Climate reporting and the CSRD

Here we give a broad overview: what the CSRD is, why it exists, and how it connects to climate reporting in practice.

Would you rather know exactly which thresholds apply and whether your company is covered? Read more on our page about which companies are required to report.

What is the CSRD (Corporate Sustainability Reporting Directive)?

CSRD stands for Corporate Sustainability Reporting Directive and is the EU's directive for corporate sustainability reporting (1). The keyword is transparency: companies must report on their sustainability work in a structured way, following clear rules.

Put simply, the directive sets out which companies must report, what they must report, and when. So the CSRD isn't just a recommendation. For the companies in scope, it's a legally binding EU directive (1).

Background: the CSRD replaces the NFRD

The CSRD replaces the earlier NFRD, the Non-Financial Reporting Directive (1). The NFRD applied to a smaller number of large companies and had fewer requirements on exactly what to report. The CSRD is a much broader successor, covering more companies and introducing common, detailed standards for reporting.

The background is the EU's ambition to make sustainability information as reliable and comparable as financial information. Before the CSRD, companies were largely free to choose what they reported, which made it hard for investors, customers and other stakeholders to compare companies with each other.

The purpose of the CSRD and sustainability reporting

The purpose of the CSRD is to make companies more transparent about their sustainability work. The reporting is meant to help steer capital towards more sustainable investments and give investors and customers a better basis for their decisions (2).

The CSRD also exists to prevent greenwashing through standardised reporting. When every company reports under the same standard, it becomes harder to exaggerate your sustainability work without it showing.

Beyond that, it's about risks and opportunities. The reporting helps companies identify both the financial risks linked to climate change and the business opportunities that arise from being ahead of the curve on sustainability.

The CSRD timeline

From proposal to EU directive

The CSRD was adopted as an EU directive in 2022 (1). This gave the member states time to bring the directive into their own legislation before the first requirements started to apply.

A phased introduction

Large public-interest companies with more than 500 employees must report under the CSRD for financial year 2024 (1) (6). Other large companies are covered at a later stage, so the rollout happens step by step depending on the size and structure of the company.

Omnibus: simplifications from 2025 and 2026

In 2025 and 2026, the EU introduced a simplification package called Omnibus, which, among other things, reduces the number of companies in scope and simplifies the requirements in the ESRS (3) (4). Want to see exactly which thresholds apply after Omnibus? Read more on our page about who is covered by the CSRD.

Which companies are covered by the CSRD?

Today, the CSRD primarily covers large listed companies, banks and insurers (1) (6). But since the requirements and thresholds have changed through Omnibus, we won't go through the details here. For a full rundown of thresholds and exemptions, read more on our page about who is covered by the CSRD.

The CSRD and the ESRS (European Sustainability Reporting Standards)

What is the ESRS?

The CSRD is linked to the ESRS, the European Sustainability Reporting Standards (2). The ESRS is the common reporting standard for sustainability reporting, and it sets out both what must be reported and exactly how it should be presented.

Environment, social responsibility and governance

Together, the CSRD and ESRS cover three sustainability areas: environment, social responsibility and governance (2). These are in turn broken down into a range of subcategories, such as emissions, working conditions and anti-corruption.

Double materiality assessment

To work out which subcategories are relevant, each company carries out a double materiality assessment. This means the company assesses both how its own operations affect the world around it and how different sustainability issues could affect the company financially (2).

Climate impact, which is a subcategory within environment, is material to report in the vast majority of cases, regardless of industry.

Climate reporting: a key part of the CSRD

Carbon footprint calculation as the first step

The first step towards climate reporting is to calculate your carbon footprint and then keep tracking it. Without a calculation, there's nothing to report and nothing to improve over time. The calculation is also what shows where in the business the biggest emissions are, whether in your own processes, in energy use, or further out in the value chain with suppliers and transport. That makes it possible to prioritise the right actions instead of guessing.

From calculation to climate report

The results of the calculation are then presented in the company's climate reporting. In short, the company gets a handle on its greenhouse gas emissions, shows where they come from, and describes how it plans to reduce them. It's a concrete step towards meeting the demands of both the market and the regulations.

See how GoClimate automates the whole step, from a carbon footprint calculation based on your invoices and receipts to a finished climate report under the ESRS (9).

How small and medium-sized companies are affected too

Even though the CSRD today primarily covers larger companies, small and medium-sized companies are affected indirectly through requirements from bigger players in the value chain. In a Finnish survey by OP Corporate Bank of 139 large companies, 42 percent said they'd had to switch subcontractors because of new sustainability requirements, a clear signal of where things are heading (8).

For smaller companies there's the EU Voluntary Standard (formerly VSME), that makes it easier to respond to requests from customers and banks without having to apply the full ESRS (7).

That makes it more relevant than ever to have a handle on your own sustainability reporting, and to keep being an attractive partner for larger customers that are themselves covered by the CSRD.

Stay one step ahead of your customers' requirements. Try GoClimate's tool and have your climate data ready before anyone asks for it.

Benefits of sustainability reporting under the CSRD

Reporting under the CSRD brings several benefits. It can attract investors and customers while also raising awareness of these issues inside the company.

Common challenges with sustainability reporting

Despite the clear benefits, many companies find it hard to report well. That's often because results are difficult to measure, especially emissions further out in the value chain, where data is rarely gathered in one place. Many also shy away from openly showing gaps in their sustainability work, even though that's exactly what the CSRD wants to encourage.

Even if your company isn't directly covered by the CSRD, it's clear that larger companies will ask their suppliers for data so they can report themselves. That's why it's important to start getting your climate data in place now.

GoClimate's automated tool helps you produce all the data you need, whether or not you're covered by the CSRD. The calculations are based on data collected from invoices and receipts, and categorised by climate impact.

Frequently asked questions about the CSRD

What does CSRD stand for?

CSRD stands for Corporate Sustainability Reporting Directive and is the EU's directive for sustainability reporting (1).

What's the difference between the CSRD and the NFRD?

The NFRD was the CSRD's predecessor and covered fewer companies with less detailed requirements (1). The CSRD widens the circle of companies and introduces common standards through the ESRS (2).

Do all companies have to report under the CSRD?

No. The requirements primarily apply to larger companies, but exactly who is covered is determined by thresholds that have changed through Omnibus (3) (4). Read more on our page about who is covered by the CSRD.

What's the connection between the CSRD and climate reporting?

Climate impact is one of the most central parts of the environmental area in the CSRD (2). Most companies in scope therefore need to calculate and report their carbon footprint as part of their sustainability reporting.

Are smaller companies affected by the CSRD even if they're not directly covered?

Yes. Many smaller companies face requests for sustainability data from larger customers and banks, even without a legal requirement of their own (7) (8).

Summary

The CSRD is the EU's framework for sustainability reporting and makes companies' environmental impact and sustainability work transparent and comparable. The reporting follows the ESRS and is built on a double materiality assessment, and for most companies a large part of it is about climate impact. And even if you're not directly covered, you're likely to notice the same expectations from the world around you anyway.

Get in touch with GoClimate for a demo and see how our automated tool produces your climate data and sustainability reporting under the ESRS.