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Charlotte Colot
Consultant Sustainability Advisory
Consultant Sustainability Advisory bij Arcadis

Our sustainability experts at Arcadis have compiled frequently asked questions about the Corporate Sustainability Reporting Directive (CSRD), approved by the European Commission in July, to provide insights on what the new reporting guidance may mean for your company.


1. What is the CSRD and what are ESRS?

The Corporate Sustainability Reporting Directive (CSRD) is European legislation that has been in force since January 2023. It requires companies to provide transparent annual reporting of their sustainability performance. The directive replaces the existing Non-Financial Reporting Directive (NFRD) and significantly expands the number of companies covered, from 12,000 to 50,000 – not only those based in the EU.

The European Sustainability Reporting Standards (ESRS) determine the specific reporting requirements for each topic. These standards were approved by the European Commission in July 2023. They enable better comparison and monitoring of a company’s sustainability performance.

2. Who is required to report under the CSRD?

Many companies are still unsure if and when they have to comply with the CSRD. It’s important to note that companies that fail to comply or take appropriate actions run the risk of reputational damage, administrative, or even financial sanctions.

The timeline below shows the reporting year in bold. For example, if you need to comply with the CSRD in 2025, you should perform a materiality analysis in 2023 then gather material data in 2024.

Starting in 2025, all companies that already fall under the Non-Financial Reporting Directive (NFRD) regulations must report on their sustainability performance for 2024. These companies should meet at least two of the following conditions:

  • >500 employees
  • >40 million Euros in revenue, and/or
  • >20 million Euros in total assets

Starting in January 2026, large European companies must also report on their sustainability performance, for 2025. This includes companies that meet at least two of the following criteria:

  • >250 employees
  • >40 million Euros in revenue, and/or
  • >20 million Euros in total assets

Starting in January 2027, listed European SMEs join the list and also must report on their sustainability performance, for 2026. These are companies that meet at least two of the following criteria:

  • >10 employees
  • >700,000 Euros in revenue, and/or
  • >350,000 Euros in total assets

Starting in January 2029, non-European companies with at least one subsidiary or branch in Europe and a turnover of more than 150 million Euros must report for the first time, for 2028.

This flowchart helps determine when your company must comply with the CSRD.



3. What should companies report under the CSRD?

There are 12 European Sustainability Reporting Standards (ESRS) that determine the reporting requirements under the CSRD. These standards apply to all sectors and consist of two overarching or "cross-cutting" standards that apply to all themes.

In addition, there are 10 thematic or "topical" standards that cover different sustainability themes including several Environment, Social, and Governance (ESG) topics. Companies only need to report on the standards considered material or relevant in their materiality analysis.

Here is an overview of the 12 standards.



4. What does a (double) materiality analysis entail?

To determine which sustainability themes are relevant for your company, a double materiality analysis is conducted.

  • Impact materiality: Environmental or social themes on which the company itself has a positive or negative impact (inside-out).
  • Financial materiality: External sustainability-related factors that have a positive or negative impact on a company's financial status (outside-in).

The European Sustainability Reporting Standards establish criteria to determine what is material. A company can set the threshold from which a theme ("topic") is considered material or relevant. A theme is considered material if it is relevant in at least one of the two (impact/financial) categories.

Arcadis can guide you in conducting a materiality analysis. This is carried out together with a working group from your company. Stakeholders are also consulted to ensure that everyone's expectations and interests are considered in the materiality analysis.

5. What is the current status of the CSRD and ESRS?

The European Parliament officially adopted the CSRD in November 2022, and it has now been in effect since January 2023. Member states must translate this directive into national legislation that further determines enforcement by 2025. They can, for example, decide to impose fines or tighten certain criteria. Member states cannot make changes to the timeline that determines when companies must comply with the CSRD. You can find more information and the latest updates on the European Commission's website.

In July 2023, the European Commission issued the final version of the 12 European Sustainability Reporting Standards. This document consists of a delegated act that deals with the legal authority, as well as Annex I with the 12 standards, and Annex II with acronyms and a glossary. These standards apply to all sectors. The European Parliament or the European Council still need to examine the delegated act. They can reject the document but cannot make any modifications. There is a two-month period, extendable by another two months, for this monitoring. The sector-specific standards are still under development. For information on when these sector-specific updates are expected, visit the .

6. What are the key changes in the final ESRS?

After the public consultation earlier this year, the European Commission made some changes to the draft ESRS standards that were recently issued.

  • Introduction of a phasing-in period of 1 or 2 years for certain reporting requirements (mainly for companies with <750 employees).
  • More flexibility to determine exactly which themes are material for each company.
  • Certain reporting requirements have become voluntary.

First, there is a longer phasing-in period for reporting, mainly applicable to companies with fewer than 750 employees. Most of these companies did not have a sustainability reporting obligation in prior standards. This phasing-in period gives these companies more time to prepare and achieve a qualitative result. Specifically, it refers to the phasing-in (1 or 2 years after reporting obligation) of biodiversity and some social themes.

Second, companies have more flexibility to decide which themes are most material. This can reduce costs because companies do not have to report on themes that are less relevant for their particular business. Only the cross-cutting standard 'General disclosures ESRS 2' remains mandatory for all companies. Also, 'Climate change ESRS E1' is now subject to the materiality analysis. However, if a company considers climate change immaterial, it must clearly specify how this conclusion was reached.

Finally, some reporting requirements have been made voluntary and changed from 'shall disclose' to 'may disclose'. These are data points currently considered the most challenging for companies, such as the biodiversity transition plan and certain indicators related to self-employed and temporary workers within a company's workforce.

7. What can companies already start doing?

The first step is to determine which themes are a priority for your company through a materiality analysis. Then, it is important to compare your current management measures and reporting with the requirements of the CSRD. What has already been done? What is expected? What is still lacking? This outcome forms the basis for a step-by-step plan that establishes priorities for your company. Where action is still needed, clear objectives and KPIs are set for each theme. In the final step, you monitor the KPIs. Arcadis can guide you through all these steps and help you convert these intensive obligations into added value for your company.



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Throughout our 135-year history, Arcadis has evolved into a company focused on fostering the transition to a more sustainable world. We do this through helping clients with sustainable strategies and offerings with a global presence, ensuring we meet local sustainability needs with an understanding of the market, and best practices from across the world. Learn more and connect with an Arcadis expert today.


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