Introduction

The European Union (EU) is making significant adjustments to its Corporate Sustainability Reporting Directive (CSRD), bringing about key changes that will impact businesses of all sizes. With sustainability reporting becoming an essential part of corporate governance, these updates aim to refine the scope of CSRD while ensuring that businesses remain accountable for their environmental and social impact.

What Is the CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is the EU’s ambitious move to increase corporate ESG transparency. It replaces the Non-Financial Reporting Directive (NFRD) and expands reporting requirements for businesses operating in Europe.

The CSRD is crucial in driving the EU’s sustainability goals, ensuring that investors, stakeholders, and the public have access to reliable corporate sustainability data.

Key Updates to the CSRD

The latest adjustments to the CSRD introduce several important changes, particularly concerning the scope and requirements of reporting. 

Here are the most critical updates:

1. Fewer Companies Are Directly Affected

The employee threshold for mandatory reporting increases from 500 to 1,000 employees. Mid-sized companies below this threshold may no longer be legally required to comply.

It means that if you’re below the 1,000-employee mark, you might not need to file official reports but your supply chain partners may still expect ESG data from you.

2. Reporting Deadlines Stay the Same

The directive will still apply from the 2024 financial year, meaning that first reports will be due in 2025. Companies falling under the CSRD should already be preparing for compliance.

3. Simplified ESG Reporting for SMEs

The EU recognizes that SMEs lack the resources of large corporations. Hence, they’re introducing voluntary ESG reporting standards to reduce administrative costs.

It means that even if SMEs aren’t mandated to report, investors and larger corporations will favor businesses that engage in sustainability transparency.

4. Greater Alignment with Global Standards

The CSRD remains aligned with global ESG reporting frameworks such as:

• Global Reporting Initiative (GRI)
• International Sustainability Standards Board (ISSB)
• EU Taxonomy

This alignment ensures that European companies remain compliant with international best practices for sustainability disclosures.

5. Supply Chain ESG Data Will Still Be Required

Large corporations still have mandatory CSRD requirements which means they’ll be asking their suppliers for sustainability data. Even if you’re exempt, your business partners may still demand:

• Carbon footprint data
• Human rights due diligence
• Sustainable sourcing practices

While mid-sized companies may no longer fall under the directive, larger corporations still need to report and will require sustainability data from their suppliers. This means that smaller businesses working with large enterprises may still need to collect and provide ESG-related information.

Why Is the EU Making These Changes?

The initial scope of the CSRD was broad, covering a wide range of companies. However, after industry feedback and concerns over administrative burden, the EU decided to adjust the requirements. The goal remains to increase corporate sustainability transparency while ensuring that reporting remains manageable and impactful.

The Key Reasons Behind the Updates:

• Reducing the regulatory burden on SMEs by excluding smaller firms from mandatory reporting.
• Ensuring sustainability reports remain high-quality by focusing on large companies with significant environmental impact.
• Encouraging voluntary reporting for companies below the new threshold, allowing businesses to build sustainability credibility without immediate regulatory pressure.

What Does This Mean for Your Business?

The updates to the CSRD bring forth both opportunities and challenges for businesses. Here’s how different types of companies will be impacted:

1. If You Have 1,000+ Employees

• You must comply with CSRD regulations.
• Start preparing now to meet the 2025 reporting deadline.
• Ensure your data aligns with EU Taxonomy, GRI, and ISSB frameworks.

2. If You Have Fewer Than 1,000 Employees

• You may not be legally required to report—but that doesn’t mean you can ignore ESG.
• Large corporations in your supply chain will still expect ESG data.
• Voluntary reporting can boost your credibility and position your business as a preferred supplier.

3. If You Are a Supplier to a Large Company

• You must still provide ESG data to help your customers comply.
• Implement sustainability tracking to stay competitive.
• A lack of transparency could lead to lost contracts.

Regardless of whether your company is directly impacted by the CSRD changes, sustainability reporting is becoming an industry standard. Businesses that proactively prepare will not only ensure compliance but also gain a competitive edge.

VECTRA Helps You Prepare for the New CSRD Landscape

Regardless of whether you fall under mandatory reporting, ESG disclosure is fast becoming a business standard. The companies that proactively prepare will not only ensure compliance but also gain a competitive advantage. Here’s how VECTRA International helps:

• Assess Your ESG Readiness – Conduct an internal audit of your sustainability practices.
• Develop a Sustainability Strategy – Align with EU Taxonomy & global ESG frameworks.
• Invest in Data Management – Track carbon emissions, social impact & governance metrics.
• Engage Your Supply Chain – Ensure your suppliers understand and contribute to ESG efforts.
• Stay Updated – CSRD regulations will continue evolving so we keep monitoring developments.

Want to know more about how these changes may impact your business? Connect with one of our industry experts.