Corporate Sustainability Reporting Directive (CSRD): Challenges and Opportunities

By Sofia Moreno, Partner, PKF Portugal

EU and non-EU companies need to be mindful of how the Corporate Sustainability Reporting Directive (CSRD) requirements may apply to them, regardless of their domicile.

Transparency and improvement of sustainability information are at the heart of the CSRD. The CSRD is a European Union Directive that must be transposed into the national legal framework of each member state by July 5, 2024, which brings important changes to the current reporting of non-financial information.

The CSRD establishes rigorous requirements and represents a significant advance in sustainability reporting. It is also an opportunity for the national business community to provide the financial sector and public decision-makers with tools that enable them to obtain objective, reliable and comparable information on ESG.

Reporting Dates

To date, companies with an annual average of 500 or more employees were already subject to reporting non-financial data on governance, social and environmental matters. Beginning on January 1, 2024, these companies must report sustainability data in accordance with the CSRD with an adaptation period for small- to medium-sized enterprises (SMEs). Reports for these companies will be released in 2025. This reporting date also applies to all non-EU companies with securities listed on an EU-related market, regardless of whether the issuer is established in the EU.

Thereafter, sustainability reporting in accordance with the CSRD applies in the following manner:

From January 1, 2026, for fiscal years beginning on January 1, 2025, for large EU companies or EU subsidiaries of non-EU parent companies, which exceed at least two of the following criteria:

  • Total asset balance: €20,000,000
  • Net turnover: €40,000,000
  • Average number of workers: 250

From January 1, 2027, for fiscal years beginning on January 1, 2026, SMEs listed on EU-regulated markets, which cannot be considered micro-enterprises, which exceed at least two of the following requirements:

  • Total asset balance: €4,000,000
  • Net turnover: €8,000,000
  • Average number of workers: 50

From January 2029, for fiscal years starting January 1, 2028, the CSRD applies to non-EU parent companies with subsidiaries and branches in the EU, which meet the following criteria:

  • Net turnover: Exceeding €150,000,000 in the last 2 economic years.
  • Branch with net turnover of at least €40,000,000.


The first delegated act for the initial group of 12 European Sustainability Reporting Standards (ESRS) is now available:

  • Two standards are of general nature and contain some basic principles regarding what should be reported on strategy, governance and materiality (ESRS 1 and 2).
  • The remaining 10 standards cover different ESG aspects:
    • Environmental disclosures [climate] (ESRS E1), pollution (ESRS E2), water and marine resources (ESRS E3), biodiversity and ecosystems (ESRS E4), resource use and circular economy (ESRS E5);
    • Social disclosures [own workforce] (ESRS S1), workers in the value chain (ESRS S2), affected communities (ESRS S3), consumers and end users (ESRS S4); and
    • Governance disclosures [business conduct] (ESRS G1).


The European Commission has also incorporated the concept of double materiality into the Directive. This approach establishes a broader requirement for what companies should report: how sustainability issues affect their business (financial materiality) and how their business impacts society and the environment (impact materiality). Companies are required to refer to double materiality to identify their main impacts, risks and opportunities on the environment, society and the company’s financial performance.

Information relating to sustainability and must be included in the company’s management report, be disclosed in electronic format and be verified by an auditor or an independent certifier.

It is undeniable that sustainability is the order of the day and must be seen as an organizational goal; a greater good and a reason for which companies should orient themselves. Strategies, policies and objectives must be designed around sustainability, metrics defined and results achieved.

Contact Us

We welcome the opportunity to answer any questions you may have related to this topic or any other assurance, technology, tax or advisory matters relative to sustainability and ESG. Please call or email any of the Sustainability and ESG Services team members below: