CSRD: Definition

The Corporate Sustainability Reporting Directive (CSRD) is the European Union’s sustainability reporting law. It replaced the Non-Financial Reporting Directive (NFRD) and requires in-scope companies to report under the European Sustainability Reporting Standards (ESRS), with limited assurance over the report.

What makes CSRD different

• Double materiality: companies report both how sustainability issues affect the business (financial materiality) and how the business affects people and the environment (impact materiality). AASB S2 and IFRS S2 use financial materiality only.
• Breadth: ESRS covers climate, pollution, water, biodiversity, resource use, workforce, communities, consumers and governance, not just climate.
• Digital tagging: reports must be published in a machine-readable format.

Scope has been narrowed

Since 2025 the EU has scaled CSRD back through its “Omnibus” simplification package. The reporting deadlines for later waves were postponed, and the size thresholds were raised so that far fewer companies are in scope. Check the current thresholds before assuming your company or EU subsidiary is captured.

Why Australian companies should care

Australian groups with large EU subsidiaries or significant EU turnover can fall within CSRD, and EU customers subject to it will ask suppliers for emissions data. The climate standard within ESRS (E1) overlaps heavily with AASB S2, so one well-structured emissions inventory can serve both, provided the boundary and methods are documented.