Unveiling the revolution in news reporting: Shining Light on the Manufacturing Process
The Corporate Sustainability Reporting Directive (CSRD) and its associated European Sustainability Reporting Standards (ESRS) are undergoing significant changes, aiming to make sustainability reporting more practical, scalable, and accessible for companies across Europe.
Key Changes
The revisions to the ESRS introduce a more targeted materiality assessment, simplified report structures, and clearer separations between requirements and guidance. This streamlined approach reduces the reporting burden and enhances clarity [5].
One of the key changes is a significant reduction in reporting requirements. The number of mandatory data points has been cut by approximately 57%, and the overall length of the ESRS standards has been reduced by over 55% [1].
For companies already reporting under the CSRD since 2024 ("Wave 1"), certain requirements have been allowed to be omitted for an extended period through 2025 and 2026. This phased approach aims to give companies more flexibility and time to adapt [2][3][4].
The phase-in reliefs initially limited to entities with fewer than 750 employees have been extended to those with 750 or more employees for reporting periods starting from 2025 onwards [2].
Voluntary reporting for non-listed SMEs and micro-companies has also been recommended by the EU Commission, recognizing the varied capacities of SMEs [4].
Implications
For large companies, the revised CSRD offers a more tailored and less burdensome reporting regime, with extended flexibility to comply gradually with the full scope of disclosures. This reduction in administrative and compliance costs does not dilute the intent to improve sustainability transparency [1][2][3][4][5].
SMEs newly in scope have access to simplified standards designed to be less complex and demanding. Non-listed SMEs and micro-companies are not currently mandated to report but may do so voluntarily under a separate, simpler framework [4].
The revisions aim to balance manageability with consistent, high-quality sustainability data, supporting investor decision-making and policy monitoring in line with European Green Deal objectives [1][2][3][4][5].
The new rules of the CSRD directive will also impact the supply chain, as more companies are expected to draw up sustainability reports, such as the Non-Financial Declaration (DNF) in Italy, where the number of companies involved is expected to increase from around 200 to over 5,000 directly involved, with at least 100,000 companies indirectly involved due to being part of a supply chain [6].
The shift from a separate document to a sustainability report is a cultural leap, as only one in five companies in Italy previously followed the former practice [7]. The CSRD directive, making sustainability reporting mandatory, starts in the 2024 financial year [8].
The aim of the CSRD directive is to provide financial markets with reliable, relevant, and comparable information on environmental, social, and governance (ESG) criteria. The CSRD directive aims to direct private capital towards financing the green and social transition and untangle complexities in European sustainable finance [1][8].
In conclusion, the CSRD and its 2025 ESRS revisions represent a move towards more practical, scalable, and accessible sustainability reporting for both large companies and SMEs, through fewer mandatory data points, phased implementation, and voluntary options for smaller entities, while maintaining ambition toward sustainability transparency and impact [1][2][3][4][5]. The new sustainability report will replace the sustainability balance sheet and will be inserted in the management report.
- The revised Environmental-science standards within the CSRD aim to make sustainability report structures more simplified, thereby reducing the reporting burden for companies across Europe.
- The changes in the CSRD directive encourage businesses to invest in Environmental-science, as the new standards foster improved transparency regarding climate-change and other ESG criteria, helping to guide private finance towards the green and social transition.
- The Finance sector will experience alterations with the CSRD's implementation, as more businesses in Europe will now be required to disclose Environmental-science information in their sustainability reports, impacting factors such as climate-change, social, and governance issues.
