Scope

NOTE: the European Commission (EC) has published proposals as part of the Omnibus Package which, if finalised, would change the scope and timing of CSRD reporting. Further detail on the Omnibus Package is available here.

The following section provides a high-level introduction to key elements rather than an exhaustive list of all relevant scoping requirements. In brief, the CSRD applies to:

• all companies that have securities listed on an EU regulated market (including listed small and medium companies);
• all EU companies or EU companies that are a parent of a large group ('EU subgroup') that exceed two of the three following criteria (as per the Accounting Directive 2013/34/EU as amended in 2023 to increase the thresholds) on two consecutive annual balance sheet dates:
  • more than 250 employees during the financial year
  • balance sheet total of more than €25 million
  • net turnover of more than €50 million;
• non-EU companies generating a net turnover of more than €150 million in the EU and:
  • having a subsidiary in the EU that meets the criteria applicable to EU companies (ie, being listed on an EU regulated market except micro, or being a large EU company or subgroup as per the Accounting Directive thresholds); or
  • a branch in the EU generating more than €40 million net turnover in the preceding year;
• some small and non-complex credit institutions and some captive insurance and reinsurance undertakings.

The effective dates of application vary for different categories, as outlined below.

Exemptions

There are some exceptions for an in-scope EU subsidiary or EU subgroup where the EU parent undertaking produces a consolidated report in compliance with the CSRD.

Unless they reach the large undertaking threshold, an exemption applies to subsidiaries that are public interest entities. Exempted subsidiaries must include in their management report:

• the name and registered office of the parent undertaking that is reporting sustainability information at group level
• weblinks to the consolidated management report
• a reference to this exemption in their own management report
• weblinks to the applicable assurance opinion

Where significant differences are identified between the risks, opportunities and impacts of the group versus the subsidiaries, the parent company should provide an adequate understanding of the risks and impacts of their subsidiaries, including information on their due diligence processes where appropriate, within the consolidated report.

An EU subsidiary or EU sub-group exemption also applies when the parent undertaking is established in a non-EU country and reports sustainability information in accordance with European or equivalent sustainability reporting standards. No equivalence assessments have been made or are likely to be made in the immediate future, the CSRD contains transitional provisions to enable EU subsidiaries to report according to EU standards.

It should be noted that this is not an exhaustive list of available reporting exemptions.

Timing

The deadline for EU countries to complete the transposition of the CSRD into national law was July 2024. The effective dates for companies in scope are being phased in, by financial year.

In April 25, the EU adopted the ‘stop the clock’ directive, which delays the effective date of mandatory reporting for second and third wave reporters. The table below shows the timing under the initial CSRD requirements, compared to the new timing under the ‘stop the clock’ directive.

Note that the EU Omnibus Package  includes proposals that, if finalised,  would change the scope of entities required to comply with the CSRD, resulting in a substantial reduction in the number of entities captured.

*A transitional two-year opt-out option is available for listed small and medium companies, provided their management reports include an explanation of why the required information is not given.

Having been approved by the European Parliament and the European Council, the ‘stop-the-clock’ Directive was formally adopted on 17 April 2025. Member States are required to transpose the directive into national law by 31 December 2025.