With ecosystems under strain, biodiversity declining, and climate risks escalating, businesses can no longer afford to ignore their environmental impact. The Corporate Sustainability Reporting Directive (CSRD) is one of the EU’s answers to address climate change. It is a regulation that requires companies to disclose detailed sustainability information, pushing companies to measure, disclose, and manage their footprint in a standardized way. It should fuel real action on issues like carbon emissions, biodiversity loss, and resource depletion. For businesses, this directive is not just a compliance requirement—it’s an opportunity to build resilience, attract ESG-focused investors, and stay competitive in a market increasingly shaped by sustainability expectations.
With the CSRD comes its sister, the European Sustainability Reporting Standards (ESRS). The ESRS provides the specific framework for CSRD disclosures, covering environmental, social, and governance topics in line with the EU’s climate and sustainability goals. In simple terms, the ESRS are tools through which the CSRD will be implemented. Today, we’ll go on a short walk through the CSRD and ESRS to help you prepare and get your company started as the directive is phased into action.
To whom does the CSRD apply?
The CSRD applies to a broad range of companies, expanding significantly beyond the previous Non-Financial Reporting Directive (NFRD). If your company matches any of the three groups listed below, chances are, it applies to your company.
- Large EU companies that meet at least two of these three criteria:
- More than 250 employees
- More than €40 million in net turnover
- More than €20 million in total assets
- Listed SMEs (excluding micro-enterprises) starting in 2026 with simplified reporting requirements.
- Non-EU companies with net turnover above €150 million in the EU and at least one EU subsidiary or branch.
My company has to report. Now what?
Identifying which of the European Sustainability Reporting Standards (ESRS) applies to your business is the next step in this ladder. There are 12 ESRS that together address general principals of sustainability, as well as environmental, social, and governance principles.
Out of all 12 ESRS, the first two, ESRS 1 and 2, set the general requirements and list the mandatory general disclosures for all companies, respectively. So these have to be included in your report. Other than that, the commission developing the ESRS is also developing sector-specific standards, which will also be required at a later date, depending on which sector your company is acting in. You can check the state of development for the sector-specific standards in this link if you are interested. After this point, a Double Materiality Assessment is needed to identify further reporting needs.
To understand how this fits into the larger system, explore our guide on eco rewards for loyalty platforms.
Double Materiality Assessment
The Double Materiality Assessment is a process created to help companies identify which sustainability issues are relevant to their business. By following the DMA, companies will identify and learn how to quantify two types of materiality:
- Impact Materiality: how the business affects the environment and society
- Financial Materiality: How Sustainability Issues Affect Financial Performance
This process is actually the crux of the whole thing. It is a long and winding process that, once seen through to its end, will open your eyes to some very relevant dimensions of your business that you may never have considered before.
Companies looking to start their double materiality assessment can get a quick start by using the Implementation Guidance Documents. It provides a step-by-step approach tailored to CSRD compliance. If extra help is needed, the European Commission’s CSRD FAQ clarifies regulatory expectations. If you’re interested in a case study, you can also check out how one of our business partners, Wooga, has handled their Double Materiality Assessment by visiting this link.
The Omnibus Package enters the chat
By this point, you might be asking, “What about the Omnibus thing I keep hearing about? You haven’t talked about that yet”. The Omnibus Package is a set of legislative proposals that the European Commission submitted last month for analysis by the EU Parliament and the Council of the European Union.
The package aims at simplifying and reducing the administrative burden of EU sustainability regulations, including those covered by the CSRD. As a proposal, the package now has to be studied by the evaluating entities and be voted on in order to pass. There has not been any date announced as of the date of writing this, so we can expect several months to pass by before it goes into effect.
There is one point in the package that might be voted on earlier than the rest, a stop-the-clock measure that would push implementation of the CSRD by 2 years, giving companies more time to learn and build up on their Double Materiality Assessments. It might take some time for us to see the other changes being voted on, and we don’t expect them to come into effect until at least 2027. The main changes are:
- Changing the definition of a large company from “companies with more than 250 employees” to “companies with more than 1,000 employees”. This reduces the scope of who has to report by about 80%, letting several companies off the hook.
- Setting boundaries for what kind of information can be requested from companies in your value chain. There will be a voluntary standard for companies that are not in the scope of the CSRD anymore (up to 1,000 employees). That standard will act as a shield by limiting the information that companies or banks falling into the scope of the CSRD can request from companies in their value chains with fewer than 1,000 employees.
- Removing sector-specific standards requirements to alleviate administrative burdens.
- A review of the ESRS by the Commission to reduce the number of data points required.
- Removing the possibility for the Commission to propose going from a limited assurance requirement to a reasonable assurance requirement. This means that companies will not be required to undergo stricter financial audits in order to comply with the CSRD, locking in place lower-level assurance requirements.
You can read more about the Omnibus Package in the Omnibus Package FAQ page created by the Commission to address common concerns.
Now I’m lost. Do I change directions or not?
Short answer? Disregard the changes proposed by the Omnibus Package for now. It will take some time for it to come into effect IF passed. And, even then, once it does come into effect, it should lessen the requirements of the CSRD, not add more to it. By sticking to the process you already have, your company is still likely to remain compliant when/if the Omnibus Package passes and comes into effect, requiring only minor changes, if any at all.
If you got to this point, we hope we helped you get some clarity on the sustainability reporting discussions going on in the EU today and how they might impact you and your company. Feel free to let us know what you think, and have a happy reporting season!
