The Corporate Sustainability Reporting Directive (CSRD) is the European Union law requiring large companies to publish independently assured sustainability disclosures alongside their financial statements. Companies report against the European Sustainability Reporting Standards (ESRS), applying a double materiality lens that covers both their impact on people and the environment and the sustainability risks facing the business.
Why It Matters for Manufacturers
Manufacturers are more likely than most sectors to remain in scope after the EU narrowed the directive, because the thresholds — 1,000 employees and €450 million in net turnover — describe a large industrial company.
The reporting burden also lands squarely in operations: a compliant CSRD report requires site-level energy, emissions, water and waste data across every plant, plus Scope 3 data from suppliers. Even manufacturers outside the directive feel it through their customers, since in-scope companies push data requests down the value chain.
A new “value chain cap” limits what in-scope customers can demand from suppliers with 1,000 or fewer employees, but the requests keep coming.
U.S. and EU Applicability
CSRD is EU law, but U.S. manufacturers reach its scope two ways: through EU subsidiaries that meet the thresholds on their own, or through the third-country regime. This covers non-EU parent companies with more than €450 million in EU net turnover and an EU subsidiary or branch above €200 million and applies to financial years starting in 2028.
U.S. suppliers outside scope still face ESRS-shaped data requests from EU customers.
Current Status
Last updated: July 2026
- The Omnibus I Directive (EU) 2026/470 entered into force March 18, 2026, raising scope thresholds to 1,000 employees and €450 million net turnover. The narrowed scope applies to financial years beginning on or after Jan. 1, 2027, with first reports due in 2028.
- First-wave companies that fall out of the new scope remain subject to existing requirements for fiscal 2025 and 2026 unless their member state transposes the optional exemption into national law.
- Revised, simplified ESRS were adopted by the European Commission on July 3, 2026, and are now in a parliamentary scrutiny period. They apply to financial years beginning on or after Jan. 1, 2027, with early adoption permitted for fiscal 2026 once the act enters into force.