18 December 2025
The Corporate Sustainability Reporting Directive (CSRD) is an EU directive that requires companies to report comprehensively and transparently on their sustainability performance in accordance with national legislation. It replaces the previous Non-Financial Reporting Directive (NFRD) and significantly expands its scope. More and more companies are required to disclose their environmental, social, and governance (ESG) aspects according to uniform standards. The aim of the CSRD is to provide reliable and comparable information in order to promote investment in sustainable business models and drive the transformation to a climate-neutral economy. This makes sustainability reporting a central component of corporate strategy and competitiveness.
We would like to provide you with this CSRD ABC a supporting tool to help you find answers to any questions that may arise. The ABC will be updated regularly and adapted to the latest political developments (such as expected changes resulting from the trilogue negotiations between the European Parliament, the European Commission, and the Council of the European Union).
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Area of Application (Scope) | Affected companies subject to reporting requirements |
The sustainability reporting obligation (regulated by the Corporate Sustainability Reporting Directive (CSRD)) is being introduced gradually, with the scope of application already having been restricted or postponed by the first Omnibus Directive. Recently, the second Omnibus Directive (proposed Directive COM (2025)81) was also adopted by the EU Parliament after lengthy trilogue negotiations (for further information pls refer to letter “O”). The directive will therefore come into force shortly. Based on these two Omnibus Directives, the scope of application of the CSRD shall be as follows (the regulations have only been partly reflected in the German federal government's draft): From 2025 for 2024: Public-interest companies with more than 500 employees and total assets of more than EUR 25 million or revenues of more than EUR 50 million, whereby the reporting obligation for companies that will fall out of scope as of 2027 financial year is suspended for the 2025 and 2026 financial years (see below). From 2028 for 2027: EU companies that exceed turnover of EUR 450,000 and employees of 1000 From 2029 for 2028: Non-EU parent companies with EU revenues exceeding EUR 450 million and either an EU subsidiary that itself exceeds the CSRD thresholds or an EU branch with revenues exceeding EUR 200 million. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Business model adaption | Adaption of the business model to identified risks and opportunities |
Companies must explain how their business model is evolving to integrate sustainability. Under ESRS 2, disclosures should describe changes to the core strategy, value proposition, and operations, and explain how sustainability issues (e.g., climate, human rights) influence and reshape performance, risks, and opportunities. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| CO₂-accounting |
Accounting of Greenhouse gas emissions |
The original version of ESRS E1 provides for the disclosure of Scope 1, 2, and 3 emissions. Companies with fewer than 750 employees are not required to report Scope 3 emissions in the first reporting year. (The Omnibus Directive (under negotiation) provides for further simplifications with regard to Scope 3 emissions.) |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Double materiality analysis | Combination of financial and impact materiality | Companies must conduct a materiality analysis to determine which topics are material to them and therefore subject to reporting requirements. A sustainability topic can be material from two different perspectives (double materiality). It can have a financial impact on a company (e.g., through risks or opportunities), or the company itself can have a significant impact on the environment or society. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| ESRS | European Sustainability Reporting Standards |
The European Commission has tasked the European Financial Reporting Advisory Group (EFRAG) with developing standards to specify the reporting requirements under the CSRD, the EU Sustainability Reporting Standards (ESRS). An initial set of ESRS has already been published but is currently being revised as part of the Omnibus Initiative in order to limit the scope of reporting requirements. This initial set contains 12 standards: 2 general standards, 5 environmental standards, 4 social standards, and 1 governance standard. The first sentence of the ESRS was amended by Delegated Regulation (EU) 2025/1416 for so-called Wave 1 companies in order to introduce relief for these companies. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Financial materiality | Part of double materiality | Description of whether a sustainability issue could have a material financial impact on the company – for example, through risks, opportunities, costs, or changes in value. This involves examining whether environmental, social, or governance aspects influence the company's financial position, performance, or position. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Governance | Corporate management in the context of sustainability |
The area of governance is specified in ESRS G1 “Business Conduct.” According to this, comprehensive information on corporate governance and business ethics must be provided. This includes in particular:
|
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Human Rights | Human rights in the supply chain and within the company as part of the Social reporting requirements | Human rights are an important part of the reporting requirements under ESRS S 3: Companies must explain how they identify, assess, and address human rights risks along the value chain. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Impact materiality | Part of double materiality | Description of whether a sustainability issue has a significant impact on the environment and society, regardless of whether it has financial consequences for the company. Companies must analyse how their activities, products, or business relationships affect external stakeholders. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Just Transition | Socially just transformation | Description of the principle that environmental measures should be designed in a socially acceptable manner. Companies must describe how they deal with the impact of their climate strategy on their stakeholders and what measures they are taking. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Key Performance Indicators (KPIs) | Measurable values | KPIs are measurable values that indicate how effectively a company is achieving its sustainability objectives. They help track progress on environmental, social, and governance (ESG) goals. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Legal consequences of missing or incorrect reporting | Sustainability-related risks and opportunities | The legal consequences of failing to report or reporting incorrectly are regulated in national implementation laws. The German government's draft bill provides for fines or even criminal liability for management and supervisory boards, e.g., in the event of incorrect accounting or misrepresentation. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Merging the reporting for supply chain legislation | Interplay between CSRD and LkSG or, in future, CSDDD | Originally, there was an obligation to prepare both a sustainability report in accordance with the CSRD and a report in accordance with the German LkSG. This separate LkSG report is to be abolished if a company prepares a CSRD report. Even under the CSDDD, no separate report is required. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Non Financial Reporting Directive (NFRD) | Former name for the sustainability report | Prior to the introduction of the CSRD, companies of public interest were already required to disclose sustainability-related information. This was based on the Non-Financial Reporting Directive, which was implemented in German law in the German Commercial Code (HGB). |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Omnibus guidelines | EU directives to simplify CSRD, including threshold adjustments and transitional arrangements. |
The CSRD regulations are to be simplified by means of two directives:
|
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Principles of Sustainability | The sustainability report shall reflect the principles of sustainability of a company. |
The sustainability report must contain the sustainability principles of each company. It covers three key dimensions:
|
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Quick Fix Regulation: | Delegated Regulation (EU) 2025/1416 amending the first set of the European Sustainability Reporting Standards (ESRS) |
Relief for so-called “Wave 1” companies for the years 2025 and 2026:
|
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Reporting obligation | Obligation to disclose sustainability information | The CSRD requires companies to provide comprehensive and standardized reporting on environmental, social, and governance issues. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Stakeholder | Involvement of stakeholders in materiality analysis and reporting | The CSRD attaches great importance to the involvement and consideration of stakeholders, i.e., all groups that are directly or indirectly affected by the company – including employees, suppliers, customers, investors, and society. Companies must explain how they interact with stakeholders, take their interests into account, and how these are incorporated into the materiality analysis. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Taxonomy Regulation | Connection to the EU taxonomy | The CSRD is closely linked to the EU taxonomy. Companies must disclose the extent to which their activities are environmentally sustainable, although there are exceptions and exemptions that must be examined on a case-by-case basis. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Underpinning future viability | Long-term orientation of the company | The CSRD is a driver for transformation and a touchstone for competitiveness. It forces companies to integrate sustainability into their strategy, processes, and reporting. And it creates transparency. Implementation is a challenge, but at the same time an opportunity to position oneself for the future. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| VSME | Standardization of reporting | The VSME Standard (Voluntary Sustainability Reporting Standard for SMEs) is a voluntary reporting framework developed specifically for small and medium-sized enterprises (SMEs) that are not subject to CSRD reporting requirements. It was designed by EFRAG on behalf of the European Commission to provide small and medium-sized enterprises (SMEs) with a structured, resource-efficient, and practical option for sustainability reporting. As part of the Omnibus debate, EFRAG has been tasked with developing a revised VSME standard based on this framework for all companies that are not themselves subject to reporting requirements but are required to report by companies that are subject to reporting requirements within the value chain. In future, reporting entities will not be allowed to impose higher requirements on non-reporting entities than those provided for in the revised VSME standard. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Whole Value Chain | Reporting obligation across the whole value chain | The reporting obligation covers a company's whole value chain, i.e., all upstream and downstream activities of a company – from raw material extraction, production, and distribution to the use and disposal of products. However, certain companies (fewer than 750 employees) and certain periods (first three reporting years) are subject to exemptions from the reporting obligation, which must be examined on a case-by-case basis. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| XBRL (eXtensible Business Reporting Language) | Technical format for the digital submission of sustainability reports. | The CSRD requires companies to submit their sustainability reports in this format. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Yearly Reporting | Annual reporting obligation | The sustainability information must be published annually in the management report and is therefore part of the annual financial statements. |
| Keyword | Brief description | Detailed explanation |
|---|---|---|
| Zero Emissions | Eliminating greenhouse gas emissions | A goal aimed at eliminating greenhouse gas emissions from operations and value chains, often aligned with climate neutrality and net-zero commitments under international sustainability frameworks. |
by multiple authors