Your cheat sheet for the structure, acronyms and disclosure requirements of CSRD Reporting
Last Updated: February 2026 – This blog has been updated to reflect the significant changes introduced by the EU’s Omnibus I package, approved by the European Parliament in December 2025. These changes substantially revise the scope, timelines, and reporting requirements of the CSRD and ESRS standards. The revised ESRS standards are expected to be formally adopted by mid-2026 and become effective for financial year 2027.
The EU has significantly revised the Corporate Sustainability Reporting Directive (CSRD) through the “Omnibus I” package, which was approved by the European Parliament on December 16, 2025, and is expected to be formally adopted by the Council in early 2026. The directive will enter into force 20 days after publication in the Official Journal (expected around March 2026).
5 Highlights of CSRD Reporting Changes
- CSRD scope has been significantly narrowed: Following the EU’s Omnibus I reforms (December 2025), companies must now meet BOTH thresholds to be in scope: more than 1,000 employees AND more than €450 million in net turnover. For companies within scope, requirements remain rigorous with third-party assurance and penalties for non-compliance. The reduced scope means many previously expected reporters are now exempt from mandatory requirements.
- CSRD reporting has been substantially simplified: The revised European Sustainability Reporting Standards (ESRS), expected to be adopted mid-2026, reduce mandatory datapoints by 61% (from ~1,073 to ~320). The new standards take a more principles-based, materiality-driven approach with greater flexibility for estimates and narrative disclosures, making compliance more manageable while maintaining quality.
- CSRD requires a materiality-focused data foundation: The simplified standards emphasize a top-down, strategic approach to materiality assessment. Companies should focus data collection on what’s genuinely material to their business rather than attempting to report on everything. Enhanced flexibility for value chain estimates reduces the burden of extensive primary data collection while still requiring documented and reliable processes for material datapoints.
- CSRD protects smaller companies in the value chain: The “protected undertakings” concept ensures companies with 1,000 or fewer employees can refuse information requests beyond voluntary standards. Large companies cannot contractually impose excessive CSRD compliance burdens on smaller suppliers and partners, preventing the “trickle-down” effect many feared.
- CSRD timelines provide breathing room: Wave 1 companies (large public interest entities) continue reporting for FY2024 and FY2025 using current standards. Wave 2 companies (large non-listed) have been delayed by two years, with first reports now due in 2028 covering FY2027. This provides additional preparation time and allows companies to adopt the simplified standards from the start.
The opportunity: Despite the reduced scope and simplified requirements, CSRD still represents a significant step forward in sustainability transparency. Companies that embrace these standards—whether mandatory or voluntary—gain valuable insights into their risks and opportunities, enhance stakeholder trust, avoid greenwashing claims through standardized data, and position themselves competitively as sustainability becomes increasingly central to business strategy.
Revised Scope Thresholds:
New Requirements for EU Companies:
Companies must meet BOTH thresholds (not the previous “two-out-of-three” test):
- More than 1,000 employees (average during financial year)
- More than €450 million net turnover
Old Thresholds (for reference): Previous requirement was two out of three: €50 million net turnover OR €25 million balance sheet total OR employees
Impact: This significantly reduces the number of companies in scope – many “high-turnover, low-headcount” businesses are now exempt from mandatory CSRD reporting.
New Requirements for Non-EU Companies:
New Higher Thresholds:
- More than €450 million net turnover generated in EU (for two consecutive financial years)
- AND EU subsidiary or branch with more than €200 million net turnover
New Exemptions
- Financial Holding Companies: Financial holding companies (not involved in management of subsidiaries) are now exempt from CSRD reporting
- Large Listed Subsidiaries: Large stock-listed subsidiaries can now opt out of CSRD reporting if included in parent’s consolidated CSRD reports (previously they could not)
- Listed SMEs: Listed small and medium-sized enterprises are completely removed from CSRD scope
Value Chain Protection (“Anti-Trickle-Down”)
New “Protected Undertakings” Concept:
- Companies with ≤1,000 employees in the value chain have the legal right to refuse information requests beyond what would be required under voluntary standards
- Reporting companies cannot contractually impose more extensive information obligations
- If such clauses exist, they are not legally binding
Purpose: Prevents large companies from pushing CSRD compliance burden down to smaller suppliers and partners
Revised Timelines (“Stop-the-Clock” & Wave Changes)
- Wave 1 (Large PIEs – unchanged: Started reporting for FY2024, published in 2025. Wave 1 transition relief: Member States may exempt Wave 1 companies that fall out of scope under new thresholds for FY2025 and FY2026
- Wave 2 (Large companies): DELAYED by 2 years. First report now due in 2028 (covering FY2027) instead of 2026 (covering FY2025). This makes 2026 a preparation year rather than reporting year
- Wave 3 (Listed SMEs): Delayed to 2028, but many/most will fall out of mandatory scope entirely under new thresholds
- Wave 4 (Non-EU companies): Timeline unchanged for now
The structure of the ESRS Standards
As part of the Omnibus package, the Commission made a commitment to revise the European Sustainability Reporting standards (“ESRS”): The Commission will revise the delegated act establishing the ESRS, with the aim of substantially reducing the number of data points, clarifying provisions deemed unclear, improving consistency with other pieces of legislation and reducing the number of data points.
The ESRS Standards are organized into Cross-Cutting Standards covering general requirements and disclosures and Topical Standards covering Environmental, Social, and Governance topics. The simplified ESRS (expected mid-2026) maintains this overall architecture while reorganizing internal requirements for greater clarity and reducing duplication.
Key Simplification Principles:
- Principles-based approach: More flexibility in how requirements are met
- Materiality-driven: Focus on what’s genuinely material rather than comprehensive checklists
- Reduced repetition: General Disclosure Requirements consolidated in ESRS 2
- Greater interoperability: Enhanced alignment with ISSB and GRI standards
- Flexible presentation: Flexible reporting allows information to be grouped by topic or cross-referenced
- One-time disclosures: Disclosure Management Approach doesn’t need annual repetition unless significant changes occur
Note on Sector-Specific Standards: Planned sector-specific standards have been delayed, with the Commission expected to revisit this in a future review.
Cross-Cutting Standards
ESRS 1 General requirements and ESRS 2 General disclosures apply to the sustainability matters covered by topical standards and sector-specific standards.
ESRS 1 – General Requirements – describes the architecture of ESRS standards, explains drafting conventions and fundamental concepts, and sets out general requirements for preparing and presenting sustainability-related information.
ESRS 2 – General Disclosures – establishes Disclosure Requirements on the information that the undertaking shall provide at a general level across all material sustainability matters on the reporting areas governance, strategy, impact, risk and opportunity management, and metrics and targets. In the simplified ESRS, this standard has been reorganized to include General Disclosure Requirements (GDRs) that previously appeared across multiple standards, eliminating repetition. ESRS 2 now covers the reporting areas of governance, strategy, impact/risk/opportunity management, and metrics and targets, as well as cross-cutting policies like human rights.
Topical Standards
Topical ESRS cover a sustainability topic and are structured into topics and sub-topics, and where necessary sub-sub-topics. The simplified ESRS maintains all 10 topical standards (E1-E5, S1-S4, G1) with significantly reduced mandatory datapoints (61% reduction) while preserving core disclosure objectives.
Disclosure Requirements – What do companies need to disclose?
The Disclosure Requirements in ESRS 2, in topical ESRS and in sector-specific ESRS are structured into the following reporting areas:
| (a) | Governance (GOV): the governance processes, controls and procedures used to monitor, manage and oversee impacts, risks and opportunities ; |
| (b) | Strategy (SBM): how the undertaking’s strategy and business model interact with its material impacts, risks and opportunities, including how the undertaking addresses those impacts, risks and opportunities; |
| (c) | Impact, risk and opportunity management (IRO): the process(es) by which the undertaking: i. identifies impacts, risks and opportunities and assesses their materiality, ii. manages material sustainability matters through policies and actions |
| (d) | Metrics and targets (MT): the undertaking’s performance, including targets it has set and progress towards meeting them |
Topical Standards Categories
The topical standards contain 5 Environmental Standards, 4 Social standards and 1 Governance standard as detailed below:
Environmental Standards:
- ESRS E1 – Climate Change – Covers Scope 1, 2 and 3 emissions
- ESRS E2 – Pollution – Tracks air, water and soil pollution, including microplastics
- ESRS E3 – Water & Marine Resources – water consumption and marine impacts
- ESRS E4 – Biodiversity and Ecosystems – Impacts on wildlife habitats and ecosystems
- ESRS E5 – Resource use & circular economy – Waste management, recycling and product life cycles
The detailed disclosures cover the following areas, the process used to identify the material risks and opportunities related to that topic, the policies adopted by the company to address the issues, actions taken to implement the policies. Metrics and targets related disclosures allow the company to demonstrate the progress and impacts of the policy and actions the company is taken to address the risks and opportunities. Finally, the financial impacts in the short, medium and long term, of the impacts of the material risks and opportunities related to the topic have to be disclosed. Companies also need to disclose, methodologies and assumptions used in the disclosures.
CSRD disclosures are thorough and consistent, enabling users of sustainability statement provided by companies to be useful.
Social Standards:
- ESRS S1 – Own workforce
- ESRS S2 – Workforce in the Value Chain
- ESRS S3 – Affected communities
- ESRS S4 – Consumers & End-users
Governance Standards:
- ESRS G1 – Business Conduct
CSRD Data Foundation
Developing and documenting reliable processes for collecting, managing, and reporting your sustainability data is critical, especially for third-party assurance. It will set you up for success in CSRD reporting and prepare you for other global regulations that are undoubtedly on the way. Technology and tools can help with this onerous portion of CSRD reporting. Still, they will not replace developing internal processes to create alignment across different parts of your organization that must collect the required data.
Going beyond CSRD compliance, you can get returns on the investment in collecting this data by analyzing and integrating the insights into business strategy, mitigating risks, and leveraging opportunities.
Prioritizing data collection and using the appropriate estimations are important considerations in CSRD reporting. Materiality assessments and stakeholder engagement will help prioritize data points for your business. Industry-standard guidelines and best practices will help guide estimated calculations.
While a lot of quantitative data needs to be collected, do not underestimate the importance of qualitative data, such as your business context, the targets you have set, and the policies and actions you have implemented.
ESRS Sustainability Statement
ESRS Sustainability Statement needs to include:
Information about all impacts, risks and opportunities (also referred to as IROs) across environmental, social and governance matters determined to be material from the impact materiality perspective, the financial materiality perspective or both.
The materiality assessment is the process by which the undertaking determines material information on sustainability IROs. This is achieved by determining material matters and material information to be reported. The assessment considers the undertaking’s entire value chain, i.e., it includes the undertaking’s upstream and downstream value chain in addition to its own operations.
Double Materiality
ESRS requires that the materiality assessment (MA) apply the principles of double materiality.
Double materiality covers both impact and financial materiality. Impact materiality pertains to the material information about the undertaking’s impacts on people or the environment related to a sustainability matter; financial materiality pertains to the material information about risks and opportunities related to a sustainability matter.
AR 16 – Sustainability Matters to be considered in the material assessment
AR 16 of the ESRS documentation provides a starting list of sustainability matters to consider in a materiality assessment. in addition, companies need to consider entity-specific disclosures on material impacts, risks and opportunities not covered by ESRS but are material to the company due to its specific facts and circumstances.
Stakeholders
Stakeholders are those who can affect or be affected by the undertaking. There are two main groups of stakeholders:
(a)affected stakeholders: individuals or groups whose interests are affected or could be affected – positively or negatively – by the undertaking’s activities and its direct and indirect business relationships across its value chain ; and
(b)users of sustainability statements : primary users of general-purpose financial reporting (existing and potential investors, lenders and other creditors, including asset managers, credit institutions, insurance undertakings), and other users of sustainability statements, including the undertaking’s business partners, trade unions and social partners, civil society and non-governmental organizations, governments, analysts and academics.
Leveraging GRI and ISSB assessments into the ESRS sustainability statement
The impact materiality assessment process in ESRS are aligned in substance with GRI Universal Standards, and the GRI materiality assessment can be the starting point for the ESRS double materiality assessment, with appropriate integration of financial materiality. The universe of potential impacts identified using the GRI Universal Standards, which are compatible in principle with the list of matters in ESRS 1 paragraph AR 16 (and therefore also with ESRS architecture). In addition, a GRI materiality assessment can inform the process of identifying the entity-specific impacts; and the role of due due diligence and stakeholder engagement, which is central to both frameworks in informing the impact materiality assessment.
As there is an alignment in scope between financial materiality in ISSB standards and the ESRS, when a company is able to comply with the identification of sustainability-related information on risks and opportunities under IFRS Sustainability Disclosure Standards (also known as ISSB Standards) it is a good basis for ESRS reporting. The same financial materiality assessment process can support the identification of the risks and opportunities for both IFRS and ESRS purposes with the caveat that the ESRS the assessment of what is decision-useful considers both investors and other stakeholders, in IFRS this is limited to the users’ needs for investors.
EFRAG has worked together with the TNFD to issue a mapping between the TNFD 2024 framework and the related ESRS environmental disclosures, namely ESRS E3-E5. For the materiality assessment, the LEAP approach embedded within the TNFD disclosure framework may complement and support the identification of environmental matters
