Corporate Sustainability Reporting Directive (CSRD)
The Corporate Sustainability Reporting Directive (CSRD – Directive (EU) 2022/2464) entered into force in 2023. It is the EU’s framework for corporate sustainability reporting. It aims to improve the quality, consistency and comparability of sustainability information disclosed by companies, replacing the previous Non-Financial Reporting Directive (NFRD). It enables investors and other stakeholders to better assess companies’ long-term resilience, risks, opportunities and impacts. The framework also provides companies with a common reporting language, helping improve communication with investors, lenders and other stakeholders.
It requires private and public European companies, as well as non-EU companies with substantial presence in the European Union, to report on the impact of their activities on the environment and society and requires the audit of the reported information. It introduces new requirements for reporting on a wide range of sustainability matters, including environmental, social, human rights and governance topics.
Companies subject to the CSRD must report according to European Sustainability Reporting Standards (ESRS). Developed by the European Financial Reporting Advisory Group (EFRAG), the ESRS are a set of standards defining the subjects and metrics that businesses must cover in their CSRD reports. These standards require in-scope companies to report on environmental, social and governance matters using a double materiality approach, assessing both impact materiality (effect on people and planet) and financial materiality (effect on the company’s bottom line).
In addition, under the CSRD, certain non-EU parent groups will also be required to report sustainability information at a consolidated group level for financial years beginning on or after 1 January 2028, with first publication generally in 2029. However, these organisations will have their own reporting standard, known as ESRS-40a. This standard is currently an EFRAG Exposure Draft and is subject to an open consultation until 31 October 2026, and thus, not yet legally binding. The intention of this standard is to promote transparency, accountability and set a level playing field for non-EU companies with significant business on the EU market. See section “What is the objective?” for further information on the requirements of both ESRS and ESRS-40a reporting standards.
In February 2025, the European Commission published the Omnibus I package which proposed a number of changes to the CSRD. The aim of the Omnibus is to reduce the regulatory burden for business operating in the EU and to increase EU competitiveness. The Omnibus I package contained two separate proposals from the European Commission:
- a proposal for a “Stop-the-Clock” Directive to delay by two years the application of the CSRD for in-scope companies that have not yet started reporting (so-called “second wave” and “third wave” companies); and
- a proposal making more substantial changes to the CSRD, including changes to the scoping rules (“Omnibus I Directive”).
The “Stop the Clock” (Directive (EU) 2025/794) came into force in April 2025 and is in the process of being transposed in the EU Member States. Please see “What are the adaptations at the Luxembourg level” for further information on the status for Luxembourg transposition on CSRD.
Omnibus I was politically agreed in December 2025. Following the European Parliament’s approval on 16 December 2025, the Council formally adopted the Directive on 24 February 2026. Directive (EU) 2026/470 was published in the Official Journal of the European Union on 26 February 2026 and entered into force on 18 March 2026.
By replacing the NFRD, the CSRD’s main objectives is to make sustainability information as reliable, comparable, and decision-useful as financial information. The CSRD aims to provide a uniform standardized format for companies to report both on:
- The impact the external world (environmental, social and governance issues) has on the companies’ business activities and financials (outside-in perspective);
- The impact the business activities of a company have on the external world (inside-out perspective).
These two perspectives are commonly referred to as “double materiality”.
By developing the ESRS reporting standards, and accompanying standards, the EU seeks to increase the data available for, amongst others, Financial Market Participants (FMPs) who rely on the information provided by companies to fulfil their disclosure requirements.
The CSRD applies to different categories of undertakings, including certain EU undertakings, EU-listed issuers and certain non-EU undertakings with significant activities in the European Union. Its scope and application dates were significantly amended by Directive (EU) 2026/470, commonly known as the Omnibus I Directive.
The Omnibus I Simplification Directive has substantially reduced the scope of the CSRD by approximately 90% compared with the original framework. Thresholds and reporting amendments are now as follows:
1. EU Undertakings and EU-listed Issuers
This category covers EU-incorporated undertakings and certain EU-listed issuers that meet the applicable employee and turnover thresholds. From financial years beginning on or after 1 January 2027, mandatory reporting generally applies where the undertaking exceeds both 1,000 employees and €450 million in net annual turnover. These requirements may apply on an individual or consolidated basis, depending on whether the undertaking is reporting for itself or as the parent of a group. A full breakdown of changes is provided below:
| Topic | Position as at final Omnibus Directive |
| Scope threshold | There are two ways to be caught, and , |
| Standard applied | Mandatory European Sustainability Reporting Standards (ESRS). The revised version of the ESRS was adopted by the European Commission in the form of a Commission Delegated Regulation, document reference C(2026) 5010 final. The act amends Delegated Regulation (EU) 2023/2772, which contains the first set of ESRS, on 3 July 2026. It is currently subject to a two-month scrutiny period by the Council and European Parliament (extendable by a further two months) before it can enter into force. |
| Value chain impact | An in-scope company cannot demand sustainability information that goes beyond what the Voluntary Standard (VS) requires from any value chain counterparty (customer or supplier) that itself has fewer than 1,000 employees. This caps the amount of downstream/upstream data-gathering that large reporters can push onto smaller partners in their value chain*. Please note the delegated act defines the companies shielded by the value chain cap as “protected undertakings”. These are businesses outside mandatory CSRD scope with no more than 1,000 employees on average. |
| Assurance | Sustainability disclosures must be accompanied by a limited assurance opinion from a statutory auditor (or, where the Member State permits, an independent assurance provider). The previously planned future upgrade to a stricter “reasonable assurance” standard has been removed entirely by Omnibus I. The Commission is now required to adopt limited assurance standards by 1 July 2027 (previously 1 October 2026). |
| Transition plans | In-scope companies must still disclose a climate transition plan if they have one (including how it aligns with limiting warming to 1.5°C), or explain if and when they will adopt one. This requirement is unchanged by Omnibus I. |
| Sector-specific ESRS | The Commission’s legal power to adopt additional ESRS standards tailored to specific sectors (e.g., oil & gas, agriculture) has been deleted from the CSRD by Omnibus I. No sector-specific EU standards will be produced under this power going forward |
*Please see “3. Who the Voluntary Standard (VS) Applies to” for further information.
2. Non-EU Companies (post Omnibus I)
Omnibus I introduced a revised reporting regime for certain non-EU undertakings with significant activities in the European Union. Under Article 40a of the Accounting Directive (2013/34/EU), as amended by Directive (EU) 2026/470, an EU subsidiary or branch may be required to make available sustainability information covering its non-EU ultimate parent undertaking or group.
| Topic | Position as at final Omnibus Directive |
| Scope threshold | A non-EU ultimate parent undertaking is caught only if both of the following are true: (1) EU turnover test: the group generates more than €450 million in net turnover specifically within the EU (this can be measured on an individual basis or on a consolidated group basis) — and this must be true for each of the last two consecutive financial years, not just the most recent one. (2) EU presence test: the group has either an EU subsidiary or an EU branch that itself generated more than €200 million net turnover in the preceding financial year. Both the turnover test and the presence test must be satisfied, meeting only one is not sufficient. |
| Reporting timing | Unchanged by the Stop-the-Clock Directive: non-EU companies caught by the rules report from the financial year starting on or after 1 January 2028, with first reports published in 2029. What changed under Omnibus I is not the date, but the €450m/€200m thresholds that determine whether a given non-EU group is caught at all. |
| Standard applied | A dedicated standard, ESRS-40a, is being developed specifically for these non-EU companies, rather than requiring them to use the full standard EU-entity ESRS. It is not yet finalised: EFRAG’s public consultation on the draft runs until 31 October 2026, and EFRAG must deliver its technical advice to the Commission by January 2027. |
| Value chain impact | The same value chain cap described in Table 1 applies once a non-EU parent is in scope: it cannot request more sustainability data than the Voluntary Standard requires from any value chain partner with fewer than 1,000 employees. |
| Assurance | The final assurance obligations, including whether and how limited assurance will apply to the sustainability information made available by the relevant EU subsidiary or branch, will be confirmed once the Commission adopts the final ESRS-40a Delegated Act. |
3. Who the Voluntary Standard (VS) Applies to
The Voluntary Standard (VS) is separate from the mandatory European Sustainability Reporting Standards (ESRS). It is intended for undertakings that are outside the mandatory CSRD scope and wish to report sustainability information on a voluntary and proportionate basis. The VS is based on the earlier VSME framework and is designed to help smaller undertakings respond consistently to information requests from customers, lenders, investors and other stakeholders.
The Voluntary Standard (VS) is established through a separate Commission Delegated Regulation, C(2026) 5011 final. The act is adopted under Article 29ca of Directive 2013/34/EU, the Accounting Directive, as amended by Directive (EU) 2026/470 (Omnibus I). It establishes sustainability-reporting standards for voluntary use by undertakings protected by the value-chain cap.
The VS is structured around two reporting modules: the Basic Module and the Comprehensive Module. The Basic Module is the foundation of the standard, while the Comprehensive Module provides additional information for undertakings that face more detailed requests from banks, investors, customers or other business partners.
| Dimension | Position |
| Legal status | Not mandatory under CSRD. It is a standalone Delegated Regulation, adopted by the European Commission on 3 July 2026 at the same time as the revised ESRS, and is currently subject to the same two-month (extendable) scrutiny period by the Council and Parliament. |
| Legal basis | Built on the Commission’s earlier, non-binding recommendation on voluntary sustainability reporting for non-listed SMEs, but with some changes made when it was converted into this binding Delegated Regulation. |
| Application timing | The VS is intended to apply from financial year 2027 for value-chain reporting by undertakings subject to the CSRD. This applies irrespective of whether an undertaking already subject to the CSRD chooses to apply the revised ESRS early for financial year 2026. Separately, undertakings outside the mandatory CSRD scope, including eligible SMEs, may use the VS voluntarily from the date on which the delegated act establishing the VS enters into force, subject to the conditions and application provisions in that act. |
| Who can choose to use it | Non-listed SME, i.e., small and medium-sized companies whose shares or debt are not admitted to trading on an EU regulated market, and which fall entirely outside mandatory CSRD scope (they are not large enough, and not publicly listed, so nothing compels them to report at all). These companies may choose to report under the VS on a voluntary basis, or, for example, because a lender, investor, or large customer up their value chain asks them to. |
| Value chain ceiling | Independent of whether any given SME actually chooses to report under the VS, the content of the VS itself sets a legal ceiling: large in-scope companies (Table 1 and Table 2) are prohibited from asking any value chain partner with fewer than 1,000 employees for sustainability information that goes beyond what the VS specifies. This applies automatically to protect smaller value-chain partners from excessive data requests, regardless of whether that smaller partner has adopted the VS for its own reporting. |
| Distinction from ESRS-40a | These are two entirely separate instruments serving different populations: the VS is a voluntary option for non-listed EU/EEA SMEs outside CSRD scope; ESRS-40a is a mandatory standard being built specifically for non-EU parent groups that are caught by the mandatory non-EU thresholds in Table 2. A company cannot be subject to both, and being eligible for one says nothing about the other |
Summary of CSRD regulatory instruments
| Instrument | Type | What it does | Status |
| Directive (EU) 2022/2464 | Directive | Creates the original CSRD framework and reporting obligation. | In force, but subsequently amended. |
| Delegated Regulation (EU) 2023/2772 | Delegated regulation | Establishes the first set of mandatory ESRS. | In force, subject to amendment. |
| Directive (EU) 2025/794 | Directive | Postpones certain original CSRD reporting dates. | In force. |
| Directive (EU) 2026/470 | Directive | Changes scope, thresholds, timing, Article 40a and value-chain rules. | In force since 18 March 2026. |
| C(2026) 5010 final | Draft delegated regulation | Revises the detailed mandatory ESRS by amending Regulation (EU) 2023/2772. | Adopted by Commission but under scrutiny; not yet final Official Journal regulation. |
| Article 40a of Directive 2013/34/EU | Provision in Accounting Directive | Creates the reporting route for certain non-EU undertakings with significant EU activity. | In force as amended, subject to national transposition. |
| ESRS-40a | Exposure Draft | Proposed detailed standard for the Article 40a non-EU regime. | Not yet legally binding. |
| C(2026) 5011 final | Draft delegated regulation | Establishes the VS for voluntary use and supports the value-chain cap. | Adopted by Commission but under scrutiny; not yet final Official Journal regulation.
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Financial companies are captured by the CSRD depending on their size, as it happens with non-financial companies. A financial company that falls within the scope of the CSRD will have to report information on a collection of ESG aspects as defined in the European Sustainability Reporting Standards (ESRS) in a dedicated section of its annual management report which will be part of the statutory audit.
Financial companies are captured by the CSRD based on size criteria, as with non-financial companies, though following the 2026 Omnibus reforms, the applicable thresholds have narrowed considerably. In addition, Omnibus I provides a conditional exemption from consolidated CSRD reporting for certain passive financial holding undertakings whose subsidiaries operate independently.
It is not a blanket exemption for all financial holding companies or their subsidiaries. A subsidiary may still be required to report where it independently falls within CSRD scope, unless it can rely on an applicable subsidiary exemption. A financial company within scope must report ESG information per the ESRS in a dedicated section of its management report, subject to assurance requirements.
Separately, under SFDR, financial market participants (FMPs) must disclose specific information on their financial products and underlying investments. Because CSRD reporting improves the availability of standardised ESG data from investee companies, it is expected to support FMPs in meeting their SFDR obligations, though the narrower CSRD scope means FMPs may now need to source more of this data from voluntary or non-CSRD channels than originally anticipated.
The CSRD, EU Taxonomy and SFDR are separate but interconnected elements of the EU sustainable-finance framework. The CSRD requires in-scope undertakings to publish a sustainability statement in their management report using the ESRS. Taxonomy Article 8 disclosures form part of that corporate-reporting ecosystem: non-financial undertakings disclose Taxonomy KPIs relating to turnover, CapEx and OpEx, while financial undertakings disclose sector-specific KPIs. These disclosures can provide important data for financial market participants applying SFDR and Taxonomy-related product, portfolio and entity disclosures. However, CSRD reporting does not replace SFDR or Taxonomy obligations, and financial market participants may still need to obtain and validate data from investee companies, borrowers and other counterparties.
Art. 8 of the EU Taxonomy states that financial and non-financial companies subject to the CSRD must disclose sustainability metrics about their economic activities. In particular, they must incorporate the proportion of their turnover, capital expenditures (CapEx), and operating expenditures (OpEx) that align with the EU Taxonomy into their CSRD reports, among other requirements.
Following Omnibus I, large undertakings with more than 1000 employees and a net turnover exceeding €450 million must disclose these metrics. Additionally, the reporting templates will be simplified, reducing data points by almost 70%. Visit the Taxonomy Regulation for more information.
Moreover, as stated in recital 33 of the SFDR Regulatory Technical Standards (SFDR-RTS), FMPs subject to the SFDR are also required to disclose Taxonomy-based metrics and provide disclosures for their ESG financial products in the SFDR disclosure templates. FMPs will depend on the information from the CSRD reports of the companies they invest in to obtain the necessary Taxonomy figures. Hence, the CSRD holds significance for the SFDR as it provides some of the information that needs to be disclosed in the SFDR disclosure templates. Visit SFDR for more information.
Directive (EU) 2022/2464, the Corporate Sustainability Reporting Directive (CSRD), has not yet been fully transposed into Luxembourg law. On 29 March 2024, the Luxembourg Government submitted Bill No. 8370 to the Chamber of Deputies to transpose the CSRD and related measures into national law.
The original EU transposition deadline of 6 July 2024 was not met. The legislative process remains ongoing. Bill No. 8370 was amended in May 2025 to reflect the Stop-the-Clock Directive, which postponed certain CSRD application dates. Luxembourg’s final national framework must also reflect the substantive changes introduced by Omnibus I, Directive (EU) 2026/470, including the revised scope, thresholds, transitional arrangements and value-chain provisions.
Until Bill No. 8370 is enacted and published, the detailed application of the CSRD framework in Luxembourg, including transitional relief and national filing or assurance arrangements, should be assessed against the current status of Luxembourg law and relevant guidance from the CSSF and other competent authorities.
Regulatory dates
- 14 December 2022: Directive (EU) 2022/2464, the Corporate Sustainability Reporting Directive (CSRD), was adopted.
- 16 December 2022: The CSRD was published in the Official Journal of the European Union.
- 5 January 2023: The CSRD entered into force.
- 31 July 2023: The European Commission adopted Commission Delegated Regulation (EU) 2023/2772, containing the first set of European Sustainability Reporting Standards (ESRS).
- 22 December 2023: Delegated Regulation (EU) 2023/2772 was published in the Official Journal.
- 1 January 2024: First-wave CSRD reporting requirements began applying to financial years beginning on or after this date.
- 6 July 2024: Original deadline for Member States to transpose the CSRD into national law.
- 26 February 2025: The European Commission published the Omnibus I sustainability simplification proposals.
- 16 April 2025: Directive (EU) 2025/794, the Stop-the-Clock Directive, was published in the Official Journal.
- 17 April 2025: The Stop-the-Clock Directive entered into force. It postponed the original second- and third-wave reporting dates by two years.
- 9 December 2025: Parliament and Council negotiators reached a provisional political agreement on the substantive Omnibus I amendments.
- 16 December 2025: The European Parliament approved the provisional Omnibus I agreement.
- 31 December 2025: Deadline for Member States to transpose the Stop-the-Clock amendments.
- 24 February 2026: The Council formally adopted Directive (EU) 2026/470, the final Omnibus I Directive.
- 26 February 2026: Directive (EU) 2026/470 was published in the Official Journal.
- 18 March 2026: Omnibus I entered into force.
- 3 July 2026: The Commission adopted the revised ESRS delegated act, C(2026) 5010 final, and the VS delegated act, C(2026) 5011 final. Both remain subject to scrutiny by the European Parliament and Council.
- 19 March 2027: Deadline for Member States to transpose the CSRD-related Omnibus I amendments.
Original CSRD and ESRS
- 21 April 2021: The European Commission proposed the Corporate Sustainability Reporting Directive (CSRD), intended to amend and replace the Non-Financial Reporting Directive (NFRD) framework.
- 14 December 2022: Directive (EU) 2022/2464, the CSRD, was adopted.
- 16 December 2022: The CSRD was published in the Official Journal of the European Union.
- 5 January 2023: The CSRD entered into force.
- 31 July 2023: The European Commission adopted Commission Delegated Regulation (EU) 2023/2772, establishing the first set of European Sustainability Reporting Standards (ESRS).
- 22 December 2023: Delegated Regulation (EU) 2023/2772 was published in the Official Journal. It entered into force three days later and applies to financial years beginning on or after 1 January 2024.eur-lex.europa+1
- 1 January 2024: First-wave CSRD reporting requirements began applying for financial years beginning on or after this date. For calendar-year companies, this means FY2024 reporting, generally published in 2025.
- 6 July 2024: Original deadline for Member States to transpose Directive (EU) 2022/2464 into national law.
Size-threshold adjustment
- 17 October 2023: The Commission adopted Commission Delegated Directive (EU) 2023/2775, amending the Accounting Directive’s monetary size criteria to reflect inflation. It increased the relevant financial thresholds by 25%. It was not awaiting adoption by Parliament and Council; it had already been adopted by the Commission.
- 21 December 2023: Commission Delegated Directive (EU) 2023/2775 was published in the Official Journal.
- 24 December 2023: Commission Delegated Directive (EU) 2023/2775 entered into force, three days after publication.
This measure is historically relevant because it increased the Accounting Directive’s general large-undertaking thresholds. However, it should not be confused with the later Omnibus I CSRD thresholds of more than 1,000 employees and more than €450 million net turnover.
2025 simplification measures
- 26 February 2025: The European Commission published the Omnibus I sustainability simplification package. The package contained:
- a proposal to postpone certain CSRD application dates—the later Stop-the-Clock Directive; and
- a substantive proposal to amend the CSRD, Accounting Directive and related legislation.
- 16 April 2025: Directive (EU) 2025/794, the Stop-the-Clock Directive, was published in the Official Journal.
- 17 April 2025: Directive (EU) 2025/794 entered into force.
- 31 December 2025: Deadline for Member States to transpose the Stop-the-Clock Directive. This is not the transposition deadline for the substantive Omnibus I Directive.
- 11 July 2025: The Commission adopted the ESRS Quick Fix delegated act. It extended certain phased-in disclosure reliefs for former Wave 1 undertakings for FY2025 and FY2026. The measure allowed affected companies to omit certain disclosures that they were already permitted to omit in FY2024.
- 30 July 2025: The Commission adopted Commission Recommendation (EU) 2025/1710 on a voluntary sustainability-reporting standard for SMEs—the VSME standard. This was a non-binding Commission Recommendation, not the later binding VS delegated regulatio
- 5 August 2025: Commission Recommendation (EU) 2025/1710 was published in the Official Journal.
- 10 November 2025: The ESRS Quick Fix was published as Commission Delegated Regulation (EU) 2025/1416.
- 13 November 2025: Commission Delegated Regulation (EU) 2025/1416 entered into force. It applies to financial years beginning on or after 1 January 2025.
Omnibus I finalisation
- 9 December 2025: European Parliament and Council negotiators reached a provisional political agreement on the substantive Omnibus I amendments.
- 16 December 2025: The European Parliament approved the provisional agreement.
- 24 February 2026: The Council formally adopted Directive (EU) 2026/470, the final substantive Omnibus I Directive.
- 26 February 2026: Directive (EU) 2026/470 was published in the Official Journal.
- 18 March 2026: Omnibus I entered into force.
- 19 March 2027: Deadline for Member States to transpose the CSRD-related Omnibus I amendments into national law.
2026 ESRS and VS updates
- 6 May 2026: The Commission launched a one-month consultation on draft simplified ESRS and a draft voluntary sustainability-reporting standard. These consultations formed part of the Commission’s post-Omnibus simplification work.
- 3 July 2026: The Commission adopted:
- C(2026) 5010 final, the delegated act revising the mandatory ESRS; and
- C(2026) 5011 final, the delegated act establishing the Voluntary Standard (VS).
Both acts are separate from Omnibus I itself. They remain subject to scrutiny by the European Parliament and Council and, as of 21 August 2026, have not yet been published in the Official Journal or assigned final regulation numbers.
- 23 July 2026: EFRAG published the ESRS-40a Exposure Draft for certain non-EU undertakings under Article 40a of the Accounting Directive.
- 31 October 2026: Deadline for comments on EFRAG’s ESRS-40a Exposure Draft. ESRS-40a is not yet legally binding.
| Consultation or process | Lead body | Status as at 21 August 2026 | Why it matters |
| Revised mandatory ESRS | European Commission | Closed 3 June 2026; revised act adopted by Commission on 3 July 2026; subject to Parliament and Council scrutiny | Revises the detailed mandatory ESRS for undertakings within the CSRD scope |
| Voluntary Standard (VS) | European Commission | Closed 3 June 2026; VS act adopted by Commission on 3 July 2026; subject to Parliament and Council scrutiny | Establishes voluntary reporting standards and supports the value-chain cap |
| ESRS-40a | EFRAG | Open from 23 July to 31 October 2026 | Develops the future detailed reporting standards for certain non-EU groups under Article 40a |
EU Level:
- Directive (EU) 2022/2464 — original CSRD
- Delegated Regulation (EU) 2023/2772 — first ESRS
- Directive (EU) 2025/794 — Stop-the-Clock
- Directive (EU) 2026/470 — Omnibus I
- C(2026) 5010 final — revised ESRS delegated act
- C(2026) 5011 final — VS delegated act
- EFRAG ESRS-40a project
- EFRAG ESRS Knowledge Hub
- EFRAG Knowledge Hub — 2026 Revised ESRS and VS interactive documents
- 2026 Voluntary Standard — EFRAG interactive text
- EFRAG ESRS standards and implementation guidance
- EFRAG ESRS-40a project page
- EFRAG ESRS-40a Exposure Draft consultation
Luxembourg Level:
