CSRD & ESRS — Double Materiality, Data Collection & Digital Submissions

The Corporate Sustainability Reporting Directive (CSRD) replaces the Non-Financial Reporting Directive (NFRD) and dramatically raises the bar for sustainability disclosure in the EU. Where the NFRD applied to roughly 11,000 companies with relatively flexible reporting, the CSRD introduces mandatory reporting against a detailed standard (ESRS), requires third-party assurance (initially limited, moving toward reasonable assurance), demands digital tagging (XBRL) of disclosures, and - critically - requires a double materiality assessment that evaluates both how sustainability issues affect the company (financial materiality) and how the company affects people and the environment (impact materiality). Reports must be included in the management report, not buried in a standalone CSR document.

The Omnibus I Directive (EU 2026/470), published in February 2026, significantly narrowed the CSRD’s scope. The original four-wave phased rollout has been replaced with a simpler threshold: only EU entities (or non-EU issuers listed on EU-regulated markets) with more than 1,000 employees and over €450 million net turnover are now subject to mandatory CSRD reporting. Wave 2 companies (large companies below these thresholds) and Wave 3 (listed SMEs) have been either delayed or removed from mandatory scope entirely. Listed SMEs are encouraged to report voluntarily using a simplified VSME framework. Wave 1 companies already reporting for FY2024 that fall below the new thresholds may be exempt for FY2025 and FY2026, depending on national transposition. The bottom line: confirm your entity-level scoping against the revised thresholds before committing resources.

The "Stop-the-Clock" Directive (EU 2025/794), adopted in April 2025, postponed CSRD application for Wave 2 and Wave 3 entities by two years. Combined with the Omnibus scope changes, the practical timeline is now: Wave 1 entities (large public-interest entities already reporting) continue reporting - with "quick fix" ESRS reliefs that maintain the same level of effort as FY2024 for FY2025 and FY2026. Wave 2 companies (those still in scope under the new thresholds) will first report in 2028, covering FY2027. The simplified ESRS delegated act is expected to be adopted by September 2026, giving companies the revised standards in time to prepare for the FY2027 reporting cycle. For most companies, 2026 is a preparation year - focused on confirming scope, running or refreshing double materiality, and building data collection processes - not a full reporting year.

Yes - double materiality remains mandatory and is the methodological foundation of CSRD reporting. It has not been removed or made optional under the Omnibus reforms. Double materiality requires companies to assess each sustainability topic from two perspectives: impact materiality (how the company’s activities affect people, the environment, and society) and financial materiality (how sustainability issues create risks or opportunities that could materially affect the company’s financial position). If a topic is material from either lens, it must be reported on. The output is a materiality matrix that determines which ESRS topics and datapoints are in scope for your disclosures. The simplified ESRS streamlines how you conduct and document the assessment, but the core requirement to perform it - and to have it be defensible under assurance - hasn’t changed.

EFRAG submitted its final technical advice on simplified ESRS to the European Commission in December 2025. The Commission is expected to adopt the delegated act by September 2026. Key changes include: fewer mandatory datapoints overall, more emphasis on materiality as the filter for what’s disclosed, removal of sector-specific ESRS standards, clearer alignment with ISSB (particularly on GHG emissions boundaries and financial impact disclosures), and a "value-chain cap" that limits the data-collection burden smaller companies face when asked for information by reporting entities. Some previously mandatory disclosures move to "may disclose" or illustrative guidance. But the structural framework - ESRS E1 through S4, plus governance standards - remains intact. For companies already collecting data against the original ESRS, this means some datapoints can be dropped and others simplified, but the core reporting architecture (materiality → topic mapping → evidence → digital tagging) stays the same.

Substantially, yes - but not one-to-one. The ESRS were designed with interoperability in mind: there are significant overlaps with GRI (particularly on impact-side disclosures), and the simplified ESRS further aligns with ISSB standards (which underpin SASB’s evolution). CDP questionnaire responses also map to several ESRS climate and environmental datapoints. However, ESRS has its own structure, specific datapoint definitions, and digital tagging requirements that GRI or CDP don’t share. The practical approach is to build crosswalks - mapping each ESRS datapoint to your existing GRI/SASB/CDP disclosures - and then identifying the gaps (datapoints unique to ESRS, evidence requirements, and the double materiality assessment itself, which GRI and SASB don’t require in the same form). This avoids duplicate data collection across frameworks while ensuring your CSRD submission meets the specific ESRS evidence and format requirements.