involves |
| 1. Confirm the reporting entity | Establish which company or group carries the obligation, and whether a parent reports on a consolidated basis |
| 2. Determine the reporting boundary | Set out which entities, sites and value-chain relationships fall inside the statement |
| 3. Conduct the double-materiality assessment | Identify material impacts, risks and opportunities from both perspectives, with documented reasoning |
| 4. Identify applicable ESRS disclosures | Map material topics to the disclosure requirements that follow from them |
| 5. Gather data | Collect information from operations and from relevant parts of the value chain |
| 6. Prepare the sustainability statement | Draft the statement within the management report |
| 7. Obtain assurance | Submit the information to the applicable assurance process |
| 8. Prepare for digital reporting | Apply the relevant tagging and electronic reporting requirements |
The sustainability statement forms part of formal annual corporate reporting, filed and published with the rest of the annual report, so the internal controls, sign-off routes and timetables associated with regulatory reporting requirements apply to it as well.
Assurance is carried out at limited level. A practitioner reviews the reported information and the processes used to prepare it, then concludes whether anything has come to their attention suggesting the statement is materially misstated. Assurance says nothing about how sustainable the company is; a business with weak environmental performance and accurate disclosures passes, while strong performance backed by unreliable data does not.
Does CSRD Require an LEI?
The CSRD does not create a general requirement for every reporting company to obtain a Legal Entity Identifier. Scope, thresholds and disclosure duties under the directive are defined without reference to any identifier.
Separate rules are another matter. Under UK MiFIR transaction reporting, LEIs are required for relevant legal-entity clients and specified legal-entity fields; UK EMIR also requires LEIs for reportable counterparties under its own rules. Plenty of companies affected by the CSRD therefore already hold an LEI for reasons unrelated to sustainability, and identifier scope stays a separate question from CSRD scope.
Consistent legal-entity identification does support the reporting exercise. Sustainability statements sit alongside financial statements, group structures span several jurisdictions, and a verified identifier ties disclosures to the entity that made them.
EFRAG has developed an ESRS XBRL taxonomy as the technical basis for future tagging of sustainability information, while mandatory markup still depends on the ESEF rules being adopted for that purpose. The taxonomy creates no universal LEI obligation. Technical detail sits on EFRAG’s ESRS XBRL taxonomy project page, and the markup rules with the ESEF regime covered on ESMA’s electronic reporting pages.
Frequently Asked Questions About CSRD
What Does CSRD Stand For?
CSRD stands for the Corporate Sustainability Reporting Directive, EU legislation requiring companies within its scope to publish standardised information about sustainability-related impacts, risks and opportunities.
Is CSRD Mandatory in the UK?
No. The CSRD is not a general domestic UK reporting requirement, though certain UK companies and groups are affected through EU subsidiaries, EU-regulated market listings or substantial EU operations.
What Is the Difference Between CSRD and ESRS?
The CSRD creates the legal obligation to report. The ESRS are the standards specifying which disclosures companies make and which reporting principles apply when preparing them.
What Is Double Materiality Under CSRD?
Double materiality tests sustainability matters from two angles: the company’s impact on people and the environment, and the financial effect of sustainability matters on the company.
When Will UK Companies Have to Report Under CSRD?
An EU subsidiary reports on its own timetable under national law. UK groups caught by the third-country framework report from the 2028 financial year, with first statements published in 2029.
