The Corporate Sustainability Reporting Directive (CSRD) is a regulatory framework established by the European Union to standardise and enhance sustainability reporting across businesses. By requiring companies to disclose detailed information on environmental, social, and governance (ESG) factors, the CSRD aims to increase transparency and drive sustainable business practices.
Understanding the thresholds set by the CSRD is crucial for companies as they determine the applicability of the reporting requirements and ensure compliance with the EU directive.
CSRD thresholds: Current requirements and timelines
The CSRD sets specific thresholds to determine which companies must comply with its reporting standards. The thresholds for large undertakings are the following:
- Large undertakings: Companies classified as large undertakings must meet at least two of the following criteria
- Balance sheet: Total assets exceeding €25 million (previously €20 million).
- Turnover: A net turnover exceeding €50 million (previously €40 million).
- Employees: More than 250 employees on average during the financial year.
- Listed companies: All companies listed on regulated markets in the EU, including small and medium-sized enterprises (SMEs), must comply with the CSRD. Although SMEs have an extended period for phased-in reporting requirements.
- Timeline for implementation of the CSRD
- 2024: Large undertakings already subject to the Non-Financial Reporting Directive (NFRD) begin reporting under the CSRD.
- 2025: All other large undertakings not previously subject to the NFRD.
- 2026: Listed SMEs, small and non-complex credit institutions, and captive insurance undertakings.
- 2027: Non-EU companies with a net turnover above €150 million in the EU if they have at least one subsidiary or branch in the EU exceeding certain thresholds.
Recent updates on CSRD thresholds: What has changed?
The updates to the CSRD thresholds aim to adjust these criteria for inflation and reduce the reporting burden on companies by 25% without weakening the directive's goals. In the past, the balance sheet limit was €20 million, the net turnover limit was €40 million, and the employee count limit was 250. These adjustments are expected to lower the number of companies classified as significant from 82,986 to 71,372, making the rules less strict for smaller businesses.
These changes align with the broader goal of improving the accuracy and relevance of sustainability reporting, ensuring that the collected data is helpful for both regulatory purposes and corporate transparency efforts.
Download our document about the CSRD & ESRS or access broader resources about all ESG reporting regulations.
Comprehending CSRD thresholds is vital for companies to follow EU sustainability reporting standards. Understanding the recent threshold changes and their implications supports businesses in preparing for their reporting obligations and contributes to more transparent and standardised sustainability disclosures.
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