Compliance walkthrough
How to comply with the CSRD and the ESRS: video walkthrough
A walkthrough of building a CSRD reporting programme under the ESRS, from scoping with the auditor to a sustainability statement ready for limited assurance.
Key takeaways
- The CSRD requires a sustainability statement in the management report.
- The ESRS set what goes in it, on a double materiality basis.
- ESRS 2 applies to every reporter; topical standards apply where material.
- The statement receives limited assurance; there is no certificate.
- Confirm scope and first reporting year with the auditor, as the rules have been amended.
Sustainability reporting in the management report
The Corporate Sustainability Reporting Directive is the European Union's law on how companies report their sustainability performance. Companies in scope publish a sustainability statement in a dedicated section of the management report, prepared under the European Sustainability Reporting Standards, the ESRS. The statement covers both what sustainability matters do to the company's cash flows, financing and value, and what the company does to people and the environment across its operations and value chain; this is double materiality.
There is no certificate. The statement receives limited assurance from the statutory auditor or, where the Member State allows, an accredited independent assurance services provider. This short film walks through how a reporting programme is built.
Built, operated and then examined
First confirm scope, wave and reporting level with the auditor and legal adviser: which entities are in scope, the first financial year, whether a parent's consolidated statement covers them, which phase-in reliefs apply and who will provide assurance. The thresholds and timing have been amended since the original directive, so this step matters. A gap analysis then compares current data, processes and disclosures with what the ESRS require.
The double materiality assessment decides which topical standards apply: ESRS 2 applies to every reporter, and each environmental, social and governance standard applies where the matter is material. Data owners, definitions and controls are then set up so that figures can be traced and reviewed, the statement is drafted in the required digital format and aligned with the financial close, and the assurance provider is engaged early. The assurance provider decides whether the statement passes; interpretation for the company's facts stays with its auditor and legal advisers.
Sterling's expert and experienced consultants design and implement the programme with your finance, sustainability and operations teams under Sterling OS™. Suppliers to in-scope companies are often asked for data too, even when they do not report themselves.
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.
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