CSRD – regulations on sustainability reporting mandatory from 2024

Corporate Sustainability Reporting Directory

CSRD stands for Corporate Sustainability Reporting Directive, regulations that govern how organisations should report on sustainability. CSRD (adopted by the EU in April 2021) is the successor to the 2018 Non-Financial Reporting Directive (NFRD). The NFRD prescribes how organisations must report on topics such as human rights, anti-corruption and anti-money laundering, board diversity, social and employee rights. The NFRD focuses only on PIEs – Organisations of Public Interest (+ 11,600 companies in the EU).

The CSRD will apply to all organisations meeting 2 of the 3 following conditions:

  • More than 250 FTE employed
  • More than €50 million turnover per year
  • More than €25 million balance sheet total

This means that from 2024, at least 49,000 companies in the EU will have to report on the impact of their activities on people and the environment. Not only will the CSRD apply to more organisations, the reporting obligation will also be extended fors. From 2026, the CSRD will apply to all small and medium-sized enterprises (SMEs).

Finally, reporting must be available digitally. The CSRD directive should ensure more transparency and better quality of sustainability reporting.

So the question is not whether your organisation should produce a sustainability report, but when!


What is the point of sustainability reporting?

The CSRD stems from the NFRD, a financial guideline. A major reason for tightening the NFRD is therefore financially motivated, as part of the measures stemming from the European Green Deal to enable investments towards sustainable activities. It gives pension funds, banks and investors better insight into a company’s sustainability indicators.

The European Commission writes:

“Investors need to know more and more about companies’ impact on people and the environment. For the green investment market to be credible, investors need to know about the sustainability impact of the companies they invest in. Without such information, money cannot be channelled into environmentally friendly activities.”

But besides the financial obligation, there is also a moral obligation. To limit global warming to 1.5 degrees Celsius, drastic steps are needed. This will not succeed if, on a voluntary basis, only a small number of organisations account for their sustainability policies. Sustainable business is only feasible if every organisation, large or small, provides insight into what its impact on people and the environment is. And not only provides insight, but also defines actions on how to reduce that impact.

What should I report on and by when?

The starting point for reporting is the double materiality principle. What does that entail? Double materiality involves defining the impact of sustainability-related risks and opportunities on the organisation. Think, for instance, of resource scarcity, severe drought and image damage.
Besides these sustainability-related risks and opportunities on the organisation, the company’s ecological and social impact on people and the environment must also be reported.

Examples include CO emissions, loss of biodiversity or violation of human rights. So it is about impact on the organisation (outside in) and impact of the organisation on the environment (inside out).

Schematically this looks as follows:


Source: KPMG study ‘Geen uitweg’ 2021

The scope of the NFRD reports was mainly reporting on the past year. CSRD reports mainly report on the future. Therefore, measurable long-term sustainability goals should be included in the report, with progress tracked annually. Non-financial, intangible indicators such as social, human and intellectual capital should also be reported. Finally, all reporting has a mandatory external audit.

Organisations complying with the requirements from 2024 will have to deliver a sustainability report for 2023.

These organisations should be preparing now.

Where to start?

If you already meet the balance sheet total, turnover and/or employee criterion, then you should get started right away! Start by drawing up the double materiality matrix: what has impact on my organisation and what impact do I have to my environment? Based on this matrix, you will have insight into which themes are important for your organisation.

For each theme, determine what you want to achieve, on what timescale and how you will monitor progress. Above all, set the bar high.

Make sure the goals are laid down in policy and actions, monitor progress and report on it annually. Do not be afraid to report on which goals you have not yet achieved, but do include in your plans what you are going to change in order to achieve them.

The progress reports are a good starting point for the external audit by an auditor. Agree with the auditor in advance what the sustainability report should look like so that the organisation gets used to preparing it.

Even if you do not yet meet the CSRD criteria, it is advisable to start sustainability reporting now. It not only strengthens your position on the capital market, it also gives you a competitive advantage over parties that do not (yet) have a sustainability strategy.

Goal 17 helps organisations transform to a sustainable business model.

Through our Sustainability Awareness & Training, we raise awareness on sustainability issues. With our Capability Assessment, organisations gain insight into the necessary changes for the transition to a sustainable business model. Our Transformation Services provide a structured and iterative programme during this transition, including internal and external (mandatory) reporting. 

If there is a need for occasional support, we offer a Sustainability Officer as a Service, who is the organisation’s point of contact on sustainability issues.

The ultimate goal is not the smallest possible negative impact, but the largest possible positive contribution to society. Only then do you talk about a ‘net-positive organisation’. 

If you would like more information or an introductory meeting, please email: info@goal17.eco

  • EU: commission proposal for Corporate Sustainability Reporting Directive (2021) 
  • MVO Nederland: wat is de CSRD richtlijn (2021) 
  • KPMG: Geen uitweg (2021)
  • AFM: Duurzaamheidsverslaglegging en de CSRD (2021)