The reporting law, also called the Corporate Sustainability Reporting Directive (CSRD) represents a big step forward when it comes to company reporting. With the European Union's goal set on Net Zero 2050, companies will need to start reporting on (timing depending on size of company) their full environmental and social impact next to their financial results.

This reporting law is a key part of the European Green Deal and has the goal to make sustainability reporting more transparent and easier to compare throughout the EU. It will also increase the trustworthiness as the reporting needs to be audited and verified by external auditors. This increased clarity helps all stakeholders to properly understand a company's sustainability efforts leading to more informed decisions.

With ESG as the framework to report on, the reporting law will build on current reporting standards, segmenting environmental, social, and governance (exact measurements are written down in the framework of European Sustainability Reporting Standards/ESRS if you want to know the details).

Environmental impact covered in two main areas:

Products: For each product you sell, you will need to report on environmental impact. This includes things like CO2 emissions, climate risk, and water usage. This data, along with other key product information, will be visible in the Digital Product Passport.

Corporate: This part focuses on your company's overall operational impact not tied directly to products. Think about things like company cars, heating your buildings, or office supplies and waste.

Social impact: An organisation needs to report on equal opportunities, fair wages, health & safety, human rights etc. This applies not only to your company, but to your entire supply chain. This means using supply-chain partners with certifications and factory audits is key to provide solid data, proving your commitment to ethical practices.

Governance: Highlights a company's commitment to responsible leadership and ethical conduct. It includes policies and procedures for things like grievance mechanisms and whistleblower protection, ensuring transparency and accountability in all decision-making, but also assures compliance with other European product laws like the Product Safety Legislation.

The reporting law will be implemented in different phases:

In 2025, large, listed companies that are already doing similar reporting under an older EU law called the Non-Financial Reporting Directive (NFRD) will need to report on their 2024 data.

In 2026 large EU companies meeting at least two of these three criteria: over 250 employees, over €50M net turnover, or over €20M balance sheet total, will need to report on 2025 data.

In 2027 large non-EU companies operating in the EU, would need to comply and report on 2026 data. Meaning that if a company is based outside the EU but has a significant economic footprint within the EU, then the mandatory reporting would apply. In this case the company would need to have either a net turnover of over €150 million in the EU for at least two financial years in a row, a large EU subsidiary, or a substantial EU branch with over 250 employees, over €40M net turnover, or over €20M balance sheet total.

The goal with this is to create a level playing field and ensure that major players in the EU market, regardless of where they are headquartered, are transparent about their sustainability impacts.

Why these thresholds might change: The EU's "Omnibus package," which aims to simplify several sustainability laws, is currently under negotiation. Because of this, the thresholds we refer to throughout this article are based on what is officially in place right now. We are committed to keeping you informed and will update this text as soon as the package's adjustments are signed into law!

While Small and Medium-sized Enterprises (SMEs) have been excluded from mandatory reporting under this law, they are still encouraged to report. This adjustment means that roughly 80% of companies in the EU will not be directly required to comply with the reporting law.

Want to learn about the details? You can find it here!