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EU CSRD: Council and European Parliament reach political agreement

After much delay, the European Parliament and Council reached political agreement on the proposal for a Corporate Sustainability Reporting Directive (CSRD) in their trilogue meeting on 21 June. 

The agreed text was released on 30 June - see Council press release - and is now going through the legal-linguist review and translation process. This can take 2-3 months.

So, what do we know about the final wording on the most controversial points?

  • Third country undertakings: The new rules will apply to non-European companies generating a net turnover of EUR 150 million in the EU and which have at least one subsidiary or branch in the EU (this is a new addition to the scope of the original proposal). These companies must provide a report on their environmental, social and governance impacts. The EUR 150 million turnover threshold mirrors that in the proposal for a Corporate Sustainability Due Diligence Directive (CSDDD). Understanding how “turnover” is defined in both Directives is going to be critical to fully understanding the reach of these two, potentially very wide-reaching, frameworks. It also remains to be seen whether the CSDDD will take the same approach as the CSRD on the scoping requirement for the non-EU company to have an EU subsidiary or branch. For more information on the CSRD and CSDDD proposals, see our previous publications here, here and here.
  • A point of process: reports will need to be provided in digital format so that they can feed into the forthcoming European Single Access Point. There will be practical challenges around this for companies outside the EU not subject to this regime.
  • SMEs and proportionality: A handful of SMEs listed on public markets will be subject to lighter reporting standards but there will be an opt-out for SMEs during a transitional period until 2028.
  • Assurance of sustainability: Reporting must be certified by an accredited independent auditor or certifier. The reporting of third country undertakings has be certified by a European auditor or by one established in a third country.


Application of the CSRD will take place in four stages (for financial years starting on or after):

  • 1 January 2024 for large public interest entities already subject to the Non-Financial Reporting Directive (NFRD);
  • 1 January 2025 for organisations that are not presently subject to the NFRD but which fall within the CSRD’s enlarged scope;
  • 1 January 2026 for listed SMEs, small and non-complex credit institutions and captive insurance undertakings;
  • 1 January 2028 for non-EU companies. It is not yet clear when non-EU undertakings will have to report under the CSRD. At the Commission’s conference, Commissioner McGuiness said they would need to report in 2029 but the (unofficial) revised wording of the CSRD seems to imply that this might be in respect of financial years starting on or after 1 January 2028 (so that the first reports would be published in 2029). But this remains to be confirmed once the official final version of the CSRD is publicly available.

Next steps

Although the political negotiations are finally over, there are still a number of procedural steps that need to take place before the final version of the CSRD is published in the Official Journal (OJEU):

  1. The Political Agreement needs to be endorsed by the Council and the European Parliament. In the Council, the agreement will hopefully be endorsed by Coreper next week (possibly on Wednesday 6 July), so that the European Parliament can also endorse it in the coming weeks.
  2. The text will then need to go through a legal-linguist review and be translated into all the official EU languages. This can take 2-3months.
  3. Once ready and translated, the Directive will then be formally adopted by the European Parliament and Council, and published in the OJEU. The Directive will enter into force 20 days after its publication and Member States will need to transpose the CSRD into their national rules 18 months after that.

National implementation - beware of goldplating

The CSRD will have to be implemented into national law and may be subject to local goldplating. It will be important to assess its impact (e.g. in relation to scope and reporting timeframes) in relation to the relevant national implementations.


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