Europe's sustainability shift to becoming climate neutral by 2050 is steadily progressing. This is the goal of the European Green Deal, which is a package of policy initiatives seeking to transform the EU into a society with both fairness and a competitive economy. The introduction of the Corporate Sustainability Reporting Directive (CSRD) is a milestone for the EU, requiring companies to disclose ESG information. The CSRD has already entered into force for some EU companies that will have to start reporting in 2025.  

Around 50,000 EU companies will be subject to reporting under the CSRD. As the EU aims to drive the rest of the global economy, non-EU companies will also be obliged by the legislation, including approximately 3,000 US companies.  

Which American companies are subject to the CSRD?

The CSRD applies to U.S. companies that have either of the following:  

1. Securities listed in the EU
   A company has securities admitted to trading in EU-regulated markets.
   

2. Significant activity in the EU
   If the net revenue exceeds €150 million for each of the last 2 consecutive years and meets one of the following criteria:
   - At least one large subsidiary in the EU (see criteria for large subsidiary further down in the article)
   - At least one subsidiary listed
   - A branch in the EU with a net turnover the previous year of over €40 million

When will you have to report as an American company?

When your company needs to report depends on its size, turnover, balance sheet, and whether or not it is listed in the EU. To ease the transition, there is a phase-in approach for international companies, from 2024 until 2030.  

Note that from 2029 US parent companies will have to publish CSRD consolidated sustainability reports covering all its operations, including operations outside of the EU.

EU subsidiaries of American parent company

EU subsidiaries of US parent companies will follow the same timeline as EU companies. You can check out this article for the timeline and criteria that apply to EU companies. However, there are some exemptions for EU subsidiaries and subgroups. These are as follows:

• A subsidiary or subgroup may be exempt from separate reporting if included in the parent entity’s consolidated management report. The report must comply with the European Sustainability Reporting Standards (ESRS), or equivalent standards, and will typically be provided in the annual report as a sustainability statement.
  

• With several sister companies in the EU, the largest EU subsidiary (by turnover) can include all EU subsidiaries within the scope in a consolidated sustainability report. This is an option until 2030.  

Can you use equivalent standards?

To comply with the CSRD, companies need to disclose a report according to 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 develop guidelines to determine which standards will be considered equivalent for this purpose.

Even though your company isn’t required to report on the CSRD yet, there is no need to wait. We recommend starting to collect data and get ahead of the curve.

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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