Glossary · EU Sustainability Regulation CSRD (Corporate Sustainability Reporting Directive (Directive EU 2022/2464))
EU directive expanding and strengthening corporate sustainability reporting requirements. Replaced the 2014 NFRD. Phased applicability since 2024, expanding to ~50,000 EU companies by 2028. Requires audited reporting against European Sustainability Reporting Standards (ESRS) on environmental, social, and governance impact.
## What CSRD actually is
The Corporate Sustainability Reporting Directive (CSRD, Directive EU 2022/2464) is the EU's comprehensive corporate sustainability reporting framework. Adopted in late 2022 and applicable in phases from 2024 onward, it replaces the more limited 2014 Non-Financial Reporting Directive (NFRD) and substantially expands both the scope of in-scope entities and the depth of required disclosures.
CSRD operates through two layers: the directive itself (legal framework, in-scope entities, audit requirements) and the **European Sustainability Reporting Standards (ESRS)** — the technical disclosure standards covering specific topics (climate, biodiversity, workforce, supply chain, governance, others).
## Who's in scope
CSRD scope expanded significantly compared to NFRD:
### 2024-2025 (first wave)
Large public-interest entities already in NFRD scope plus newly added large companies. Approximately 11,000 entities.
### 2025-2026 (second wave)
All EU-listed and large EU companies meeting two of three criteria:
- 250+ employees
- €40M+ turnover
- €20M+ balance sheet total
Approximately 50,000 entities total by 2028.
### 2026-2028 (subsequent waves)
- Listed SMEs (with proportionate ESRS)
- Non-EU parent companies with significant EU operations (turnover >€150M in EU and one EU subsidiary or branch)
## What must be reported
CSRD requires comprehensive disclosure across the **ESRS framework**:
### Cross-cutting standards
- **ESRS 1**: General requirements
- **ESRS 2**: General disclosures
### Environmental
- **ESRS E1**: Climate change
- **ESRS E2**: Pollution
- **ESRS E3**: Water and marine resources
- **ESRS E4**: Biodiversity and ecosystems
- **ESRS E5**: Resource use and circular economy
### Social
- **ESRS S1**: Own workforce
- **ESRS S2**: Workers in the value chain
- **ESRS S3**: Affected communities
- **ESRS S4**: Consumers and end-users
### Governance
- **ESRS G1**: Business conduct
Each ESRS standard requires specific quantitative and qualitative disclosures, with **double materiality assessment** at the foundation — companies must report both how sustainability issues affect their business (financial materiality) and how their business affects sustainability matters (impact materiality).
## Why CSRD matters for tech procurement
CSRD might seem distant from cloud-vendor or SaaS-tool selection, but the implementation reality is more direct than it appears.
### 1. Supply-chain disclosure obligations
ESRS S2 (workers in value chain) and ESRS G1 (business conduct) require companies to disclose information about their suppliers. CSRD-reporting companies now actively request sustainability data from their technology vendors — including cloud providers, SaaS tools, and hardware suppliers.
For European SaaS and cloud vendors, providing CSRD-aligned supply-chain disclosure is becoming a competitive differentiator. Vendors that cannot or will not disclose this information are losing procurement opportunities with CSRD-reporting customers.
### 2. Climate disclosure (ESRS E1)
Energy consumption disclosure under ESRS E1 includes the energy footprint of digital infrastructure — increasingly material for companies with significant cloud spend. Several European cloud providers (Infomaniak, OVHcloud, others) provide detailed energy and CO2 reporting specifically aligned with CSRD expectations.
US hyperscalers provide energy reporting but typically less aligned with ESRS-specific disclosure formats. This is operationally relevant for CSRD-reporting customers.
### 3. Data Centre Energy Efficiency Directive interaction
The Energy Efficiency Directive (EED) recast — applicable since 2024 — requires data centres over 500 kW to report energy consumption annually. CSRD-reporting customers integrate this data into their ESRS E1 disclosures.
For cloud-vendor procurement, EED-compliant disclosure from your provider directly supports your own CSRD obligations.
### 4. Sovereignty reporting interplay
CSRD's governance disclosures (ESRS G1) interact with vendor-sovereignty questions. Companies disclosing their technology supply-chain dependencies are increasingly motivated to demonstrate EU-jurisdiction vendor relationships as part of strategic-risk management narratives.
## Assurance and audit requirements
CSRD introduces mandatory assurance of sustainability disclosures:
- **Limited assurance** required from initial application (2024-2026)
- **Reasonable assurance** required by 2028 (subject to Commission review)
- **Audit by statutory auditor or independent assurance service provider**
This is operationally significant — sustainability data must be auditable, which requires controls and documentation processes far beyond typical voluntary ESG reporting.
## CSRD and the Omnibus simplification (2025)
In early 2025 the European Commission proposed the "Omnibus Simplification" package — adjusting CSRD scope and timing in response to competitiveness concerns. Key changes under discussion:
- **Smaller companies removed from scope** (criteria raised)
- **Reporting timelines extended** for some categories
- **ESRS standards simplified** with reduced data point counts
- **Phased value-chain reporting** to ease initial burden
The Omnibus proposal is in legislative process through 2026. The political compromise outcome will determine final CSRD scope and timing — but the core framework remains.
## CSRD vs related frameworks
| Framework | Subject | Status |
|-----------|---------|--------|
| **CSRD** | EU corporate sustainability reporting | In force, phased applicability |
| **EU Taxonomy** | Sustainable economic activity classification | In force since 2022 |
| **SFDR** | Financial-services sustainable-investment disclosure | In force since 2021 |
| **CBAM** | Carbon border adjustment | In force 2023, full applicability 2026 |
| **Sustainable Products Regulation** | Product-level sustainability | Phased 2024-2030 |
CSRD is the corporate-disclosure layer; the others address specific topics or activities.
## What CSRD means in practice
### For European businesses in scope
CSRD compliance requires substantial process and infrastructure investment. Most in-scope companies are building sustainability data-management capability comparable to financial reporting infrastructure. The audit requirement is the operational pinch point.
### For EU SaaS and cloud vendors
CSRD-aligned supply-chain disclosure is becoming a procurement positive. Providers that publish detailed sustainability data — energy consumption, supplier transparency, governance documentation — are winning CSRD-reporting customers.
### For US-headquartered vendors
US vendors operating in EU markets face increasing demands to provide CSRD-compatible data even when not directly in CSRD scope themselves. This is creating asymmetric reporting overhead that pushes some procurement toward EU vendors with native ESRS alignment.
### For technology procurement teams
CSRD-aligned vendor evaluation is becoming standard at large European organisations. Procurement RFPs increasingly include sustainability-disclosure questions tied directly to ESRS data points the customer must report.
## Practical implications
- **For in-scope companies**: CSRD is a major operational programme requiring multi-year compliance investment
- **For vendors selling to in-scope companies**: provide ESRS-aligned disclosure to remain procurement-relevant
- **For European tech vendors**: this is a competitive opportunity — sustainability-aligned disclosure is increasingly differentiating
- **For US vendors**: expect to provide CSRD-relevant data even when not directly in scope
- **For policy and sustainability teams**: track Omnibus simplification outcomes through 2026 for revised scope and timing
The CSRD is the EU's most operationally significant sustainability regulation of the 2020s. Its interaction with technology procurement is real and growing — sustainability reporting is increasingly shaping vendor selection in ways that were not visible two years ago.
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