On November 28, 2022, we learned through a press release that the Council of the EU has given the final green light to the Corporate Social Sustainability Disclosure Directive (CSRD). This directive aims to strengthen the existing rules, introduced by the Non-Financial Reporting Directive (NFRD) (2014). In fact, European legislation requires large companies to disclose information on how they operate and manage the social and environmental issues they face.

This legislation also allows stakeholders, such as investors, policymakers, citizens, etc. to monitor, measure, and evaluate the non-financial performance of companies and their impact on society.  

More specifically, what is CSRD? What are its objectives? Which companies are impacted? And when will it be implemented? 


On December 11, 2019, the European Commission identified the need to renew its strategy for financing the green transition as part of the European Green Deal. This strategy focuses on several actions, including the revision of the NFRD. The objective of the NFRD was to increase the transparency of social and environmental information provided by companies to a uniform level in all Member States, and therefore to improve the disclosure of non-financial information. Nevertheless, the NFRD and its implementation have several shortcomings, such as a lack of comparability and reliability of non-financial information published by companies. Hence the need for a reform that identifies a set of common indicators and harmonizes auditing standards across EU member states. 


In order to put an end to “greenwashing”, the CSRD directive aims to require companies to provide non-financial reporting, to be included in an annual report, that meets the new publication standards (quality, relevance, reliability of information). Financial reporting is seen as a tool to measure companies’ environmental, social and societal performance and guide CSR policies to make them more efficient. In addition, to ensure the relevance of the extra-financial publication, it must cover the company’s entire value and supply chain. 

To this end, the CSRD or Corporate Sustainability Reporting Directive:  

  • Introduces more detailed reporting requirements and ensures that covered companies are required to disclose information that addresses their business’s environmental, social and societal impact. “Within a few years, the ESG (environmental, social, and governance criteria) report card may well be as important as the financial report card.” (Desjardins, 2022). In addition, to ensure reliability, the information provided by companies will be subject to independent certifications and audits. 
  • Broadens the scope of application to all large companies, whether listed or not. SMEs listed on a regulated market in the EU, as well as non-European companies that generate, through European branches and subsidiaries, a net turnover of more than EUR 150 million in the EU, will also be required to comply. 


Finally, in terms of implementation, the directive will enter into force 20 days after its publication in the EU’s official journal.   

Its application will take place in four stages:  

  • Reports in 2025 on the financial year 2024 for companies that are already subject to the Non-Financial Reporting Directive (NFRD); 
  • Reporting in 2026 on the financial year 2025 for large companies that are not currently subject to the NFRD; 
  • Reports in 2027 on the financial year 2026 for SMEs listed on the regulated market in the EU (except microenterprises), small non-complex credit institutions, and captive insurance companies; 
  • Declarations in 2029 on the financial year 2028 for companies from non member countries generating a net turnover of more than EUR 150 million in the EU through at least one subsidiary or branch. (Council of the EU, 2022) 

A derogation may also be granted to listed SMEs, exempting them from the application of the directive until 2028.