CSRD
Corporate Sustainability Reporting Directive
The EU-wide CSRD requires companies to be fully transparent in their ESG reporting. Many companies will be affected not only directly, but also indirectly by ESG data requests from the market. The article explains what this means for companies in concrete terms and shows how they can efficiently address the relevant requirements.
What is the CSRD, and why is it important for your business?
The Corporate Sustainability Reporting Directive (CSRD) aims to make corporate sustainability reporting more reliable, comparable and easier to assure. It builds on the previous requirements of the Non-Financial Reporting Directive (NFRD) and embeds reporting on Environmental, Social and Governance (ESG) topics in line with common European standards (the ESRS).
The CSRD promotes transparency and accountability with regard to sustainability and thereby strengthens the information base for investors, customers and other stakeholders. Through clearer requirements and standardised disclosures, the comparability of sustainability information improves—and companies can manage sustainability risks and opportunities more systematically.
Since 2025, the CSRD has been simplified and realigned. With the ‘stop-the-clock’ directive, the deadlines for companies affected at a later date have been postponed by two years. With Omnibus I (finally adopted on 24 February 2026), the scope of application will also be significantly narrowed (focus on very large companies) and the reporting burden reduced – including protective mechanisms to limit excessive data requirements along the supply chain.
The CSRD requires companies to:
Standardised sustainability reporting (ESG):
Companies must report comprehensively and in a traceable manner on material sustainability topics. A robust materiality assessment is central, ensuring that reporting covers the most relevant impacts, risks and opportunities.Double materiality:
The reporting considers two perspectives based on a double materiality analysis (DMA):
– Impact materiality: Impact of business activities on the environment, society and stakeholders.
– Financial materiality: Sustainability-related risks and opportunities for the company itself.
According to Omnibus, DMA can be carried out more pragmatically, for example using a top-down approach: First, topics are derived from the business model, strategy and sector and prioritised. A more in-depth analysis is only carried out where it is essential (instead of collecting all data points ‘bottom-up’ across the board).Alignment with the European Sustainability Reporting Standards (ESRS):
Reporting is carried out in accordance with the ESRS. These are currently being simplified in a targeted manner. Additionally, the obligation to develop sector-specific standards is set to be abolished. The EU Commission is expected to adopt the revised ESRS Delegated Act in mid-2026, meaning it will apply from the 2027 financial year onwards.External audit/assurance:
The sustainability information must be audited externally. The CSRD initially provides for ‘limited assurance’ for this purpose. EU-wide harmonised ‘limited assurance’ standards are to be adopted by 1 July 2027 at the latest. According to the Omnibus, there are no plans for a subsequent mandatory extension to ‘reasonable assurance’.Integration into the annual report (management report):
Sustainability information forms part of the management report and should be closely connected to financial reporting.Machine readability and tagging:
Reports must be prepared digitally in such a way that structured evaluation and better comparability are possible. The obligation to use digital tagging will only apply once the European Commission has adopted the detailed mark-up rules (ESEF-RTS/XBRL taxonomy). The start date depends on this adoption.
Who is affected?
The reporting requirements under the CSRD will be introduced gradually. Swiss companies that do business in the EU (e.g. through subsidiaries or branches) or are part of the supply chain of a company subject to reporting requirements may also be affected by the CSRD – either directly (if they are subject to reporting requirements themselves) or indirectly through information requirements along the value chain. Companies subject to CSRD reporting requirements are also generally required to report in accordance with the EU taxonomy.
Following the adoption of the Omnibus Package, the following criteria currently apply:
From the 2024 financial year (2025 reporting): Companies that were already covered by the NFRD. Typically large companies of public interest, e.g. listed companies, banks, insurance companies.
From the 2027 financial year (reporting in 2028): Companies based in the EU with more than 1,000 employees and more than €450 million in net turnover.
From the 2028 financial year (2029 reporting): Companies based outside the EU with more than €450 million in net turnover in the EU (at parent company level); in addition, a threshold of more than €200 million in generated turnover applies to the EU subsidiary or branch.
SMEs: Listed SMEs are exempt from the CSRD obligation.
What does this mean in practice?
Although the CSRD now focuses more strongly on very large companies, higher transparency and data reporting requirements are expected to indirectly impact suppliers and partners, particularly those integrated into the value chains of EU companies subject to reporting requirements. Some medium-sized and larger companies are also expected to voluntarily adopt ESRS to support financing, tenders, customer requirements and competitiveness.
Our recommendation:
- If your company will be subject to CSRD requirements from the 2027 financial year onwards, you should start preparing well in advance. Conduct a double materiality analysis, review the relevant ESRS data points and carry out a gap analysis and pilot report one year in advance.
- If your company is not subject to the CSRD, start with a materiality analysis and clearly prioritise topics, key figures, targets, responsibilities and verifiability. This will provide a basis for decision-making, reduce risks and strengthen your market position, regardless of formal reporting requirements.
Implications for Swiss companies
For Swiss companies that are directly or indirectly affected by the CSRD, this means in practice that they must further develop their data collection, management and reporting systems in order to be able to provide reliable information on environmental, social and governance issues. In many cases, the pressure to act does not arise solely from their own reporting obligations, but also from requirements imposed by customers, banks, insurance companies or corporate guidelines.
- Indirect impact via the supply chain (since the start of the first CSRD wave / ongoing):
Companies that are part of the value chain or supply chain of an EU company subject to CSRD reporting requirements may already be affected today if ESG data is required to meet CSRD/ESRS reporting obligations. A ‘value chain cap’ applies here: data requests to companies with fewer than 1,000 employees are limited and should be based on voluntary standards (VSME) – nevertheless, the need for reliable ESG metrics and evidence remains high. - Direct reporting obligation for large EU subsidiaries or EU branches (after stop-the-clock, at the earliest from FY 2027 / report 2028):
Swiss companies may be affected if an EU subsidiary or EU entity exceeds the relevant thresholds and thus becomes subject to CSRD. In this case, the EU entity is generally required to report; however, the Swiss parent company is typically involved in data collection and consolidation. Depending on the final structure, group-wide solutions (e.g. consolidated reporting) may also simplify implementation under certain conditions. - Obligation for non-EU companies (according to Stop-the-clock, earliest from FY 2028 / report 2029):
According to the political agreement on Omnibus I, the CSRD will also apply to non-EU groups in future if they generate more than €450 million in net turnover in the EU and have a significant EU presence (e.g. relevant subsidiary or branch). The detailed criteria will be specified in the course of formal implementation.
Even though the CSRD is (expected to) focus much more strongly on very large companies in future, it is to be expected that higher transparency and data reporting requirements will continue to have an indirect impact on suppliers and partners – especially where they are integrated into the value chains of EU companies subject to reporting requirements.
Note on developments in Switzerland
It remains plausible that regulatory requirements in Switzerland will converge with EU requirements in some areas in the medium term, or that market requirements (financing, customer requirements, tenders) will have similar effects. Swiss companies – especially larger and internationally integrated ones – should therefore closely monitor developments and increase their internal ESG data and governance maturity at an early stage.
Swiss companies that are (directly or indirectly) affected by CSRD requirements should begin preparations at an early stage. This includes, in particular: assessing the current ESG data situation, establishing clear responsibilities and processes, preparing for structured data collection (including the value chain) and providing targeted training on requirements and verifiability.
Your next steps
- Conduct a materiality assessment: Identify the key sustainability issues for your company as a basis for focused, verifiable reporting.
- Perform a gap analysis:Analyse which CSRD requirements your company already meets and where there is room for improvement. This will give you a clear overview of the necessary steps.
- Sharpen your sustainability strategy:Derive clear goals, priorities and measures from the results and embed them in your strategy, management and decision-making processes.
- Optimise data collection:Ensure that relevant metrics are consistently recorded, documented and internally controlled – along the value chain, where necessary. Align your data collection with the ESRS, keeping an eye on current simplification and development initiatives.
- Create a sustainability report: Prepare the sustainability statement as part of the management report and prepare for the external limited assurance audit at an early stage. If you are not subject to CSRD, choose a suitable voluntary standard and prepare lean, market-oriented reporting or a standardised ESG data package to efficiently meet customer and financing requirements.
With our support, your company can prepare optimally for the requirements of the CSRD, reaping the benefits of transparent reporting.
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FAQs about the CSRD
Double materiality means that companies assess and report sustainability topics from two complementary perspectives:
Impact materiality:
How your company’s activities actually or potentially affect the environment and society—for example greenhouse-gas emissions, resource use, working conditions, or human rights impacts across the value chain.Financial materiality:
How environmental and social matters affect your company’s financial position and performance—for example through climate-related risks, supply-chain disruptions, regulatory requirements, market shifts, or reputational risk.
Both dimensions are central to CSRD reporting, because together they provide a complete picture: your company’s impacts on people and the planet, and the sustainability-related risks and opportunities that can influence the business.
The EU Taxonomy is the EU’s classification system that defines which economic activities can be considered environmentally sustainable (i.e., “taxonomy-eligible” and “taxonomy-aligned”).
CSRD and the EU Taxonomy are closely connected because:
The CSRD/ESRS set the overall framework for sustainability reporting, while the EU Taxonomy covers a specific, more technical part of that reporting—namely the classification and quantification of environmentally sustainable activities.
Companies that are subject to the EU Taxonomy disclosure requirements (Article 8 of the EU Taxonomy Regulation) must include these disclosures within their CSRD sustainability statement (as part of the management report/annual reporting package) and follow a standardised presentation.
In practice, this means companies must disclose to what extent their activities are:
taxonomy-eligible (eligibility), and
taxonomy-aligned (alignment),
typically using key performance indicators such as turnover, CapEx, and OpEx, supported by explanatory information on methodology and criteria (including “Do No Significant Harm” and minimum safeguards).
Important context:
Being in scope of the CSRD does not automatically mean a company must publish a full set of EU Taxonomy KPIs in every case—the determining factor is whether it falls under the Taxonomy disclosure obligations. In practice, however, CSRD and Taxonomy reporting are tightly linked, because Taxonomy disclosures are commonly expected to be integrated into the CSRD reporting process and aligned with the broader ESRS narrative.
The ESRS are the mandatory rulebook for implementing the CSRD. They specify what sustainability information companies must disclose and how it must be structured, explained and presented—so that sustainability statements are comparable, auditable and consistent across companies and sectors.
In practical terms, this means:
Standardised content and structure: The ESRS set out common requirements for disclosures across Environmental, Social and Governance topics, including governance arrangements, strategy, targets, action plans and metrics.
Core principles and methodology: The cross-cutting standards (notably ESRS 1 and ESRS 2) embed key concepts such as double materiality, the reporting boundary, and baseline disclosures that apply to all in-scope companies.
Auditability and data quality: By defining minimum expectations for the underlying data, assumptions, consistency and traceability, the ESRS provide the foundation for external assurance of sustainability reporting.
Current simplification work: As part of the EU’s simplification agenda, the ESRS are being reviewed and streamlined. EFRAG delivered technical advice on simplified ESRS to the European Commission on 3 December 2025, as an input to the next regulatory steps.
To make your sustainability reporting CSRD-compliant, auditable and consistent, it helps to follow a structured approach:
Use the ESRS as your rulebook:
Align the structure, content and evidence trail of your reporting with the ESRS (including ESRS 1/2: core principles, governance, strategy, IROs, policies, targets and metrics). Keep in mind that the ESRS are currently being reviewed/streamlined, and adjust your approach where necessary.Carry out and document double materiality properly:
Ensure your materiality assessment (impact + financial materiality) is methodologically sound and fully traceable (stakeholder input, scoring, thresholds, decisions). The documentation is crucial later for assurance.Perform a gap analysis (current state vs required state):
Compare your existing data, processes and controls against ESRS requirements. Identify gaps in:data availability (e.g. emissions scopes, workforce data, value-chain data)
roles, responsibilities and governance
evidence and data quality
systems, workflows and consolidation processes
Consider the EU Taxonomy where applicable:
Assess early whether and how EU Taxonomy disclosures apply (eligibility/alignment, KPIs such as turnover/CapEx/OpEx) and build the data collection in parallel with ESRS reporting.Involve external assurance early (not at the end):
Ask your assurance provider/auditor to challenge key methodological choices early (materiality, KPIs, reporting boundaries, data collection approach) so that fundamental issues are not discovered late. Starting with a readiness review or a “dry-run” assurance exercise is often effective.
Machine readability means that sustainability disclosures are not only readable for people as narrative text, but are also structured so that software can automatically extract, analyse and compare the reported information.
How this is implemented under the CSRD:
Electronic Reporting Format (ESEF):
Sustainability disclosures will become part of the (group) management report and must be provided in an electronic format that is both human-readable and machine-readable – in practice: XHTML (human-readable) plus digital tagging via XBRL.Important: Tagging will only become mandatory once the EU taxonomy has been formally adopted:
The obligation to use digital tagging (and thus ensure full machine readability) will only take effect once the EU makes the relevant XBRL taxonomy binding by amending the ESEF regulation. Until then, tagging (and thus, as a rule, XHTML for the management report) is not mandatory.
Under the CSRD, sustainability disclosures must be included as a clearly identifiable, dedicated section of the (group) management report (the “sustainability statement”) and should not be published as a separate standalone report, because this would weaken the intended connectivity between financial and sustainability information.