What Is CSRD Reporting? Key Requirements, Mandates, and Penalties Explained

The Corporate Sustainability Reporting Directive (CSRD) is reshaping how companies disclose environmental, social, and governance (ESG) data in the European Union. If you’re navigating compliance or just starting to explore sustainability reporting, understanding CSRD is essential.

This guide explains what CSRD reporting is, who it applies to, what the requirements are, and what happens if you don’t comply. We’ll also walk through tools like Nasdaq Metrio and how they can help.

What Is CSRD Reporting?

The Corporate Sustainability Reporting Directive (CSRD) is a regulation from the European Union that requires companies to publicly disclose detailed information about how their business activities impact the environment, society, and governance structures. It builds on and replaces the older Non-Financial Reporting Directive (NFRD), introducing broader coverage, deeper requirements, and more structured expectations.

Why Was CSRD Introduced?
CSRD is part of the EU’s broader effort to support the European Green Deal, which aims for climate neutrality by 2050. It’s designed to increase transparency in corporate sustainability efforts, hold businesses accountable, and help investors, regulators, and the public assess ESG risks more clearly.

The regulation also aims to fight greenwashing by making sustainability claims auditable and standardized.

What Makes CSRD Different?
Unlike voluntary ESG frameworks, CSRD is legally binding. It introduces strict requirements that treat sustainability reporting with the same level of scrutiny as financial disclosures. Key features include:

• Structured, standardized data
• A requirement to report on both risks to the business and impacts on the world (double materiality)
• Coverage across the full value chain, not just internal operations
• Reports that are machine-readable and externally assured

This level of detail means companies can no longer rely on general ESG statements. They need systems, governance, and tools in place to meet CSRD expectations.

Key Takeaways

• CSRD is legally binding and expands ESG disclosure requirements for thousands of EU and non-EU companies, with strict timelines starting in 2024.
• Double materiality, value chain transparency, and third-party assurance are core to CSRD compliance—making ESG reporting more rigorous than ever.
• Reporting is phased by company type and size, but preparation must start early due to the complexity of data collection and alignment with ESRS.
• Technology is essential. Platforms like Nasdaq Metrio and AI-powered tools help streamline reporting, ensure accuracy, and meet audit and formatting requirements.
• Non-compliance carries real risks, including fines, reputational damage, and exclusion from key investment and procurement opportunities.

CSRD Reporting Requirements: What Companies Need to Know

To comply with CSRD, companies must report using the European Sustainability Reporting Standards (ESRS)—a detailed framework developed by the EU to ensure consistency, transparency, and accountability in sustainability disclosures.

These standards go beyond typical ESG reports. CSRD requires structured, verifiable data that reflects how a company both impacts and is impacted by environmental and social factors.

Double Materiality Is at the Core
At the heart of CSRD is the principle of double materiality. Companies must report not only on how ESG issues affect their financial performance (outside-in) but also on how their activities impact society and the environment (inside-out).

This dual perspective forces businesses to look beyond short-term risk and consider long-term impact—across the entire value chain.

Reporting Across the Full Value Chain
CSRD doesn’t stop at your organization’s walls. It requires reporting on material risks and impacts throughout the entire value chain—including suppliers, distributors, and downstream partners. That means companies must:

• Collect data from external partners
• Evaluate ESG risks across their ecosystem
• Document how sustainability goals extend beyond internal operations

For many businesses, this will require new data-sharing agreements and a more integrated approach to operations and procurement.

Third-Party Assurance and Digital Structure
CSRD also requires independent third-party assurance. Your sustainability report must be auditable—similar to how financial statements are reviewed by external accountants. This adds credibility but also complexity to the reporting process.

In addition, all disclosures must be submitted in a machine-readable digital format. That means structured data using XBRL (eXtensible Business Reporting Language), enabling easier access, analysis, and comparability across companies.

What You’ll Need to Report
Under CSRD, disclosures must include information across three main ESG metrics:

• Environmental metrics: greenhouse gas emissions (Scope 1, 2, and potentially 3), energy use, biodiversity impacts, water and waste management
• Social metrics: labor practices, health and safety, diversity and inclusion, human rights policies
• Governance metrics: anti-corruption measures, board diversity, executive pay, internal control and risk management
   

Each area requires specific data points, backed by documented policies and forward-looking targets.

In short, CSRD reporting isn’t just a sustainability summary—it’s a detailed, structured, and assured dataset that reflects the full scope of a company’s ESG footprint. Meeting these requirements will demand new tools, better collaboration, and clear internal ownership of the reporting process. Many companies also use the CDP framework to strengthen their climate-related disclosures, which can support alignment with CSRD’s environmental reporting expectations.

Who Needs to Comply with CSRD?

The Corporate Sustainability Reporting Directive significantly expands the number of companies required to report on sustainability issues in the EU. If your company operates in or has strong ties to the European market, CSRD might apply to you—regardless of where your headquarters are.

Which Companies Are In Scope?
CSRD applies in phases, starting with the largest companies and expanding to include smaller entities over time. Your company is required to report under CSRD if it meets any of the following:

• It’s an EU-based public-interest entity with more than 500 employees (already covered by NFRD)
• It’s an EU company with two of the following:
  • Over 250 employees
  • €40 million+ in turnover
  • €20 million+ in total assets
• It’s a listed small or medium enterprise (SME) on an EU-regulated market (reporting begins later, with opt-out available until 2028)
• It’s a non-EU company that generates more than €150 million in EU revenue and has at least one EU branch or subsidiary

If your company falls into any of these categories, you’ll need to start preparing now—even if your CSRD deadline is a few years away.

What About Non-EU Companies?
CSRD doesn’t just affect European businesses. Global companies with operations, revenue, or listed entities in the EU may also be required to report. The goal is to create consistent ESG data across the value chain, no matter where a company is headquartered. If you’re a non-European firm with a significant EU footprint, start assessing your data readiness and reporting structure today.

Timeline for Compliance
CSRD will roll out in stages between 2024 and 2028:

• 2024: Companies already subject to NFRD (reporting in 2025)
• 2025: All large EU companies not previously subject to NFRD (reporting in 2026)
• 2026: Listed SMEs and some other entities (opt-out available until 2028)
• 2028: Non-EU companies meeting the €150M EU revenue threshold

Each stage gives companies time to prepare—but the scale of reporting means many will need to begin data collection and systems planning now.

Not Sure If You’re Affected?
If you're unsure whether CSRD applies to your company, start by assessing your:

• Entity type (public or private)
• Revenue and workforce size
• Presence in EU markets
• Plans for listing on EU exchanges

Pro tip: Use Nasdaq’s free ESG Gap Assessment to understand your current alignment with CSRD and other reporting frameworks.
 

What Happens If You Don’t Follow CSRD?

The Corporate Sustainability Reporting Directive is not a suggestion—it’s binding regulation. Companies that ignore its requirements may face serious consequences, both legally and reputationally. Unlike voluntary ESG frameworks, CSRD includes enforcement mechanisms, penalties, and assurance mandates that make compliance essential for companies doing business in or with the European Union.

Regulatory Enforcement and Penalties
Each EU member state is responsible for enforcing CSRD, and local authorities have the power to impose administrative fines on companies that fail to comply. These penalties may apply if a company doesn’t file a report, submits one that’s incomplete or misleading, skips the third-party assurance process, or fails to follow the European Sustainability Reporting Standards.

While exact enforcement policies vary by country, the risks are consistent. Companies may face public sanctions, legal actions, or exclusion from public contracts. But beyond regulatory action, the more immediate impact often comes from reputational damage. A failure to meet sustainability disclosure standards can erode investor confidence and attract scrutiny from customers, partners, and media.

The Business Impact of Non-Compliance
The costs of falling behind go beyond fines. Investors—especially those with ESG mandates—expect transparency, accountability, and progress on sustainability. If your business doesn’t meet disclosure requirements, you may be excluded from key investment pools or procurement processes. As more stakeholders prioritize ESG data in their decision-making, a company’s failure to comply with CSRD could result in lost opportunities and strained relationships.

In contrast, companies that take CSRD seriously can turn compliance into a strategic advantage. Robust reporting builds trust, signals responsible governance, and can even influence credit ratings and investment terms.

Delays Come at a Price
CSRD reporting is complex. Gathering data across your value chain, aligning with ESRS, and setting up assurance-ready systems takes time. Waiting until the last minute to prepare increases the risk of rushed implementation, costly missteps, and data gaps that could compromise your disclosures—or even trigger penalties.

Preparing early helps avoid these risks and gives your organization space to embed ESG practices into day-to-day operations. It also gives your teams time to collaborate across finance, compliance, sustainability, and operations—something CSRD demands.

CSRD vs. ESG Reporting: What’s the Difference?

At first glance, CSRD reporting might seem like just another ESG disclosure framework—but it’s not. While both deal with environmental, social, and governance topics, CSRD introduces a legal requirement that formalizes how companies report. Understanding the difference is critical for sustainability teams, compliance officers, and executives planning their reporting strategies.

ESG Reporting: Voluntary, Flexible, and Broad
ESG reporting has been around for years, often shaped by voluntary frameworks like GRI, SASB, or TCFD. Companies choose how much to share, which topics to focus on, and which stakeholders to address. The result is flexibility—but also inconsistency. One company’s ESG report may highlight carbon reduction targets, while another focuses on board diversity or philanthropy. There’s no required format, audit process, or enforcement body.

This approach has its advantages. Voluntary ESG reporting allows companies to build brand trust and share progress on their own terms. But as investors and regulators demand more accountability, voluntary reports alone often fall short—especially when data isn’t standardized or independently verified.

CSRD: Regulated, Structured, and Enforceable
CSRD changes the game. It’s a mandatory framework under EU law, applying to thousands of companies inside and outside of Europe. Instead of flexible, high-level summaries, CSRD requires granular, forward-looking, and assured sustainability disclosures using the European Sustainability Reporting Standards (ESRS).

Reports must include structured data, follow specific reporting topics, and cover both how sustainability affects the company (financial materiality) and how the company affects the world (impact materiality). This dual focus is known as double materiality, and it’s at the core of CSRD.

Unlike ESG reports, CSRD submissions must also be:

• Digitally tagged for machine readability
• Externally assured by a third party
• Submitted on a set timeline, aligned with financial reporting

In short, CSRD holds companies accountable in a way voluntary ESG reporting does not.

A Side-by-Side Comparison

The ISSB plays a key role in harmonizing global ESG reporting, and its standards are designed to complement CSRD by offering investor-focused, internationally consistent disclosures.

Why the Distinction Matters
For companies already producing ESG reports, CSRD may seem redundant—but the expectations are very different. ESG shows what a company wants to share. CSRD demands what regulators require.

Companies that treat CSRD as an evolution of ESG—rather than a replacement—are best positioned to meet compliance and deliver meaningful value to stakeholders.

CSRD Reporting Timeline and Phases

CSRD reporting is rolling out in waves, giving companies time to prepare based on their size, structure, and market presence. But deadlines are fast approaching—and many organizations will need to start collecting data well before their first reporting year. If you’re not sure when CSRD applies to your business, this breakdown will help you understand which phase you’re in and what’s required by when.

2024: Companies Already Subject to NFRD
The first group includes companies already reporting under the EU’s earlier Non-Financial Reporting Directive (NFRD). These large public-interest entities—typically with over 500 employees—must begin collecting data in 2024 for their first CSRD-aligned reports in 2025.

If your organization falls into this category, the compliance window has already opened. ESG teams should be finalizing reporting processes and aligning with ESRS now.

2025: Other Large EU Companies
The second wave includes large EU companies not previously covered by NFRD. This group includes businesses that meet at least two of the following criteria:

• Over 250 employees
• €40 million in net turnover
• €20 million in total assets

These companies must begin collecting data in 2025, with reports due in 2026. While this may seem far off, preparing now ensures smoother adoption and reduces the risk of last-minute errors or delays.

2026: Listed SMEs and Certain Other Entities
In 2026, CSRD expands to include listed small and medium-sized enterprises (SMEs) on EU-regulated markets, as well as some non-complex credit institutions and captive insurance companies.

Recognizing the complexity of compliance, the EU is offering an opt-out period until 2028 for listed SMEs. However, companies should use this time to build capacity and test internal systems, even if they choose to delay formal reporting.

2028: Non-EU Companies with EU Revenue
By 2028, the directive will reach non-EU companies that generate more than €150 million in annual revenue within the EU and operate through at least one EU subsidiary or branch.

This is a major development. Global companies based outside of Europe—but doing significant business within it—will need to comply with CSRD just like EU-based firms. That means understanding the standards, setting up data collection mechanisms, and preparing for external assurance—well in advance.

Why Early Planning Matters
The phased timeline gives companies time to prepare, but CSRD compliance isn’t something you can achieve overnight. It requires coordination across departments, alignment with IT systems, value chain collaboration, and significant executive support.

For many companies, especially those new to ESG disclosures, it’s not just about reporting—it’s about building a new internal function from the ground up.

CSRD Reporting Software and Tools

Meeting CSRD requirements isn't just about having the right data—it’s about managing that data efficiently, accurately, and at scale. The level of detail required, the need for third-party assurance, and the inclusion of digital formatting make manual processes nearly impossible to sustain.

To comply with CSRD, companies need purpose-built tools that can handle data collection, integration, verification, and formatting—all while aligning with the European Sustainability Reporting Standards (ESRS).

Why Technology Matters for CSRD Compliance
Unlike traditional ESG reports, CSRD mandates structured data, machine-readable submissions, and audit-ready processes. This means companies need platforms that go beyond spreadsheets and PDFs. The right software doesn’t just streamline compliance—it reduces risk, increases confidence in the data, and saves time for sustainability and finance teams.

With more regulatory scrutiny and shorter reporting timelines, software tools are quickly becoming essential for scaling sustainability reporting efforts.

Tools That Support CSRD-Aligned Reporting
Several digital platforms have emerged to help companies comply with CSRD. Nasdaq offers a suite of ESG tools designed to meet these new demands and support end-to-end reporting workflows.

Nasdaq Metrio
The Nasdaq Metrio platform is purpose-built for sustainability data management and reporting. It allows companies to collect ESG data across departments, track progress over time, and report in compliance with CSRD, ESRS, and other global frameworks.

Features include:

• Centralized ESG data management
• Audit trails for third-party assurance
• Real-time dashboards and visualizations
• Integration with financial and operational systems

Metrio is especially useful for teams managing complex, cross-border ESG initiatives.

ESG AI Assistant
Nasdaq’s ESG AI Assistant uses artificial intelligence to guide companies through the reporting process. It helps draft reports, analyze data gaps, and interpret regulatory language—freeing up internal teams for strategic work.

Think of it as a digital co-pilot that ensures your reports stay aligned with evolving CSRD expectations.

Sustainable Lens
Nasdaq Sustainable Lens offers ESG benchmarking and analytics that help companies understand how they stack up against peers. It’s particularly valuable for identifying performance gaps, setting realistic targets, and strengthening disclosures with comparative data.

Used alongside Metrio, it supports more informed reporting and board-level decision-making.

How These Tools Work Together
Together, Nasdaq Metrio, the ESG AI Assistant, and Sustainable Lens provide an integrated solution to the biggest CSRD reporting challenges. They streamline the reporting process, support data integrity, and help your company stay ahead of regulatory changes.

If you're unsure whether your current tools can handle CSRD requirements, or if you're starting from scratch, consider booking a demo or requesting Nasdaq’s free ESG Gap Assessment to understand where you stand.
 

CSRD is reshaping corporate sustainability reporting across Europe and beyond. It introduces mandatory, standardized, and assured ESG disclosures that go far beyond what most companies have shared in the past. The directive isn’t just a compliance requirement—it’s a strategic opportunity to build trust, reduce risk, and align sustainability efforts with long-term business goals.

If your organization hasn’t started preparing, now is the time. From understanding your reporting timeline to adopting the right tools, early action will make the difference between rushed compliance and a reporting process that adds value.

Whether you’re a sustainability professional, ESG analyst, or corporate reporting lead, your next step should be to evaluate your current capabilities—and fill in the gaps before deadlines approach. Tools like Nasdaq Metrio, the ESG AI Assistant, and Sustainable Lens can help you simplify the process, reduce reporting risk, and meet CSRD expectations with confidence.

CSRD Reporting FAQs

What is CSRD reporting?
CSRD is a regulation requiring companies to disclose structured ESG data using EU-approved standards.

What is the mandate of CSRD reporting?
CSRD mandates public disclosure of sustainability-related risks and impacts, enforced by EU law.

What happens if you don’t follow CSRD?
Companies may face fines, legal risks, and reputational damage for non-compliance.

Who enforces the CSRD?
Enforcement is handled by national regulators in each EU member state.

What is the difference between ESG and CSRD reporting?
ESG reporting is often voluntary; CSRD is mandatory and requires standardized disclosures and audits.