On the 21st of April 2021, the EU commission announced the adoption of the Corporate Sustainability Reporting Directive (CSRD) in line with the commitment made under the European Green Deal. The CSRD will amend the existing Non-Financial Reporting Directive (NFRD) and will substantially increase reporting requirements on the companies falling within its scope in its efforts to expand the sustainability information for users.

The proposed directive will also entail a dramatic increase in the number of companies subject to the EU sustainability reporting requirements. The NFRD that is currently in place for reporting on sustainability information, covers approximately 11,700 companies and groups across the EU. The CSRD is expected to increase the number of firms subject to EU sustainability reporting requirements to approximately 49,000.

A brief overview of the key changes and impacts from the CSRD

    Current EU Directive
2014/95/EU (NFRD)
Corporate Sustainability Reporting Directive
When will it be applicable?

FY 2018

In February 2022 the Council of European Union proposed a delay in the implementation timeline:

  • January 2024: Reporting entities already subject to the NFRD report in 2025 on 2024 data
  • January 2025: Large reporting entities not currently subject to the NFRD report in 2026 on 2025 data
  • January 2026: Listed SMEs, small and non-complex credit institutions and captive insurance entities report in 2027 on 2026 data
To which companies will it be applicable?

Large public interest entities with > 500 employees

Public interest entities are:

  • Listed companies
  • Banks and Insurance companies
All (listed or non-listed) large companies (two of three criteria met):
  • > 250 employees and/or
  • > €40M Turnover and/or
  • > €20M Total Assets

Note: small and medium listed companies get an extra 3 years to comply.

How many companies are subject to the new directive?

EU: 11,600

NL: 115

49,000 Covering > 75% of total EU companies’ turnover

NL: More than 2000

What is the scope of the reporting requirements?

Companies are to report on:

  • Environmental protection
  • Social responsibility and treatment of employees
  • Respect for human rights
  • Anti-corruption and bribery
  • Diversity on company boards (in terms of age, gender, educational and professional background)

Overall requirements:

  • Inclusion in the Annual Report
  • External (limited) assurance (as from FY2024)
  • Reporting principles
  • Format and timing

General disclosures:

  • Business model, strategy and policies
  • KPIs and targets (forward looking information)
  • Company and sustainability governance
  • Double materiality assessment and due diligence
  • Risk and opportunity management

Topic-specific disclosures:

  • Environmental (incl. EU Taxonomy)
  • Social
  • Governance
  • Sector-specific standards
Is independent 3rd party assurance mandatory?

Non-mandatory (for most countries)

In some countries part of legal audit requirements (for example in NL under NVCOS 720 requirements).

Mandatory – limited level of assurance including:

  • Integration in Auditor’s Report
  • Involvement of key audit partner
  • Scope to include EU Taxonomy information and process to identify key relevant  information.
Where should companies report?

Included in the Annual Report (for NL companies)

Inclusion in the Management Report

In what format should companies report?

Online or PDF version

To be submitted in electronic format

Main challenges and opportunities

The preparation of an ESG report that meets the requirements of the CSRD comes with its own challenges and opportunities:

Double materiality
The double materiality assessment is a key element in CSRD reporting and determines to a large extend the reporting scope. The execution of the assessment is more complex than many companies are used to (e.g. via GRI based materiality assessments) as it requires companies to identify both their impacts on people and environment (impact materiality) as well as the sustainability matters that financially impact the undertaking (financial materiality).

In addition to disclosing information on policies and initiatives, the CSRD requires organizations to set targets, select a baseline and report progress towards these targets.

Vastness of information
Information to be disclosed should contain forward-looking and retrospective information, while extending the scope with reference to the whole value chain.

Link with the European Taxonomy
The ESRS includes the requirement to report in line with information the EU Taxonomy.

Mandatory assurance
Limited assurance is mandatory from the onset, possibly moving to reasonable assurance requirements over time.

Reporting in the management report
Mandatory disclosure of sustainability information in the Management Report may require effort in terms of reshaping the existing report structure to accommodate new and different types of information.

Alignment with TCFD requirements
Companies shall disclose information in line with the TCFD, the transition to a sustainable economy, with limiting global warming to 1.5°C and with climate neutrality by 2050.

Embedding sustainability (technical reporting) knowledge
Companies shall gain and embed sustainability (technical reporting) knowledge in their organization to enable the implementation of all CSRD requirements.

Read more

Get ready for the
Corporate Sustainability Reporting Directive

Understanding the CSRD: answers to the twenty most frequently asked questions

Read more →

Early compliance with CSRD offers advantages

Early compliance with CSRD also offers many other advantages: new insights arise when companies get a grip on the non-financial indicators relating to corporate activities. For example, new opportunities for cost savings (including energy reduction) and innovations in the production process.

In line with the proposed tightening up of climate ambitions, the EU will introduce more stringent legislation on ESG over the coming years, affecting both large companies and SMEs. Early anticipation of how this affects your own corporate activities and drawing up strategic plans to reduce any negative impact will ensure that your company is more agile and future-proof to face these challenges. Actively focussing on ESG provides you with a competitive advantage over companies that have no reporting obligation yet.

In addition, early compliance with ESG reporting in the long term offers scope for streamlining your own production and supply chain from a sustainability point of view. In this way, you can enter into strategic partnerships and identify future bottlenecks at an early stage. This guarantees the continuity of the supply chain at the time the directives enter into force.

A challenge

Developing the right ESG reporting is a serious challenge for many organizations. The amount of ESG metrics is vast and varies by industry, company size and complexity. In addition, there are many different measurement and reporting frameworks worldwide. We help you prepare an ESG report that meets the requirements of the CSRD, including the EU Taxonomy and the Task Force on Climate Related Financial Disclosures (TCFD).

Get ready with KPMG for a new level of sustainability reporting

Sustainability is vitally important for all companies. KPMG firms support organizations of any Sustainability reporting level to make their sustainability transition as smooth and beneficial as possible. The CSRD will require corporations to integrate Sustainability as a major topic in their Risk discussion which must be qualified and quantified in their ERM. Our five-phase approach can help you embed the CSRD requirements in your organization while, at the same time, seizing Sustainability-related opportunities. We bring support both on technical capabilities as well as organizational capabilities and bring full transition support.

With our tailored, modular project approach, and KPMG professionals extensive experience in providing advisory and assurance we can help you address the CSRD challenges and get ready for a new level of sustainabilty reporting. Click here for more information on our CSRD approach.


The Corporate Sustainability Reporting Directive (CSRD) requires companies to report on the impact of corporate activities on the environment and society, and requires the audit (assurance) of reported information.

The purpose of the Green Deal is to make Europe the first climate-neutral continent by 2050. It is the EU’s response to achieving the targets laid down in the 2015 Paris Agreement. The EU’s action package ‘Fit for 55’ works towards the first step: reducing net emissions by at least 55% by 2030.

The EU Taxonomy is a classification system that can be used to indicate if a financial product or investment is environmentally sustainable. Its purpose is to make it easier for investors to opt for sustainable investments.

The Non-Financial Reporting Directive (NFRD) is the predecessor of the CSRD and has a more limited scope. For example, the NFRD currently imposes an obligation on some one hundred companies in the Netherlands to report on ESG factors. In the future, the CSRD is expected to impose this obligation on some thousands of companies.

Under the Sustainable Finance Disclosure Regulation (SFDR), asset managers have to disclose their ESG risks, policies and results. Its purpose is to make European clients aware of the impact of investments and to make it easier to compare financial products in terms of sustainability.

Questions about the CSRD? Engage with our team