A New Baseline for Transparency in Europe
The Corporate Sustainability Reporting Directive (CSRD) has redefined corporate accountability in the European Union. It requires companies to disclose verifiable, standardized data on how they impact—and are impacted by—environmental, social, and governance (ESG) issues.
This is not a voluntary framework. It is a legal obligation that elevates sustainability reporting to the same level as financial reporting. Companies must now show—not just say—how they contribute to a sustainable economy.
Who Must Report—and When?
The CSRD applies to companies that meet all of the following thresholds:
- At least 1,000 employees
- Either a net turnover over €50 million or balance sheet total above €25 million
Reporting obligations are phased in gradually:
- Large listed companies and financial institutions already reporting under the old NFRD regime continue under CSRD rules.
- Other large EU companies (meeting the above thresholds) must begin reporting by 2028.
- Listed SMEs also begin in 2028, with simplified standards.
While many small and medium enterprises fall outside the scope, their role in value chains and financing arrangements means that ESG reporting is quickly becoming de facto mandatory for any company that wants to do business in the EU.
What Needs to Be Reported?
CSRD reports must follow the European Sustainability Reporting Standards (ESRS) and cover:
- Environmental: Greenhouse gas emissions, climate risk, resource use, pollution, and biodiversity.
- Social: Working conditions, human rights (including in the supply chain), diversity, and equal pay.
- Governance: Ethical behavior, risk management, anti-corruption, board diversity, and compliance structures.
A central principle of the CSRD is double materiality: companies must report both on how ESG factors affect them and how their business affects society and the environment.
Why Financiers Are Paying Close Attention
CSRD-compliant sustainability reporting is no longer just for regulators—lenders and investors are increasingly relying on ESG data to assess risk and allocate capital.
What This Means for Borrowers
Banks, insurers, and other capital providers are under their own ESG reporting obligations. This means they must assess the sustainability risks of the companies they finance. If you’re applying for loans, issuing bonds, or seeking investment, your ESG profile could now directly affect your cost of capital.
Companies that cannot produce reliable, structured ESG data may face:
- Higher interest rates
- Tougher collateral and covenant terms
- Lower credit ratings
- Reduced access to green loans, subsidies, or guarantees
- Delays or rejection in the financing process
Even if you’re not required to report under the CSRD, your bank might ask for CSRD-style data anyway.
How to Prepare—Whether You’re In Scope or Not
Whether you’re required to comply now or not until 2028 (or never formally), the direction is clear: ESG performance is becoming a basic business credential.
Action Plan for Companies
- Assess ESG gaps now
Benchmark your policies, data systems, and KPIs against ESRS requirements. - Talk to your financiers
Ask what ESG disclosures they will expect in the coming 12–24 months. - Set up data infrastructure
You’ll need auditable, structured, forward-looking data—not just narrative CSR reports. - Train your teams
Reporting under CSRD touches finance, HR, operations, procurement, and legal. Cross-departmental coordination is essential.
Beyond Compliance: A Strategic Opportunity
Companies that embrace CSRD not just as a rulebook but as a strategic tool will gain:
- Stronger trust from investors and customers
- Access to sustainability-linked financing
- Better reputation and employer branding
- Insight to future-proof the business against regulatory, climate, and social risks
Final Thought
Sustainability is no longer a marketing line—it’s a creditworthiness factor. In a business environment where lenders ask for ESG KPIs before signing term sheets, your ability to report on sustainability isn’t optional. It’s foundational.
The CSRD is not just a reporting obligation. It’s a reflection of what tomorrow’s economy expects from today’s businesses.