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Read More about ASDA GeorgeThe Corporate Sustainability Reporting Directive (CSRD)
The Corporate Sustainability Reporting Directive (CSRD) is the EU law requiring large companies to report standardised information on their environmental and social impact. Following the 2026 Omnibus simplification, its scope was narrowed sharply. From financial years starting in 2027, mandatory reporting applies mainly to EU companies with more than 1,000 employees and over €450 million in net turnover.
What is the CSRD?
The Corporate Sustainability Reporting Directive is the EU framework that requires large companies to disclose how their business affects, and is affected by, environmental and social issues. It replaced the older Non-Financial Reporting Directive (NFRD) and was designed to make sustainability reporting more consistent, comparable and reliable.
Under the CSRD, sustainability information is reported in the management report alongside the financial statements, rather than in a separate document, and it is prepared against a common set of standards. The aim is to give investors, regulators and other stakeholders dependable, comparable data on a company’s sustainability performance.
What the Omnibus changed
In 2025 the EU began simplifying its sustainability rules through a series of Omnibus proposals. The result for the CSRD was the Omnibus I Directive (Directive (EU) 2026/470), published in the EU Official Journal on 26 February 2026 and in force from 19 March 2026. Member States have until 19 March 2027 to transpose it into national law.
The change is substantial, not cosmetic. The original CSRD was on track to cover roughly 50,000 companies. Under the revised rules, that number is reduced by around 85 to 90%, concentrating mandatory reporting on the largest enterprises. Three changes matter most:
A higher, dual threshold
Mandatory reporting now applies to EU companies that exceed both 1,000 employees and €450 million in net turnover. The old "two out of three criteria" test is gone.
Learn about the thresholdA delayed timeline
A separate "Stop the Clock" directive, adopted in April 2025, postponed reporting for companies not already reporting by two years.
See the full timelineSimpler standards
The European Sustainability Reporting Standards (ESRS) are being simplified, with a sharp reduction in the number of mandatory data points.
Learn about requirementsThe CSRD reporting timeline
The simplified ESRS are expected to be adopted around the middle of 2026 and to apply from the 2027 financial year, both for Wave 1 companies that remain in scope and for Wave 2 companies entering reporting for the first time. As these are still being finalised, the dates should be treated as the current expectation rather than fixed certainties.
The headline dates under the revised regime are:
- Wave 1 (already reporting): continues to report, on the 2025 financial year in 2026 and the 2026 financial year in 2027, subject to any Member State exemption.
- Wave 2 (large companies meeting the thresholds): first report on the 2027 financial year, published in 2028.
- Wave 3 (Non-EU groups meeting the thresholds): first report on the 2028 financial year, published in 2029.
- Revised scope thresholds apply to financial years beginning on or after 1 January 2027.
The CSRD position for UK businesses
CSRD is EU law, but UK companies with EU turnover, EU operations, or a place in an EU supply chain can still be pulled in, alongside the UK’s own emerging standards. Find out where you stand.
What CSRD requires: ESRS and double materiality
Companies in scope of the CSRD report against the European Sustainability Reporting Standards (ESRS), which set out the specific information to be disclosed across environmental, social and governance topics.
A central principle is double materiality. This means a company assesses sustainability issues from two directions: the impact the business has on people and the environment, and the way sustainability issues affect the business financially. The double materiality assessment identifies which topics are material and therefore need to be reported.
The simplified ESRS keep this structure but aim to be more focused. The revised standards substantially reduce the number of mandatory data points and place greater emphasis on relevance and proportionality, so reporting is lighter even though the strategic substance, understanding impacts, setting targets and disclosing progress, remains in place.
Discuss your requirements
Companies outside scope: voluntary reporting and the value chain gap
Falling outside mandatory CSRD scope does not mean sustainability reporting disappears. Many companies will still face data requests from customers, banks and investors.
For these businesses, the EU has pointed to a voluntary standard for small and medium-sized enterprises, known as the VSME. It offers a lighter, proportionate way to respond to value chain data requests without the full weight of the CSRD.
The revised rules also introduce a value chain cap. Companies with up to 1,000 employees that sit in the supply chain of an in-scope business have the right to refuse information requests that go beyond what the voluntary standard covers. This is designed to protect smaller companies from excessive reporting demands passed down the chain.
Speak to our CSRD expertsTurn CSRD into confident reporting
Reconomy’s specialist brands connect double materiality, data readiness and reporting, so CSRD works with your wider compliance picture, not apart from it.
How to prepare for CSRD in 2026
Treating 2026 as a capacity-building year puts in-scope companies in a strong position for mandatory reporting, and helps out-of-scope companies respond confidently to data requests. For many companies, 2026 is a year to confirm scope and build readiness rather than to produce a full report. A sensible approach is to:
- Confirm whether you are in scope. Test your business against the revised thresholds and the rules in the relevant Member State.
- Run a focused double materiality assessment. Identify the topics likely to be material and where your evidence is strong or weak.
- Take a data inventory. Map the data points you can already evidence and the gaps you need to close.
- Avoid over-preparing. Align with the simplified ESRS direction rather than the original, longer disclosure lists, so effort is not wasted on requirements that have been removed.
- Decide your voluntary position. If you fall out of scope, consider whether voluntary reporting through the VSME standard helps you meet customer and investor expectations.
Related regulations and resources
PPWR does not sit in isolation. It connects to a wider set of packaging and circular economy regulations, and this hub links to the content that helps you navigate them:
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Frequently asked questions
The Corporate Sustainability Reporting Directive (CSRD) is the EU law requiring large companies to disclose standardised information on their environmental and social impact. It replaced the Non-Financial Reporting Directive and requires sustainability information to be reported in the management report against common standards. Following the 2026 Omnibus simplification, its scope was significantly narrowed to focus on the largest companies.
CSRD stands for the Corporate Sustainability Reporting Directive. It is an EU directive that sets out how large companies must report on sustainability matters, including their environmental and social impact and the risks and opportunities those issues create for the business. Reporting is prepared against the European Sustainability Reporting Standards (ESRS).
Following the Omnibus simplification, mandatory CSRD reporting applies mainly to EU companies that exceed both 1,000 employees and €450 million in net turnover. Large public interest entities already reporting (Wave 1) continue to do so. Listed SMEs have been removed from mandatory scope. Because the rules are applied through national law, businesses should confirm their position in the relevant Member State.
The CSRD already applies to the largest companies, which began reporting in 2025 for the 2024 financial year. Under the revised timeline, large companies meeting the thresholds report on the 2027 financial year, published in 2028, and non-EU groups report on the 2028 financial year, published in 2029. The revised scope thresholds apply to financial years beginning on or after 1 January 2027.
The Omnibus I Directive (Directive (EU) 2026/470), in force from March 2026, narrowed CSRD scope by around 85 to 90%. It introduced a higher dual threshold of more than 1,000 employees and over €450 million turnover, removed listed SMEs from mandatory scope, delayed reporting for companies not already reporting, and triggered a simplification of the ESRS that sharply reduces the number of mandatory data points.
Double materiality is the principle at the heart of CSRD reporting. It means a company assesses sustainability from two perspectives: the impact its activities have on people and the environment, and the way sustainability issues affect the company financially. A double materiality assessment identifies which topics are material under either lens, and therefore which need to be reported.
The CSRD is EU law, so it does not apply to UK companies just for being UK-based. However, a UK group with a large EU presence may fall within the non-EU group scope and need to report from the 2028 financial year if it meets the thresholds. UK suppliers to in-scope EU businesses may also receive data requests. The UK is separately developing its own UK Sustainability Reporting Standards.
For many companies, 2026 is a preparation year rather than a reporting year. Confirm whether you are in scope under the revised thresholds, run a focused double materiality assessment, and take a data inventory to find the gaps. Align your work with the simplified ESRS direction to avoid over-preparing, and if you fall out of scope, consider voluntary reporting through the VSME standard.
Speak to our CSRD experts