CSRD: Corporate Sustainability Reporting Directive

If you’ve been anywhere near ESG, annual reports, or investor conversations lately, you’ve probably heard the acronym CSRD. 

Imagine you’re trying to choose between two companies. One waves a flag that says, “we’re sustainable” and points you to a few feel-good highlights. The other gives you a thick report packed with numbers, but the numbers don’t match what anyone else uses, the boundaries are unclear, and you’re left guessing what it all means. For years, that’s been the problem with sustainability reporting: lots of talk, plenty of effort, and not enough consistency. CSRD is the European Union’s way of turning sustainability information from a fuzzy add-on into something more like financial reporting: structured, comparable, and harder to dodge.

What is CSRD?

CSRD stands for the Corporate Sustainability Reporting Directive. In plain language, it’s a set of EU rules that requires many companies to publicly explain their sustainability impacts, risks, and actions in a standardised way. That includes environmental topics like emissions and resource use, social topics like workforce practices and human rights, and governance topics like oversight and accountability. The big change is not just that companies must report more, but that they must report in a clearer, more consistent format so readers can compare one business to another without needing a decoder ring.

How did CSRD start?

The story of how CSRD began is basically the story of frustration. The EU already had earlier non-financial reporting requirements, but outcomes were uneven. Some companies produced detailed disclosures while others stayed vague, and comparisons across industries were messy. At the same time, sustainability stopped being a side conversation and became a business reality. Climate risks started showing up in operations and supply chains, investors wanted clearer data, and policymakers pushed harder toward a greener economy. That combination made one thing obvious: if sustainability information is going to influence decisions, it has to be reliable and comparable. CSRD was built to close that gap by replacing the “pick and choose” style of reporting with more consistent expectations.

In a nutshell,

1) The old system: NFRD (2014)

Before CSRD, the EU used the Non-Financial Reporting Directive (NFRD), introduced in 2014. It required some large companies to disclose non-financial information, but the reporting was often inconsistent and hard to compare across firms. CSRD is explicitly framed as an expansion and strengthening of this earlier approach.

2) Pressure builds: Sustainable finance + the EU Green Deal (2018–2019)

In the late 2010s, sustainability reporting shifted from a “nice-to-have” to market infrastructure. The EU’s policy agenda, especially around sustainable finance, put reporting quality under the spotlight.

In the CSRD legal text, the EU links the push to major policy initiatives like the European Green Deal (2019) and the commitment to review and strengthen non-financial reporting rules.

3) The proposal: April 2021

The European Commission formally introduced the CSRD proposal in April 2021 as part of a broader sustainable finance package, aiming to improve the quality and scope of corporate sustainability information.

4) Adoption: December 2022, in force: January 2023

The CSRD became law as Directive (EU) 2022/2464, adopted in December 2022.
It entered into force in January 2023 (the directive then had to be implemented via national laws across EU member states).

5) The standards: ESRS (adopted July 2023)

To avoid a world where every company reports differently, CSRD relies on a common rulebook: European Sustainability Reporting Standards (ESRS).

• EFRAG developed drafts and technical advice.
• The European Commission adopted the first set of ESRS via a delegated act on 31 July 2023, later published as a delegated regulation. 

Why does this matter beyond compliance?

Because good information changes behaviour; when reporting is vague, it’s easy to sound impressive without being specific. When reporting is structured, companies have to face what they measure, what they don’t measure, and what they’re doing about it. For investors and lenders, CSRD-style reporting helps them assess long-term resilience and exposure to risks like regulation, supply disruptions, and physical climate impacts. For customers, employees, and communities, it brings more transparency to what companies actually do and what they affect. For companies themselves, it often becomes a catalyst to improve internal governance, data systems, and decision-making.

What is CSRD doing inside organisations right now?

It’s pushing sustainability out of the “nice narrative” zone and into the operational engine room. Companies are being forced to coordinate across teams that don’t always sit together: finance, risk, procurement, operations, legal, HR, and sustainability, because the reporting touches all of them. It also encourages companies to look at sustainability from two directions: how the company affects the world around it, and how sustainability issues can affect the company’s performance. That two-way lens makes sustainability reporting less like a brochure and more like a map of real impacts and real business exposure.

What should we expect next?

In the near term, more companies will come into scope over time, and many will go through a learning curve: data gaps will surface, value-chain questions will multiply, and organisations will have to decide what matters most and how to prove it. Over the next few reporting cycles, disclosures are likely to become more consistent, which means benchmarking will become easier and scrutiny will rise. Once companies can be compared side by side, it’s harder to hide behind broad statements. You can expect sustainability reporting to look less like a separate ESG appendix and more like a mainstream part of how companies explain performance, risk, and strategy.

In the end, CSRD is best understood as the EU saying: if sustainability is important, then it deserves the same seriousness as financial reporting. It won’t instantly make companies sustainable, but it changes the incentives by making it tougher to rely on vague promises and easier for everyone else to see what’s real.