The Corporate Sustainability Reporting Directive (CSRD) is a silent revolution introduced in 2023. Despite the European Commission’s Omnibus Package of 2024 allowing a gradual implementation, delaying certain standards, and temporarily simplifying obligations for listed SMEs, the CSRD will fundamentally alter how companies report and demonstrate their commitment to sustainability and impact.
If you have a business, now is the time to understand what’s happening and how to prepare without delay. The directive introduces concrete obligations, European standards, and verifiable data, moving beyond mere good intentions.
Compliance is also an opportunity for clarity, internal process improvement and building a stronger, more credible reputation.
Understanding the Corporate Sustainability Reporting Directive (CSRD)
It is no longer an optional or symbolic communication. Now the ESG report (Environmental, Social, Governance) becomes part of the annual financial statements following the same approval and filing requirements, and must meet precise criteria, the ESRS - European Sustainability Reporting Standards.
In practice, the CSRD makes mandatory what until recently was left to the will of companies: tell with numbers, metrics and verifiable processes the impact of their activities on environmental, social and governance.
There is a lot of talk about it because it is an epochal change in corporate transparency. The European Union has decided to move from words to deeds and so each company will have to demonstrate with concrete data its environmental, social and governance impact. Reporting becomes a real accountability tool, integrated in the logic of management control and corporate reputation.
Another key aspect introduced by the CSRD is the principle of double materiality: companies must account not only for how ESG factors affect their business, but also for the impact that their activities generate on the environment, people and society. An important change of perspective, requiring greater awareness and traceability throughout the supply chain.
The aim is to promote a sustainable economy, empower businesses and make consumer, investment and financing choices more informed. Anyone working in reporting, management control, sustainability or corporate communication should immediately start studying this legislation. And not only: also HR, purchasing office, and general management will have to understand what changes and with which impacts on the business.
CSRD vs. NFRD: Key differences
Applicability of the CSRD
The CSRD does not only apply to large listed companies. In practice, it applies to:
- From 2024: Entities previously under NFRD obligations (listed companies, banks, insurers with more than 500 employees).
- From 2025: Companies exceeding two out of three criteria:
- 250 employees
- €40M revenue
- €20M total assets
- From 2026: Listed SMEs (with opt-out until 2028 introduced by the Omnibus Package).
- From 2028: Companies outside the EU with branches in Europe generating more than €150 million in turnover.
Caution: even if you are an unlisted SME, you may be indirectly involved. More and more large companies are asking ESG data providers to complete their reports. If you are in a supply chain, you will be asked to provide this information. Better arrive prepared.
Practical examples? A software house providing solutions to a public body will probably be involved. As well as a small manufacturing company producing for a large retail group, or a pharmaceutical laboratory supplying to a listed company.
Practical requirements of the CSRD
The CSRD calls for much more than a well-intentioned document. You want a precise and structured report on how the company addresses ESG issues, namely:
- Environmental, social and governance risks and opportunities associated with their business model
- Corporate policies adopted, objectives, strategies
- Results achieved, KPIs used and how they are monitored
- Due diligence processes for managing human rights and environmental impacts along the supply chain
- How the company engages stakeholders
And all this must be formulated according to ESRS standards, validated by an independent auditor and integrated into the company’s financial statements.
Concrete example: if you declare to be "carbon neutral by 2030", you will have to indicate how you measure your CO2 emissions, what actions you took to reduce them, what resources you invested, and what results you achieved. Above all, everything must be verifiable and consistent.
Companies will also need to demonstrate how they take account of climate risks and environmental impacts along the value chain, and how they intend to address them in future plans. The information will be subject to mandatory review and become an integral part of the corporate reputation.
When it comes into effect and what happens if you are not ready
The deadlines have already started and are differentiated by company size:
- 2025: 2024 reporting for companies already subject to the NFRD
- 2026: 2025 reporting for all large European companies
- 2027: 2026 reporting for listed SMEs
- 2029: 2028 reporting for non-EU companies with presence in Europe
What happens if you don’t report in this way?
Not being compliant with the CSRD means risking:
- Administrative penalties (which vary from country to country)
- Loss of reliability towards banks and lenders
- Exclusion from strategic competitions or partnerships
- Reputational criticalities towards clients, employees and investors
In addition, those who arrive late will be forced to run after unorganized data collection systems, unforeseen budgets and difficulties in ensuring consistency between declared sustainability and actual data.
What changes for your company even if you are an SME
Many SME entrepreneurs think they are out of the game. In fact, the real change is cultural and affects the whole supply chain. This is why even an SME today must start working in a CSRD perspective:
- If you work with large companies, you will be asked for ESG data (emissions, energy, water consumption, employees, etc.)
- If you are looking for funding or public tenders, sustainability is increasingly becoming a requirement
- If you want to attract talents, partners or investors, you must show transparency and accountability
Let’s take an example: if you are a SME producing packaging for the food industry, your customers might ask you about CO2 emissions, recyclability of materials, contractual conditions of employees. You may not be asked for a full CSRD report, but you will still need to collect and share data in a traceable and credible way, often by filling out questionnaires and customized data sheets, which are difficult to standardize (hence the value of sharing the platform through a digital platform, if they all use the same tools ... )
How to prepare for the CSRD: practical tips
Adapting to the CSRD takes time, but you can start right away with some concrete steps. Here’s what to do:
- Do an internal check: you already have a sustainability balance sheet? Have you ever monitored emissions, welfare, governance? Start here.
- Involve the right people: it’s not just a technical office topic. You need the input of finance, HR, production, procurement, marketing.
- Map the material topics: what are the most relevant ESG aspects for your industry? What impacts do you have on people and the planet? And which ESG issues have an impact on business? What do your stakeholders care most about?
- Start collecting data: create a simple system to track and update the main indicators (e.g. energy consumption, gender equality, accidents...).
- Choose whether to manage everything in house or with a consultant: the important thing is to have a roadmap and leave early.
Practical checklist: where to start immediately
- Identify who, internally, can take care of the reporting (also part-time)
- Make the materiality analysis: identify your main stakeholders, internal and external, to identify ESG issues relevant to the company according to the double perspective of double materiality
- Based on the themes identified as materials,
- An initial inventory of available ESG information: consumption, human resources, governance, suppliers...
- Compare the data you already have with the minimum ESRS requirements
- Identifies information "gaps" and evaluates how to fill them (new processes, software, tracking tools)
- Establishes a roadmap for missing data collection
- Compile the data into an effective report, which tells not only the data but also your story
What is beyond the CSRD? A look into the future
The CSRD is not the only legislation coming: it will complement the Corporate Sustainability Due Diligence Directive (CSDDD), which will oblige companies to actively monitor human rights and environmental impacts along the entire value chain.
The adoption of digital tools for the collection and management of ESG data (such as Uyolo) becomes essential: they make work faster, structured and easily integrated into business flows.
Frequently asked questions
Is it possible to use digital tools to facilitate CSRD reporting?
Yes, and it is strongly recommended. The volume of data required by CSRD is large and complex, and digital tools designed for ESG reporting can help a great deal to collect, organize and update information in a structured way that complies with ESRS.
There are platforms like Uyolo, designed to simplify the entire process: from data collection and reporting to continuous monitoring of ESG performance. Using these tools is not mandatory, but it can make a difference in terms of efficiency, consistency and preparation for review.
Do you need an in-house person to run the CSRD or just an external consultant?
There is no formal requirement to appoint a dedicated internal figure, but in practice it is highly recommended to have at least one company contact person who coordinates the whole process, even if you rely on an external consultant.
The CSRD is a cross-functional project involving several business functions: administration, finance, human resources, production, marketing, governance. A consultant can help you set the strategy, map the risks and support you with standards, but you need someone inside the company to collect data, hold the wires, do synthesis and facilitate the flow of information.
Start now one step at a time, CSRD is a real opportunity
The Corporate Sustainability Reporting Directive (CSRD) is part of the wider project of the European Green Deal and was proposed by the European Commission, then approved by the European Parliament and the Member States. With this new regulatory framework, the previous Non Financial Reporting Directive is definitively overcome, paving the way for a more structured, transparent and mandatory sustainability reporting.
The CSRD applies to an increasing number of entities, including small and medium-sized enterprises (SMEs), listed and non-listed companies, public interest entities, credit institutions and even third country companies with significant activities in the territory of the European Union.
From an operational point of view, the new reporting requirements provide for the inclusion of sustainability information in the management report, with data consistent with the balance sheet, business performance and the quality of ESG processes along the entire value chain. All must be done according to common standards - the ESRS - and in compliance with the EU Regulation governing its scope.
The timing varies according to size and type of company, but the obligation is becoming a reality for more and more Italian companies. Each company should provide clear reference to all relevant issues, ensuring consistency, transparency and comparability of data.
The CSRD is not just a norm: it is a concrete option to improve your business strategy
Thanks to the CSRD you can strengthen trust with stakeholders and distinguish yourself in a competitive field increasingly attentive to environmental impact, especially climate change and greenhouse gas reduction, but also to social impacts and good governance.
Do you want to understand how to apply CSRD easily, even in your own context?
Book a demo and see how Uyolo can help you manage every aspect of sustainability reporting with efficiency and clarity.
