What is the CSRD?

The Corporate Sustainability Reporting Directive (CSRD), established under Directive (EU) 2022/2464, represents the new European framework for sustainability reporting. The CSRD replaces the Non-Financial Reporting Directive (NFRD) and significantly expands both the scope and the content of ESG (Environmental, Social, and Governance) reporting.

The directive entered into force on January 5, 2023, and is being transposed by Member States into national legislation. In the Netherlands, this is implemented through updated regulations regarding the management report and external audits.

For real estate companies, the CSRD introduces a structural obligation to report transparently on environmental impact, social effects, and governance. This has direct implications for valuation, financing, and risk management.

Who is Subject to the CSRD?

Current Legal Scope (CSRD Directive)

The CSRD applies to large undertakings that meet at least two of the following three criteria:

• Net turnover: > €50 million
• Balance sheet total: > €25 million
• Average employees: > 250

Additionally, listed companies and certain non-EU companies with substantial EU activities also fall under the directive’s remit.

Proposed Changes (ESG Omnibus)

In February 2025, the European Commission presented the ESG Omnibus Simplification Package. This package includes proposals to reduce administrative burdens, such as:

• Increasing the employee threshold to more than 1,000 employees.
• Increasing the turnover threshold for non-EU companies active in the EU.

Important: These are currently proposals. They are not yet definitively in force and only become binding following approval by the European Parliament and the Council, followed by national implementation.

Phased Implementation (Reporting Years)

Based on the current status (including the adopted “stop-the-clock” decision):

Significance for Smaller Real Estate Companies

Non-listed small and medium-sized real estate enterprises (SMEs) technically fall outside the formal CSRD mandate. In practice, however, they may face information requests from:

• Institutional investors
• Property developers
• Banks and financiers

This data is required for the value chain reporting of CSRD-compliant entities. The Omnibus proposal explicitly limits these information requests to data points derived from the VSME standard (Voluntary SME Standard).

What Must a Real Estate Company Report?

CSRD reporting is conducted in accordance with the European Sustainability Reporting Standards (ESRS), developed by EFRAG.

Mandatory:

• ESRS 1: General Requirements
• ESRS 2: General Disclosures (applicable to all companies)

Thematic Standards:

• E (Environment): Including energy performance, CO2 emissions of buildings, circularity, and climate adaptation.
• S (Social): Affordability, impact on the local community, and working conditions within the supply chain.
• G (Governance): Risk management, compliance, integrity, and stakeholder dialogue.

Double Materiality

Real estate companies must report on:

1. Impact Materiality: Impact on people and the environment (e.g., emissions, land use).
2. Financial Materiality: Financial risks and opportunities (e.g., physical climate risks, stranded assets).

Audit and Reporting Format

• Sustainability information must be integrated into the management report.
• External auditing is mandatory (initially requiring limited assurance).
• Reports must be digitally tagged (XBRL) according to the ESRS taxonomy.

Conclusion for the Real Estate Sector

The CSRD is not merely a “paperwork exercise”; it is a strategic instrument that directly influences real estate value, investability, and access to capital. Even companies currently out of scope are well-advised to prepare in a timely manner, given value chain obligations and shifting market expectations.

Please note: Regulations are evolving. Closely monitor national implementation and the final decision-making regarding the ESG Omnibus package.