The global movement toward sustainability is rapidly accelerating, supported by the evolvement of various national and international regulations that require companies worldwide to disclose their environmental, social, and governance (ESG) information.
This trend reflects a growing commitment to corporate transparency and accountability.

One of the most comprehensive sustainability regulatory frameworks is the Corporate Sustainability Reporting Directive (CSRD) introduced by the EU. While the CSRD primarily targets EU-based companies, its impact extends far beyond the EU and introduces ESG-related reporting requirements also for non-EU entities.  

In the EU, approximately 50,000 companies will be required to comply with the European Sustainability Reporting Standards (ESRS) established under the CSRD. In addition, over 10,000 non-EU companies are also expected to adhere to these reporting requirements, particularly those that are either listed in the EU or have significant business operations within the region. Whether and when a non-EU company needs to report depends on the company's size, turnover, balance sheet, and whether it is listed in the EU. To ease the transition, there is a phase-in approach for international companies, from 2024 until 2030.

Timeline for non-EU company

An important remark is that from 2029, non-EU companies will have to publish CSRD consolidated sustainability reports covering all their operations, including operations outside of the EU.  

Subsidiaries in the EU

EU subsidiaries of non-EU parent companies will follow the same reporting timeline as EU companies. For detailed information on the timeline and criteria applicable to EU companies, please check out this article. However, there are specific exemptions for EU subsidiaries and subgroups.

A subsidiary or subgroup may be exempt from separate reporting if it is included in the parent entity's consolidated management report. This report must comply then with the ESRS or equivalent standards and is typically included in the annual report as a sustainability statement.

In situations where there are multiple sister companies in the EU, the largest subsidiary (measured based on turnover) has the option to consolidate all EU subsidiaries within its sustainability report. This option will be available through 2029.

Can equivalent standards be used?

To comply with the CSRD, companies are required to disclose a report based on the ESRS. Non-EU undertakings subject to the CSRD will be permitted to use standards equivalent to the ESRS in their report. The European Commission will establish guidelines to determine which standards qualify as equivalent for this purpose.

Get ahead of the curve

The CSRD introduces a substantial shift in sustainability reporting. Through a phased-in approach, companies will gradually adapt to the new legislation based on their size and turnover. However, the first year of data collection will require considerable time and resources to ensure compliance. Even if your company is not yet obligated to report under the CSRD, it’s wise not to delay. We recommend starting collecting data early to stay ahead of the curve and facilitate a smoother transition when reporting becomes mandatory.  

How can Celsia help?

We've decoded the requirements of the EU sustainable finance standards to save you the headache. We give you the tool to establish CSRD-compliant goals, policies, and actions. Follow straightforward steps and engage your colleagues within user-friendly software.  

Integrate with existing systems, import data from any source, and ensure all CSRD data points are covered. Plus, our expert team will be ready to support you throughout the process. Celsia helps you create a CSRD-compliant report to include as a sustainability statement in your annual report.

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