CSRD: the Corporate Sustainability Reporting Directive

The CSRD, or Corporate Sustainability Reporting Directive, is Directive (EU) 2022/2464, adopted on 14 December 2022. It is an amending directive. It rewrote the sustainability provisions of the EU Accounting Directive, Directive 2013/34/EU, which the old Non-Financial Reporting Directive had first inserted. The rules a company actually follows today are in the consolidated Accounting Directive, mainly Articles 19a (companies) and 29a (groups).

The core duty is short. An in-scope company must include in its management report the information needed to understand its impacts on sustainability matters, and how sustainability matters affect its development, performance and position. That two-way test is double materiality. The information is prepared under the European Sustainability Reporting Standards (ESRS), and an auditor or other assurance provider must give a limited assurance opinion on it.

A CSRD report is therefore not a separate glossy document. It is a sustainability statement inside the annual management report, published with the financial statements. The European Commission's CSRD pagedescribes the aim as helping investors, civil society and others evaluate a company's sustainability performance.

The CSRD is not the same thing as ESG. ESG is a general label. The CSRD is a law, and it uses its own term, “sustainability matters”, which Article 2(17) of the Accounting Directive defines as environmental, social and human rights, and governance factors.

The UK left the EU before the CSRD was adopted, so it was never transposed here. What matters for a UK group is where its entities sit and where its securities trade. There are four routes in, and our guide to CSRD reporting for UK companies works through each one in detail.

The last route touches the most UK businesses. EU reporters need data from their value chains, so UK suppliers receive questionnaires. From 2027 those requests are limited by the value-chain cap, covered in the assurance and value-chain chapter below.

Omnibus I, Directive (EU) 2026/470, replaced the old size test. Article 19a(1) now applies to undertakings which “exceed a net turnover of EUR 450 000 000 and an average number of 1 000 employees during the financial year”. The test is cumulative: both limbs must be exceeded. Article 29a(1) applies the same numbers to groups on a consolidated basis.

The figure comes from SWD(2026) 500, and it counts only companies that remain in scope after the change. It is not the pre-Omnibus population.

Two reference periods sit side by side and are easy to mix up. The scope test counts average employees “during the financial year” being reported on. The value-chain cap, which protects smaller suppliers, counts average employees during the preceding financial year. A company can be on different sides of the 1,000 line for the two purposes in the same year.

Most CSRD guidance published before March 2026 describes a scope that no longer applies. The first-wave rules caught every “large” company, meaning one exceeding two of three size limits, plus listed SMEs, as ICAEW's summary of the original scope sets out. The table below shows what Omnibus I changed. Our Omnibus I explainer covers the package history and the Member State options in full.

The point to hold on to: the thresholds are an AND test. A company with 3,000 employees and €300 million turnover is out; so is one with €2 billion turnover and 800 employees. The “1,750 employees” figure that circulated after the December 2025 political agreement is not in the adopted text.

"The obligation to prepare and publish sustainability reporting at individual level should be limited to undertakings with a net turnover exceeding EUR 450 000 000 and an average of more than 1 000 employees during the financial year."Directive (EU) 2026/470, recital 7

Is the CSRD still applicable, then? Yes. Omnibus I narrowed it and moved dates; it did not repeal it. As Dechert's September 2026 briefing puts it, reporting is now essentially limited to large EU undertakings and issuers and to large non-EU groups with significant EU activity.

A UK parent is not itself subject to Article 19a. The duty falls on EU entities, so the practical question is which EU entity files, what it files, for which year, and whether a group report can stand in for it. Every answer below is read from the consolidated Accounting Directiveas it stood on 18 March 2026, and each Member State's transposing law decides the final detail.

The consolidated-report exemption, and its conditions

Article 19a(9) exempts a subsidiary from its own statement if it and its subsidiaries are included in the consolidated management report of a parent drawn up under Articles 29 and 29a. For a subsidiary whose parent is established outside the EU, the second limb applies: the subsidiary is exempt where it is included in that parent's consolidated sustainability reporting, and that reporting is carried out under the ESRS or in a manner the Commission has determined equivalent by implementing act. A UK parent that reports only under UK SRS can use this route only if such an implementing act covers that standard, so check before relying on it.

There is a second group route for non-EU parents with several EU subsidiaries in scope. Article 48i says that until 6 January 2030 Member States must permit one EU subsidiary to prepare consolidated sustainability reporting covering all of the group's EU subsidiaries that are subject to Articles 19a or 29a. That subsidiary must be one of those that generated the greatest EU turnover in at least one of the preceding five financial years, and its report counts as group-level reporting for the Article 19a(9) exemption.

A worked example

Take an illustrative UK group with two EU subsidiaries and these figures for financial year 2027: a German company with 1,400 average employees and €620 million net turnover, and a French company with 300 employees and €90 million. Group net turnover generated in the EU was €710 million in each of 2026 and 2027.

The two duties stack. From FY2027 the German company reports on itself; from FY2028 it also publishes the Article 40a report on the whole group, to a standard EFRAG is still drafting. A group that wants one report rather than two should decide early whether to prepare consolidated ESRS reporting at the top.

The CSRD sets the duty; the ESRS set the content. The first set was Delegated Regulation (EU) 2023/2772. The revised set, Delegated Regulation (EU) 2026/1563, was adopted by the Commission on 3 July 2026 and published in the Official Journal on 21 September 2026. It enters into force on 10 November 2026 and applies to financial years beginning on or after 1 January 2027.

The structure survives the revision: two cross-cutting standards, ESRS 1 and ESRS 2, and ten topical standards, E1 to E5, S1 to S4 and G1. The content is much shorter. The Commission says the revision cuts mandatory datapoints by over 60% and total datapoints by more than 70%; the 61% figure often quoted is EFRAG's measurement of its own draft. Our ESRS guide covers each standard.

The twelve standards

No absolute datapoint count has a Commission source, so we do not print one. The changes that matter most for a preparer are inside particular standards:

The FY2026 choice is summarised well in Linklaters' note on the Official Journal publication. The eight reliefs include a top-down materiality approach, a value-chain limitation and presenting Taxonomy disclosures in a separate appendix.

Double materiality is what most distinguishes CSRD reporting. A topic is material if it passes either test. Impact materiality asks whether the company has material actual or potential impacts on people or the environment. Financial materiality asks whether the topic triggers, or could reasonably be expected to trigger, material financial effects on the company, including on its cash flows, access to finance or cost of capital.

The revised ESRS change how the assessment is run. ESRS 1 paragraph 27 lets a company reach a conclusion on a topic top-down, from an analysis of its strategy and business model, without assessing each impact, risk and opportunity, and it must fall back to a specific assessment where the answer is not evident. ESRS 1 paragraph 24 goes further than before: a company “shall not” disclose information that is not material. Our guide to double materiality walks through both approaches.

CSRD assurance is limited assurance. Omnibus I deleted the power to adopt reasonable assurance standards, and moved the Commission's deadline for limited assurance standards to 1 July 2027. The opinion covers compliance with the ESRS, the process used to identify the information reported, and the EU Taxonomy Article 8 disclosures. Member States may also allow other audit firms or accredited independent assurance providers to give it. See our page on sustainability assurance for how that compares with the UK.

What the assurance provider will ask for

Article 34(1)(aa) of the Accounting Directive sets what the limited assurance opinion covers, so it also sets what a provider will want to see evidence of. The list below follows the provision, limb by limb.

One limb protects suppliers. Article 34(2a) requires the opinion to be prepared in a manner that fully respects the right of value-chain undertakings with 1,000 employees or fewer to decline over-cap requests. A provider cannot treat a supplier's lawful refusal as a gap the company should have closed.

The value-chain cap is the change UK suppliers feel most. A “protected undertaking” is one with an average of 1,000 employees or fewer in the preceding financial year that sits in a reporter's value chain. From financial years beginning on or after 1 January 2027, a CSRD reporter may not require it to provide more than the datapoints listed in Annex II of the voluntary standard, Delegated Regulation (EU) 2026/1560.

The Commission's value-chain cap Q&Ais explicit that the cap “applies only in the context of fulfilling CSRD reporting obligations”. Due diligence requests under the CSDDD are outside it. UK SMEs asked for data can point to the voluntary standard, explained on our VSME page.

Article 40a catches the global group, not just its EU entities. A non-EU parent is in scope if its group generated more than €450 million of net turnover in the EU in each of the last two consecutive financial years and it has either an EU subsidiary or an EU branch with net turnover above €200 million. The EU subsidiary or branch then publishes a sustainability report covering the group.

Article 40a reporting starts with financial years beginning on or after 1 January 2028, with reports in 2029. Its standard is being drafted by EFRAG as ESRS-40a. The ESRS-40a exposure draft basis for conclusionssays EFRAG will deliver technical advice by January 2027; the consultation closes on 31 October 2026. For the UK parent's view of this test, see our ESRS-40a guide.

The Article 40a report is narrower than a full ESRS statement. The Directive lists the points of Article 29a(2) it must cover at the group level of the ultimate non-EU parent, and a branch reports only where the non-EU undertaking has no qualifying subsidiary. The €200 million test is read on the subsidiary's or branch's net turnover in the preceding financial year.

The UK equivalent of the CSRD reporting standard is UK SRS. The Department for Business and Trade published UK SRS S1 and S2on 25 February 2026, based on the ISSB standards and available for voluntary use. The FCA's consultation CP26/5 proposed that listed companies report against them for periods beginning on or after 1 January 2027; final rules had not been published when this page was written.

A group reporting under both will find the financial-materiality definitions closely aligned and the scope of topics very different. Our side-by-side CSRD and UK SRS comparison and the guide to UK SRS S1 and S2 go further.

For tracking where national CSRD laws stand, the Linklaters transposition trackeris the most detailed public summary we have found; confirm any national position against the Member State's own gazette.

Most CSRD errors come from reading guidance written before March 2026, from treating an entry-into-force date as an application date, or from assuming an EU law reaches a UK company directly. Test yourself on the seven statements below.

Five mistakes in UK group plans

The same rules land differently depending on where you sit. Pick the description that fits; each tab says what applies, what to do next and by when.

The original CSRD phased reporting in by wave. The Stop-the-Clock Directive (EU) 2025/794 of 14 April 2025 postponed waves 2 and 3 by two years while Omnibus I was negotiated. Omnibus I then fixed the new scope from financial year 2027. The timeline marks what has passed and what comes next on the day you read it.

Transposition is still at an early stage. The EUR-Lex national transposition page for Omnibus I, checked on 28 September 2026, lists measures from four Member States (Belgium, Croatia, Poland and Finland) and none from the other 23. That is not lateness: the deadline is 19 March 2027. National law decides the final position for any EU entity, so check the Member State where your subsidiary is incorporated.

CSRDDir (EU) 2022/2464

The Corporate Sustainability Reporting Directive, which rewrote the sustainability provisions of the Accounting Directive.

ESRSDR (EU) 2026/1563

The European Sustainability Reporting Standards: two cross-cutting and ten topical standards.

Sustainability statementArt 19a(1)

The dedicated section of the management report that holds the CSRD disclosures.

Double materialityArt 19a(1)

Reporting on the company’s impacts on people and the environment, and on how sustainability matters affect the company.

Top-down approachESRS 1 ¶27

Reaching a materiality conclusion on a topic from strategy and business model, with a specific assessment where it is not evident.

Omnibus IDir (EU) 2026/470

The 2026 directive that raised the CSRD thresholds, capped value-chain requests and deleted reasonable assurance.

Wave 1CSRD

Companies already reporting since financial year 2024; they keep reporting if above both new thresholds.

Article 40aAccounting Directive

The group-level report for a non-EU parent with large EU turnover, from financial year 2028.

Exempted subsidiary undertakingArt 19a(9)

An EU subsidiary relieved of its own statement because a parent’s consolidated report covers it, on conditions.

Limited assuranceArt 34(1)(aa)

The level of assurance the opinion on a CSRD report gives; the reasonable assurance route was deleted.

Protected undertakingArt 19a(3)

A value-chain undertaking with an average of 1,000 employees or fewer in the preceding financial year.