Impact of EU sustainability reporting on US companies
Hot Topic | March 2025
The CSRD is in effect, but changes are proposed that will likely impact its application to US companies.
March 2025 Update: The European Commission (EC) has launched an 'Omnibus Initiative' to reduce sustainability regulatory reporting burden for companies operating in the EU. This initiative includes proposed changes to the Corporate Sustainability Reporting Directive (CSRD) in a variety of areas, including a two-year postponement in reporting for certain companies. Under these proposals, only the largest companies would report under European Sustainability Reporting Standards (ESRS) and a subset of those companies would continue to report under the EU Taxonomy. The EC also announced that it will simplify ESRS disclosure requirements and is consulting to amend the EU Taxonomy.
Our Hot Topic has been updated to discuss these proposed amendments.
Applicability
- The Accounting Directive, as amended by the CSRD, applies to most companies with listed securities in the EU, non-EU parents (including US companies) with substantial activity and a physical presence in the EU, and non-EU subsidiaries of companies that meet the scoping requirements.
- An EC Commission Notice published in November 2024 provides interpretations of certain legal provisions in the CSRD.
- The Omnibus package published in February 2025 includes proposals that would amend the CSRD.
Relevant dates
- Jan 5, 2023 – The CSRD entered into force
- Jul 2023 – EC adopted European Sustainability Reporting Standards (ESRS)
- Jan 1, 2024 – The earliest effective date for the CSRD
- Jul 2024 – Deadline for Member States to transpose the CSRD into local law (i.e. 18 months from the date the CSRD became law)
- Feb 26, 2025 – First Omnibus package of proposals released which includes proposed changes to the CSRD
Effective dates
Based on the CSRD, as originally entered into force. Read our Hot Topic to understand how the following table would be impacted by the Omnibus proposals.
Company type | Effective date | Year of initial application |
|---|---|---|
Large PIEs (> 500 employees) and large companies listed on an EU-regulated market (> 500 employees) | Jan 1, 2024 | 2025 (i.e. companies would have to issue their 2024 sustainability report in 2025) |
Other large companies (including other large companies listed on an EU-regulated market) | Jan 1, 2025 | 2026 |
Small and medium-sized companies (including non-EU based SMEs), except micro-companies, listed on an EU-regulated market | Jan 1, 2026 | 2027 |
Includes an option to opt out of CSRD reporting until 2029 (i.e. effective date of 2028) | ||
Small and non-complex credit institutions and captive insurance entities | Jan 1, 2026 | 2027 |
Ultimate non-EU parent companies with substantial activity and a physical presence in the EU | Jan 1, 2028 | 2029 |
Key impacts
Despite being an EU directive, US and other non-EU based companies will be impacted by the CSRD if they meet certain scoping criteria, which are discussed in our Hot Topic. The nature of these impacts will vary depending on the specific circumstances of the company.
The complexity in applying the CSRD to those that meet the scoping criteria will vary based on a variety of factors, including their group structure and existing consolidated reporting processes.
Our Hot Topic can help US and other non-EU based companies understand the CSRD scoping requirements and consequential reporting obligations. It includes a series of examples that walk through the applicability of the CSRD to common group structures for US and other non-EU based companies.
The CSRD requires certain companies to prepare sustainability reporting in accordance with ESRS. For more information about the ESRS, see our handbook, ESRS Foundations.
Report contents
- Source and applicability
- Fast facts and impacts
- Background
- Scoping requirements
- Effective dates
- Reporting requirements
- Reporting exemptions
- Non-EU company impact
- Recent developments
- Next steps for companies
- Examples
- KPMG resources
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