This new directive marks a fundamental change in how companies report on their impact on people and the environment. Where the focus was previously on financial reporting, the CSRD brings sustainability reporting to an equivalent level of importance and quality. This article delves into the core of the CSRD, explores which companies must comply, the reporting requirements, and how Microsoft’s and Intwo’s IT solutions can play a crucial role in this complex process.
The Corporate Sustainability Reporting Directive (CSRD) is a new European rule. This rule modernizes and expands the rules for sustainability reporting. It succeeds the Non-Financial Reporting Directive (NFRD). The CSRD aims to improve the quality and reliability of sustainability information.
The goal is to provide investors and other stakeholders with insight into your company’s impact on people and the environment. This allows them to make better decisions. The CSRD should also encourage companies to adopt more sustainable practices.
A core concept within the CSRD is the principle of double materiality. This means that companies must report on:
The CSRD requires companies to report according to the European Sustainability Reporting Standards (ESRS). These standards provide detailed guidelines on the specific information that companies must report regarding environmental, social, and governance aspects. This includes CO2 emissions, gender equality, working conditions, and relationships with suppliers.
The CSRD applies to many more companies than the old rules. According to the Social and Economic Council (SER), there are recent developments in the application of the Corporate Sustainability Reporting Directive (CSRD) that affect which companies must comply with this directive in 2025.
These companies, such as listed companies, banks, and insurers with more than 500 employees, were already required to report under the Non-Financial Reporting Directive (NFRD). They are obligated to report according to the CSRD from the 2024 financial year, which means they must publish their first sustainability report under the CSRD in 2025.
Originally, large companies that meet two of the following three criteria: more than 250 employees, a turnover of more than €50 million, or a balance sheet total of more than €25 million, would have to report under the CSRD from the 2025 financial year. However, according to the European Commission’s recent ‘omnibus proposal,’ as discussed by the SER, it is proposed to raise the threshold to companies with more than 1,000 employees, in addition to a turnover of more than €50 million and/or a balance sheet total of more than €25 million. This proposal would mean that listed SME companies would no longer fall under the directive and that a total of 80% of companies would no longer be required to report.
Listed small and medium-sized enterprises (SMEs) would originally have been required to report under the CSRD from the 2026 financial year. However, with the new proposal, these companies would no longer be subject to the obligation, unless they choose to report voluntarily.
Companies from outside the EU are required to prepare a sustainability report if they meet certain criteria, such as a net turnover of more than €150 million within the EU, or if they have an EU subsidiary that qualifies as large.
It is important to emphasize that these changes are still proposals and subject to approval and implementation. It is advisable to closely monitor developments and prepare for any obligations in a timely manner. Even if your company is not directly subject to the CSRD, you may be affected by it. Large companies that do have to report may request information about your sustainability efforts.
The CSRD requires thorough preparation. These are important steps:
Good preparation is essential to comply with the CSRD on time.
CSRD reporting can be complex. Microsoft has several tools that can help you:
By using these Microsoft tools, you can make CSRD reporting more efficient and accurate. They help with managing data, reporting according to the ESRS, digital submission, and preparing information for the accountant.
The CSRD fundamentally changes sustainability reporting. Your company must be seriously committed to transparency and accountability in the areas of environment, society, and good governance. Implementation can be challenging, but it also offers opportunities to improve your sustainability strategy and create value.
Intwo is ready to guide you through this crucial transition. Our expertise in Microsoft’s IT solutions, including Microsoft Cloud for Sustainability, Power Platform, Dynamics 365 ERP, Microsoft Purview, and Microsoft Fabric, provides your organization with the tools to efficiently collect data, report accurately, and meet the stringent requirements of the ESRS. Discover how these powerful technologies not only ensure your compliance but also generate valuable insights that contribute to a more sustainable and successful future for your business.
Contact us now to take action.
The Corporate Sustainability Reporting Directive, or CSRD, is a European regulation that modernizes and expands the rules for sustainability reporting. It replaces the older Non-Financial Reporting Directive and requires companies to report on their impact on people and the environment with the same level of detail and quality as financial reporting. The goal is to give investors and stakeholders clear insight into how a company handles environmental, social, and governance issues. It is not optional for companies that fall within its scope.
The CSRD was originally designed to apply in phases, starting with large public-interest entities and eventually expanding to listed small and medium-sized enterprises and non-EU companies with significant EU operations. However, recent updates through the Omnibus I Directive have raised the thresholds, meaning only large companies meeting the new size criteria will be required to report. If your business operates in the EU or has significant activity there, it is important to check whether you fall within the updated scope and understand the timeline that applies to your situation.
Double materiality is a core concept of the CSRD. It means companies must report from two perspectives. First, they need to disclose how sustainability issues like climate change or resource scarcity could create financial risks for the business. This is called financial materiality. Second, they must report on how their own operations impact people and the environment, such as biodiversity loss or human rights issues in the supply chain. This is called impact materiality. Both perspectives must be addressed in your sustainability report.
The ESRS are the detailed guidelines that define exactly what information companies must include in their CSRD sustainability reports. They cover a wide range of topics including CO2 emissions, energy use, water consumption, gender equality, working conditions, governance practices, and supply chain relationships. The standards are designed to ensure consistency and comparability across companies. Recent updates aim to simplify the ESRS to reduce the reporting burden, but companies still need to provide thorough and accurate data across environmental, social, and governance categories.
Traditional financial reporting focuses on revenue, profit, assets, and liabilities. CSRD reporting goes beyond the numbers to cover how a company affects the environment and society. It requires detailed disclosures on topics like carbon emissions, diversity policies, labor conditions, and governance structures. The CSRD brings sustainability reporting to the same level of importance as financial reporting, meaning it must be audited and included in your annual management report. This shift requires new data collection processes, new metrics, and often new technology to manage it all properly.
The biggest challenges include collecting accurate sustainability data from across the organization and supply chain, managing data that often sits in disconnected systems, keeping up with evolving regulatory requirements, and preparing reports that meet audit-level standards. Many companies still rely on manual processes and spreadsheets, which are prone to errors and cannot scale. The complexity of tracking Scope 1, 2, and 3 emissions alone can be overwhelming. These challenges make it essential to invest in the right technology and partnerships to handle CSRD reporting effectively.
Microsoft offers several tools that support CSRD compliance. Microsoft Cloud for Sustainability helps you collect, manage, analyze, and report sustainability data from various sources. Microsoft Purview Compliance Manager includes a CSRD-specific template that helps you understand the rules, assess risks, and track your compliance progress. Sustainability data solutions in Microsoft Fabric let you create a unified view of all your sustainability data for improved accuracy. Power Platform and Dynamics 365 ERP can also help by automating data collection and linking operational data like energy consumption directly to your reporting workflow.
Dynamics 365 ERP contains critical operational data that feeds directly into CSRD reporting. This includes information on energy consumption, supply chain activities, procurement, and logistics. Because Dynamics 365 centralizes your business operations, it provides a reliable foundation for tracking sustainability metrics across departments. When connected to Microsoft Cloud for Sustainability, it allows you to pull real-time data into your reporting process without manual extraction. This reduces errors, improves accuracy, and makes it much easier to meet the CSRD’s detailed disclosure requirements.
While CSRD compliance does require significant effort, it also creates real business opportunities. Companies that report transparently on sustainability build stronger trust with investors, customers, and partners. The process of collecting and analyzing sustainability data often reveals areas where you can reduce costs, improve efficiency, and lower your environmental footprint. It also helps you identify supply chain risks before they become problems. Businesses that treat CSRD as a strategic initiative rather than just a checkbox tend to come out ahead with a stronger brand and more resilient operations.
Intwo brings deep expertise in Microsoft technologies like Dynamics 365, Power Platform, Microsoft Fabric, and Azure to help businesses build the data infrastructure needed for CSRD reporting. They can help you centralize sustainability data from across your organization, automate collection processes, and create accurate reports aligned with ESRS standards. Intwo also helps integrate your ERP and cloud systems so that operational and sustainability data work together seamlessly. Whether you are just starting your CSRD journey or looking to optimize existing processes, Intwo provides the guidance and technology to make compliance manageable.
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