Two-minute brief
CSRD and ESRS requirements explained: video brief
A two-minute brief on what the Corporate Sustainability Reporting Directive and the European Sustainability Reporting Standards require.
Key takeaways
- The CSRD sets who reports and how; the ESRS set what is reported.
- Double materiality combines financial and impact perspectives.
- ESRS 2 applies to every reporter; topical standards apply where material.
- The statement sits in the management report, in a digital format.
- Limited assurance is required; there is no certificate.
What the directive decides
The CSRD and the ESRS do different jobs. The directive, Directive (EU) 2022/2464 as amended, says who reports, where, under which standards and with what assurance. The ESRS, adopted by the Commission as delegated acts on EFRAG's technical advice, say what goes in the statement. This short film shows both.
Under the directive a company determines whether it is in scope and from which financial year, reports in a dedicated section of the management report at the level required for its group, applies the ESRS, obtains limited assurance and uses the required digital format. In practice that means a scoping memo agreed with the auditor, a reporting calendar aligned to the financial close and an assurance provider engaged early. Scope reaches large EU companies and groups, companies already reporting, and non-EU groups with large EU operations, and the thresholds have been amended since the directive was first adopted.
What the ESRS require
The ESRS consist of two cross-cutting standards, five environmental, four social and one governance standard; the simplified set adopted for later financial years keeps twelve standards with far fewer data points. ESRS 1 sets general requirements, including the double materiality assessment, and ESRS 2 sets general disclosures that apply to every reporter. Each topical standard, on matters such as climate, pollution, water, biodiversity, resource use, the company's own workforce, workers in the value chain, affected communities, consumers and business conduct, applies where the matter is material.
A matter is reported if it is material from either perspective: financial materiality, what sustainability matters do to the company's value, or impact materiality, what the company does to people and the environment. There is no certification; limited assurance comes from the statutory auditor or, where allowed, an accredited independent assurance services provider. Interpretation for a company's facts stays with its auditor and legal advisers.
CSRD / ESRS at a glance
- Purpose
- Sustainability reporting: a statement in the management report, prepared under the ESRS on a double materiality basis and subject to limited assurance
- Relevant to
- EU companies and groups exceeding 1,000 employees and €450 million net turnover (from financial years starting in 2027), companies reporting since 2024, non-EU groups with large EU operations, and their suppliers
- Edition
- Directive (EU) 2022/2464, amended by Directive (EU) 2025/794 (April 2025) and Directive (EU) 2026/470 (in force 18 March 2026); ESRS in Delegated Regulation (EU) 2023/2772, with the simplified set adopted by the Commission on 3 July 2026 for financial years from 2027
- Certification
- None. The statement receives limited assurance from the statutory auditor or, where your Member State allows, an accredited independent assurance services provider
- Sterling's role
- Programme design and consulting with your team, Effivity, training, assurance readiness, then Sustain™
- Cost and timing
- Total investment for a CSRD reporting programme depends on the current maturity of your processes, the scope, locations and number of employees. The process typically takes 6 to 12 months
CSRD / ESRS: questions people ask
Is there such a thing as CSRD certification?
No. The directive requires the sustainability statement to be examined by an assurance provider, who issues a limited assurance conclusion: an opinion on your statement for one year, not a certificate for your organisation, given by the statutory auditor, an audit firm or, where the Member State allows, an accredited independent assurance services provider. A "CSRD certified" badge from anyone else certifies nothing.
Are we in scope, and from which financial year?
Under Directive (EU) 2026/470, from financial years starting on or after 1 January 2027 the obligation applies to undertakings and parent companies exceeding 1,000 employees and €450 million net turnover, listed or not; non-EU groups with more than €450 million EU net turnover and a subsidiary or branch above €200 million fall under the third-country regime. Companies that reported for 2024 continue, though a Member State may exempt those below the new thresholds for 2025 and 2026. Transposition and group structures change the answer: confirm your wave and scope with your auditor or legal adviser.
What did the Omnibus change, and is it final?
The "stop-the-clock" directive of April 2025 delayed the second and third waves by two years. The content directive was formally adopted as Directive (EU) 2026/470 on 24 February 2026 and has been in force since 18 March 2026: it raised the thresholds, removed listed companies below them, introduced the value chain cap, deleted the sector-specific standards and the planned reasonable assurance, and moved the Commission's limited assurance standards to 1 July 2027. The simplified ESRS, adopted by the Commission on 3 July 2026, were completing Parliament and Council scrutiny when this page was written; they apply from financial years beginning in 2027.
What is double materiality, and who decides it?
ESRS 1 requires each sustainability matter to be assessed from two perspectives: impact materiality, where your actual or potential impacts on people or the environment are material, and financial materiality, where the matter triggers or could reasonably be expected to trigger material financial effects on the company. A matter material from either perspective is reported. Management decides, with stakeholder input, documented thresholds and the reasoning on file, because the assurance provider examines the process as well as the result.
Which ESRS must we apply, and can we skip climate?
ESRS 2 applies to every reporter regardless of materiality. Each topical standard, E1 to E5, S1 to S4 and G1, applies to the matters your assessment finds material. Climate is the exception in practice: a company that concludes climate change is not material must disclose a detailed explanation of that conclusion, including a forward-looking analysis. The simplified ESRS keep the twelve standards and this logic while removing most data points.
Keep exploring
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