European Union Sustainability Reporting Regulation
Updated March 5, 2025
The Corporate Sustainability Reporting Directive (CSRD) entered into force on January 5, 2023.
The CSRD creates sustainability reporting obligations for businesses that meet the specified criteria. These businesses are required to report their sustainability matters in accordance with European Sustainability Reporting Standards (ESRS). The initial reporting deadlines are phased in over several years for different types entities, beginning with large, listed companies (Wave 1) submitting CSRD-compliant sustainability reports in 2025 based on 2024 data, followed by other large entities in 2026 (Wave 2) and so on.
Please refer to the “What’s the latest?” section for updates and changes.
Who’s impacted?*
- All companies with securities listed on an EU-regulated market.
- "Large" EU companies that are not listed, with "large" defined as exceeding two of the three following criteria:
- Total assets of €25 million
- Net turnover (revenue) of €50 million
- Average of 250 employees
- EU companies of a "Large group" and not listed, with "Large group" defined the same as above, but for the consolidated group.
- Non-EU Companies that directly generate a net turnover of more than €150 million in the EU and have a subsidiary or branch in the EU that meets the criteria of a large company.
* The criteria listed here are guidelines only and should not be considered a substitute to professional / legal advice
What’s the latest?
On February 26, 2025, the European Commission adopted the “Omnibus Package”, a set of legislative proposals to streamline EU sustainability regulations and reduce compliance burden for businesses.
Among other simplification measures, it proposes:
- That the CSRD apply to only the largest companies by increasing the employee threshold to those with more than 1,000 employees from 250;
- Postponing the initial reporting deadlines under the CSRD for Wave 2 and Wave 3 companies by 2 years; and
- Reducing reporting requirements on the value chain.
The proposals must still undergo the EU legislative process of review and adoption by the European Parliament and the Council. During this process, proposals may undergo changes. It is expected the adoption may take place as early as June 2025 for some of the proposed measures and by early 2026 for others.
What do Canadian CPAs need to know?
While the CSRD and therefore the ESRS do not directly apply to Canadian companies, Canadian companies with EU operations that meet the size requirements may be required to report sustainability information for their EU subsidiary(ies); or, if on a consolidated basis the criteria for a large group is met, consolidated sustainability reporting would be required, inclusive of non-EU operations.
The extra-territorial impacts of the CSRD should not be understated and Canadian CPAs should be aware of the potential reporting requirements which could extend beyond EU subsidiaries.
It is not just companies that are subject to the CSRD regulation that will be impacted. The CSRD requires certain disclosures pertaining to the regulated entity’s value chain, which means companies that sit within the value chain of a regulated entity may be asked to provide information to the regulated entity. Refer to our article, Why Businesses Can’t Ignore Sustainability for more information.
However, if the Omnibus Package proposals are adopted, the impact on Canadian companies will be reduced. Canadian companies with 1000 employees or less would be scoped out and those in the value chain of a regulated entity may no longer be asked to provide information to the regulated entity.
Where can I learn more?
For more information, please refer to our At a Glance: Sustainability Reporting Standards and Regulations and related FAQs.
You can also refer to: