Impact of EU sustainability reporting on US companies
Hot Topic | December 2024
The CSRD is in effect, but its application to US companies continues to raise questions.
We updated this Hot Topic in December 2024 to reflect the European Commission’s (EC) CSRD FAQs published in the Official Journal of the EU in November 2024. The update also includes the latest developments by the EC and European Financial Reporting Advisory Group (EFRAG).
We explain which companies within a group are subject to the Corporate Sustainability Reporting Directive and include a series of examples that illustrate the CSRD scoping and reporting considerations for common US group structures.
Applicability
Accounting Directive, as amended by the Corporate Sustainability Reporting Directive
Commission Notice on the interpretation of certain legal provisions in the CSRD
- 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
Relevant dates
- Jan 5, 2023 – The CSRD entered into force
- July 2023 – EC adopted European Sustainability Reporting Standards (ESRS)
- Jan 1, 2024 – The earliest effective date for the CSRD
- July 2024 – Deadline for Member States to transpose the CSRD into local law (i.e. 18 months from the date the CSRD became law)
- June 30, 2026 – Deadline for the EC to adopt sector and non-EU parent standards
Effective dates
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. The EU adopted the first set of ESRS in July 2023 and they are effective for companies starting January 2024. For more information about the ESRS, see our handbook, ESRS Foundations.
Report contents
- Source and applicability
- Fast facts, impacts and actions
- Background
- Scoping requirements
- Effective dates
- Reporting requirements
- Reporting exemptions
- Non-EU company impact
- Recent developments
- Next steps for companies
- Examples
- Resources
Download the document
Explore more
Resource
Podcast: The Sustainability Report – Tracking the EU
Catch up on the latest news and developments in the ever-evolving EU sustainability regulatory reporting landscape.
Resource
Podcast: Don’t forget about the EU Taxonomy
We discuss the EU Taxonomy Regulation as US companies prepare for their EU sustainability reporting obligations.
Resource
Impact of EU supply chain laws on US companies
A German supply chain due diligence act is already effective, with an EU-wide directive nearly final.
Meet our team
Subscribe to stay informed
Receive the latest financial reporting and accounting updates with our newsletters and more delivered to your inbox.
Accounting Research Online
Access our accounting research website for additional resources for your financial reporting needs.