Extended reporting obligations for companies regarding sustainability

Corporate Sustainability Reporting Directive - CSRD

The European Union plans to amend the EU directive regarding corporate social responsibility reporting (2014/95/EU). This will expand existing reporting requirements and require many companies to report on sustainability for the first time. 

Who is affected?

  • Companies to which the reporting obligations (Section 289b to Section 289e German Commercial Code, HGB) already apply.
  • Companies meeting at least two of the following criteria:

          -  At least 250 employees on average,
          -  Balance sheet total of more than EUR 20 million; or
          -  Net turnover of over EUR 40 million.

  • Publicly listed small and medium-sized enterprises (SMEs).
  • Non-EU companies with:

          -  Net turnover of more than EUR 150 million in the EU; and
          -  Subsidiary or branch in the EU.

What's new?

Uniform standards for sustainability reporting will be introduced. The European Financial Reporting Advisory Group (EFRAG) has already published an interim draft for this.

The scope of reporting will be extended:

  • In addition to the sustainability goals of the company, reports shall focus on sustainability aspects following the principle of double materiality.
  • This includes the impact of sustainability aspects on the company and its business performance, as well as the impact of the company and its value chain on sustainability aspects.

The sustainability report will be included in the management report.

There are also plans to introduce an obligation for external auditing of the sustainability report.

When do the new rules apply?

The duties will be introduced gradually:

  • For companies currently obliged to report: On 1 January 2024 (first reporting in 2025);
  • For companies that not currently obliged to report: On 1 January 2025 (first reporting in 2026);
  • For publicly listed SMEs: on 1 January 2026 (first reporting in 2027), with option to opt-out until 2028.

The Directive shall be adopted in 2022, and implemented into national law by the end of 2022.

Which sanctions are planned?

Member states shall introduce penalties for breaches, including substantial fines. Under the current reporting requirements, inaccurate representations constitute a management offence, punishable by imprisonment of up to three years or a fine (Section 313 No. 1 German Commercial Code - HGB).

Breaches of the planned extended reporting obligations are likely to result in comparable sanctions.

What does management have to do?

Management must organise the company accordingly and have suitable reporting structures in place. Because of the short deadlines, preparations should start now.

This will require an assessment of the following:

  • What are the requirements for the company's sustainability report?
  • Which structures on the topic of sustainability are available already? Which data is at hand?
  • Is further expertise needed - also among the administrative, management and supervisory bodies?
  • Which topics should be included in the sustainability report? Who is responsible?

  • What impact does the adjustment process have on the company?
  • How can monitoring and reporting processes be implemented permanently?


  • For many companies the topic of sustainability is gaining in importance.
  • The reporting obligations will expand and affect significantly more companies.
  • Violations of reporting obligations will be sanctioned heavily. Management may be personally liable.
  • Management should keep track of legislative developments. Companies should start to set up appropriate reporting structures already now.


EU draft directive

Draft reporting standards