ASDA George
Read More about ASDA GeorgeThe Corporate Sustainability Reporting Directive (CSRD)
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 revised CSRD scope
The revised CSRD scope is the biggest change introduced by the Omnibus I Directive. Reporting is now limited to the largest companies, which removes most mid-sized and listed smaller businesses from mandatory reporting.
EU companies
Under the revised CSRD scope, an EU company must report if it has both an average of more than 1,000 employees during the financial year and net turnover above €450 million. Both conditions must be met. The previous test, which brought companies into scope if they met two of three size criteria, no longer applies.
Non-EU companies
Non-EU groups fall within the revised CSRD scope if they generate more than €450 million in net turnover in the EU, at group or individual level, for each of the last two consecutive financial years. They must also have an EU subsidiary or branch with net turnover above €200 million in the preceding financial year. For many UK groups with significant EU operations, this is the test that matters.
Companies leaving scope
Wave 1 public interest entities that fall below the new thresholds are not required to report for financial years starting on or after 1 January 2027. Listed SMEs, originally due to report from 2027, have been removed from mandatory scope entirely.
Companies in the value chain
Companies with 1,000 employees or fewer are treated as protected undertakings. They can refuse sustainability data requests from in-scope companies that go beyond the EU’s voluntary standards, and contract terms that say otherwise have no effect.
Because Member States have until 19 March 2027 to transpose the directive, the revised CSRD scope should always be checked against national rules in the countries where you operate.
The CSRD reporting timeline
The simplified ESRS are expected to be adopted around the middle of 2026 and to apply from the 2027 financial year. This covers both Wave 1 companies that remain in scope and 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:
| Cohort | Original Start Date | Omnibus Timeline | Omnibus New Scope |
|---|---|---|---|
| Wave 1 (>500 employees, listed) | FY 2024 (Report 2025) | FY 2024 (with 2-year ‘Quick-Fix’) | >1,000 employees & €450M+ turnover |
| Wave 2 (Large, non-listed) | FY 2025 (Report 2026) | FY 2027 (Report 2028) | >1,000 employees & €450M+ turnover |
| Wave 3 (Listed SMEs) | FY 2026 (Report 2027) | Out of Mandatory Scope | Out of Mandatory Scope |
| Non-EU (>€150M EU & large EU subsidiary/branch >€40M) | FY 2028 (Report 2029) | No changes | >€450M EU turnover & subsidiaries/branches >€200M |
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 sustainability reporting standards. Find out where you stand.
UK SRS and CSRD
The UK Sustainability Reporting Standards (UK SRS) are the UK’s own framework. The Department for Business and Trade published the final UK SRS S1 (general sustainability-related disclosures) and UK SRS S2 (climate-related disclosures) on 25 February 2026. They are based on the ISSB’s IFRS S1 and S2 standards and are currently available for voluntary use.
The FCA has consulted on replacing its TCFD-aligned rules for listed companies with UK SRS-aligned requirements from 1 January 2027. Under the proposals, climate disclosures would be mandatory and wider sustainability reporting would initially apply on a “comply or explain” basis.
UK SRS and CSRD differ in one important way. UK SRS focuses on financial materiality: how sustainability issues affect the business. CSRD requires double materiality, which also covers the impact the business has on people and the environment. A UK group with significant EU activity may need to meet both. It therefore pays to build one set of ESG data that can support each framework, rather than running two separate exercises.
What CSRD requires: ESRS and double materiality
Companies in scope of the CSRD report against the European Sustainability Reporting Standards (ESRS). These 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. Reporting is lighter as a result, but the strategic substance remains: understanding impacts, setting targets and disclosing progress.
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 can 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 expertsCSRD consulting and advisory services
Reconomy’s specialist brands provide CSRD and ESG reporting services that connect double materiality, data readiness and reporting. CSRD then works with your wider environmental compliance picture, not apart from it. Whether you are in scope, preparing for UK SRS or answering value chain requests, our CSRD consulting support is built around three stages.
CSRD readiness assessment
A readiness assessment confirms where you stand before you commit time and budget. It starts with your scope position under the revised thresholds and a review of your existing sustainability disclosures. It then runs a focused double materiality assessment and a gap analysis, comparing the data points you can already evidence with those you cannot.
CSRD implementation roadmap
Your implementation roadmap turns that assessment into a plan. It sets out which ESRS disclosures apply and who owns each data point. It also covers the systems and controls needed to collect reliable data, and the milestones that take you from first draft to an assurance-ready report.
Ongoing reporting support
Once the foundations are in place, we support your team through data collection, report drafting and assurance preparation. We also keep your approach aligned as the simplified ESRS and UK rules are finalised.
How to prepare for CSRD in 2026
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.
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.
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:
Latest news
Download our 2025 Sustainability Report
This report shares our latest progress towards sustainability targets and our updated sustainability strategy, Action: 2030.
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).
Under the revised CSRD scope, mandatory reporting applies to EU companies that exceed both 1,000 employees and €450 million in net turnover, and to non-EU groups with over €450 million in EU turnover and an EU subsidiary or branch above €200 million. 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 revised CSRD scope, introduced by the Omnibus I Directive in 2026, limits mandatory reporting to EU companies with more than 1,000 employees and over €450 million in net turnover. Non-EU groups are in scope if they generate over €450 million in EU turnover for two consecutive years and have an EU subsidiary or branch with turnover above €200 million. Listed SMEs are no longer in scope, and Wave 1 companies below the new thresholds are released from reporting from the 2027 financial year.
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, and removed listed SMEs from mandatory scope. It also 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 has separately published its own UK Sustainability Reporting Standards (UK SRS), currently available for voluntary use.
UK SRS is the UK’s sustainability reporting framework, based on the ISSB’s IFRS S1 and S2 and focused on financial materiality. CSRD is EU law and requires double materiality, covering both financial risk and the company’s impact on people and the environment. A UK group with significant EU operations may need to report under both. A single, well-governed ESG data set that supports each framework saves duplicated effort.
CSRD advisory services help companies understand their obligations and build the processes needed to report. Typical consulting support includes scope assessment, double materiality assessment, data gap analysis, an implementation roadmap and help preparing disclosures for assurance. Reconomy’s specialist brands provide these services alongside wider environmental compliance support.
A CSRD readiness assessment confirms whether you are in scope under the revised thresholds and reviews your existing sustainability reporting. It runs a focused double materiality assessment and identifies gaps between the data you hold and the ESRS data points you will need. The output is a clear picture of where you stand and what to prioritise.
A CSRD implementation roadmap should set out the material topics and ESRS disclosures that apply, and who owns each data point. It should also cover the systems and controls needed to collect reliable data, a timeline aligned to your first reporting year, and the steps needed to prepare for limited assurance.
Speak to our CSRD experts