Sustainability Standards Explained: CSRD

Emissions disclosures are becoming mandatory in 35 nations and markets representing 56% of the global GDP but there is one market that has been causing quite a stir. The European Union’s Corporate Sustainability Reporting Directive (CSRD) is mentally mobilizing the food and beverage market. But there is another good reason to look at CSRD more closely than the others: CSRD is different from the other national-level mandates.

Grounding exercise

What is CSRD? 👉

What is CSRD?

CSRD is the European Commission’s reporting directive on corporate sustainability issues. Ostensibly, it’s the EU’s call to sustainability arms for companies, who are called to report sustainability risks and management, mostly on financial terms – how much are you spending, on what, and with what expected result.

How is CSRD different from other reporting frameworks?

The biggest difference between CSRD and other national mandates is that the scope of the reporting extends to sustainability overall, covering all aspects of E (environment), S (social) and G (governance). Most other national or market mandates localize the scope of the disclosures to climate change and emissions management.

Since the other mandates are focusing on greenhouse gas emissions only, they all use some form of the TCFD framework and recommendations. CSRD is, we could say, inspired by the TCFD framework, covering your company’s oversight on sustainability issues and risk identification but the bulk of the report is much more action-oriented, focusing on risk management and mitigation and opportunity initiatives.

Wait What other reporting frameworks?

New to ESG standards? Take it from the top 👉 Check out our complete guide to ESG Reporting Standards

When is CSRD in effect?

Let’s clear this common misconception from the get-go: CSRD is currently not in effect yet and won’t be until 2025. What is currently in effect is the Non-Financial Reporting Directive (NFRD). NFRD has been in effect since 2014 mandating large companies to disclose their sustainability performance alongside their annual financial reporting. When in effect, CSRD will replace NFRD and expand the scope of the reporting.

The European Commission published the final version of the directive in the official journal in December 2022. From this point forward, the nation members have 18 months to bring CSRD into national legislation. This is just in time for the first rollout phase of CSRD!


The first phase begins in 2025 for the financial year 2024 and affects companies already reporting with the NFRD framework. So in 2025, the companies will have to switch reporting framework.


The second phase rolls out in 2026 for the financial year 2025 and it expands to companies that fall under the following criteria:

  • Have more than 250 employees
  • Have over €40 million in net sales, or
  • Have over €20 million balance sheet total


The third phase continues in 2027 for the financial year 2026 for listed SMEs.


The CSRD rollout concludes with the fourth phase in 2028 for the financial year 2027 for non-EU companies with at least one subsidiary operating in the EU and with sales in the EU of over €150 million.

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    What do companies need to report according to CSRD?

    Within CSRD, your company needs to report the details of every activity you are undertaking that contributes to an environmentally or socially sustainable objective. If you ask “what are these?”, the Commission has got your back.

    All sustainable objectives are outlined in the EU taxonomy. More specifically, the 6 environmental objectives are:

        1. Climate change mitigation
        2. Climate change adaptation
        3. Sustainable use and protection of water
        4. Transition to a circular economy
        5. Pollution management
        6. Protection of biodiversity

    Each activity you report should fulfill all of the following criteria:

        • It should contribute substantially to one or more of the objectives.
        • It should not cause significant harm to any of the remaining criteria.
        • it should be carried out according to the European Union’s minimum safeguards.
        • It should comply with the technical screening criteria for each objective.

    The EU saved the curveball for last: Every activity you report should pass the technical screening criteria, which are outlined in a 300-page regulation document accompanied by a 600-page Annex for climate change adaptation and mitigation alone and are based on the lifecycle approach.

    The good news is that food and beverage companies can localize their screening in sections 1, Forestry, and 2, Restoration of wetlands in the regulation and Agriculture of the Annex until more specific criteria are developed for agriculture in the future.

    Fun (?) fact

    Using CarbonCloud is an EU-taxonomy aligned activity under Engineering activities and related technical consultancy dedicated to adaptation to climate change.

    What is the CSRD reporting standard?

    Excellent question and the one that presses companies the most. To start with, there isn’t a single standard – each area of sustainability will have a standard of its own.


    Environment has 6 topical standards on:

    • Climate change
    • Pollution
    • Water and marine resources
    • Biodiversity and ecosystems
    • Resource use & circular economy


    Social has 4 topical standards on:

    • Own workforce
    • Workers in the value chain
    • Consumers and end-users
    • Affected communities


    Governance has only one topical standard on Business conduct.

    All these topical standards are at the moment in draft mode and are due to be developed further by EFRAG. You can check out some useful videos on every draft here and the exposure drafts were sent to the EU member states and bodies in June 2023. Zooming in on climate change, the format calls for 3 general areas – inspired but not fully aligned with the TCFD framework.


    • Integration of sustainability-related performance in incentive schemas
    • Transition plan for climate change mitigation

    • Material impacts, risks and opportunities, and their interaction with strategy and business models
    • Description of processes to identify and assess material climate-related impacts, risks and opportunities


    • Policies related to climate change mitigation and adaptation

    • Actions and resources in relation to climate change policies 
      👉 This is where you input your EU taxonomy-aligned activities


    • Targets related to mitigation and adaptation
    • Energy mix and consumption
      +intensity per revenue
    • Gross Scope 1, 2, 3 total emissions
      +intensity per revenue
    • GHG removals and mitigation projects via carbon credits

    • Internal carbon pricing

    • Possible financial effects from physical and transition risks and opportunities

    Some points to keep in sticky notes

    Scope 3 inventory

    Companies are asked to calculate it or screen it in full (all 15 categories of the GHG protocol Value Chain Standard) but you may disclose only significant categories.

    Double materiality

    Companies must perform double materiality, i.e. assess risks the company poses to sustainability and risks the company may face from outcomes of unsustainable practices.

    ISO 14067

    CSRD takes a life cycle approach and the accepted standard for life cycle assessments is ISO 14067.


    CSRD disclosures may be integrated in your sustainability report and hosted on your website.

    Auditable data

    Data submitted to CSRD should be audited. Until the full rollout of CSRD in 2028, limited assurance is permitted but after 2028, reasonable assurance will be required.

    All in all, CSRD is not too far from other disclosure frameworks to be totally obscure – but far enough to stir the pot and load corporate sustainability specialists and executives with some extra reading. And to be fair, considering the bulk of documents circularly referring to one another in literally hundreds of pages, quickly grasping the juice of CSRD is not light reading. But heavy reading is something we at CarbonCloud thoroughly enjoy, so next time someone brings up CSRD, forward them this article with the juice of CSRD!

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