European Commission's CSRD and ESRS: Advancing Global Sustainability Reporting


The spotlight on ESG and sustainability within corporate operations is ever-increasing. Demonstrating its pioneering spirit, the European Commission has taken a significant step by proposing the Corporate Sustainability Reporting Directive (CSRD) to establish uniform sustainability reporting standards across the EU. This directive mandates companies to adopt a dual materiality approach and adhere to the European Sustainability Reporting Standards (ESRS). 

The new regulation addresses the shortcomings of the NFRD, now increasing the scope of applicability to around 49,000 companies across Europe. ESRS requires companies to disclose information on business model and strategy, policies, risks, targets and due diligence with regard to ESG issues in their management report. 


  • With the adoption of the ESRS, the EU goes further than any other major jurisdiction to date in terms of integrating the ISSB standards into its own legal framework. 
  • The ESRS will contribute to the reporting of more relevant, comparable, reliable and usable, digitally accessible, and mandatory sustainability information of a larger number of undertakings and facilitate responsible investing. 
  • It will aid the reduction of systemic risks to the economy and increase capital flows to undertakings addressing sustainability issues.
  • Moreover, it will contribute towards achieving the ambitious goals of the European Green Deal and Europe’s 2050 climate-neutrality target.


Companies previously subject to the Non-Financial Reporting Directive (NFRD) as well as large non-EU listed companies with more than 500 employees: financial year 2024, with first sustainability statement published in 2025.

Listed SMEs, including non-EU listed SMEs: financial year 2026, with first sustainability statements published in 2027.  However, listed SMEs may decide to opt out of the reporting requirements for a further two years. 

Non-EU companies that generate over EUR 150 million per year in the EU and that have in the EU either a  branch with a turnover exceeding EUR 40 million or a subsidiary that is a large company or a listed SME will have to report on the sustainability impacts at the group level of that non-EU company as from financial year 2028. Separate standards will be adopted specifically for this case.


  • Scrutiny Period (August 2023 – October 2023): After adoption, the ESRS will enter a two-month scrutiny period, which could be extended to four months. The European Parliament and the Council will review the standards during this time.
  • Implementation (January 1, 2024): If no objections are raised during the scrutiny period, companies within the scope of the CSRD will begin to apply the ESRS for financial years commencing on or after January 1, 2024 as detailed above. 


On 31 July 2023, the European Commission (EC) adopted the final delegated act of the (ESRS) presenting multiple changes from the version issued by European Financial Reporting Advisory Group (EFRAG) in November 2022. The standards have been designed in alignment to facilitate interoperability with other global reporting frameworks such as ISSB, GRI and TCFD among others. The 12 finalised sector-agnostic ESRS standards are enlisted below:


  • ESRS 1 -General requirements
  • ESRS 2 -General disclosures
  • Environment: 
  • ESRS E1- Climate change, 
  • ESRS E2- pollution, 
  • ESRS E3-water and marine resources, 
  • ESRS E4-biodiversity, 
  • ESRS E5-Resource use and circular economy 


ESRS S1-Own workforce, 

ESRS S2-workers in the value chain, 

ESRS S3-affected communities, 

ESRS S4-consumers and end-users 


ESRS G1-business conduct 

  • Sector specific standards and proportionate standards for listed SMEs are being developed. 
  • The Commission decided that all the reporting requirements should be subject to materiality, with the exception of ESRS 2.The company’s materiality assessment process is subject to external assurance in accordance with the provisions of the CSRD.
  • Multiple disclosure requirements were shifted from mandatory to voluntary. These include the biodiversity transition plans (ESRS E4), and specific indicators concerning “non-employees” within the company’s workforce (ESRS S1).
  • Undertakings with less than 750 employees may omit: scope 3 GHG emissions data and the disclosure requirements specified in the standard on own workforce in the first year; and those in biodiversity, value-chain workers, affected communities, and consumers and end-users in the first two years that they apply the standards.
  • The disclosures concerning potential financial impacts from environmental-related risks and opportunities (like pollution, biodiversity, water) and specific employee-related data (E.g., social protection, work-associated illness) can be omitted for all companies in the first year of application.

Indian companies with global operations or with subsidiaries/business operations in the EU or even those who are suppliers to large European companies must proactively align their reporting practices with these international standards to remain competitive, attract investments, and address evolving stakeholder expectations. Such companies can gain a competitive edge in the global marketplace. 

At Breathe ESG, we understand the importance of sustainability reporting and the challenges that organizations face in meeting the reporting requirements. That is why we offer a comprehensive suite of ESG reporting solutions, to help organizations of all sizes and industries report on their sustainability performance in alignment with global reporting frameworks. Contact us today to learn more about our ESG reporting solutions and how we can help you enhance your sustainability performance and reputation. Together, we can create a more sustainable future for our planet and communities.

Explore how the Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS) are shaping uniform reporting across the EU. Learn how companies, including those in India, can align for enhanced competitiveness. Breathe ESG offers ESG reporting solutions for streamlined compliance.

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