European Union Sustainability Reporting Regulation
Updated April 15, 2026
The Corporate Sustainability Reporting Directive (CSRD) entered into force on January 5, 2023.
The CSRD created sustainability reporting obligations for businesses that meet the specified criteria. These businesses are required to report their sustainability matters in accordance with European Sustainability Reporting Standards (ESRS). The initial reporting deadlines are phased in over several years for different types of entities. Large, listed companies (Wave 1) are required to submit CSRD-compliant sustainability reports in 2025 based on 2024 data. Other large entities will follow in 2026, reporting based on 2025 data (Wave 2). Listed small and medium-sized enterprises (Wave 3) are required to report in 2027, based on 2026 data. Finally, non-EU companies with significant activities in the EU (Wave 4) must report in 2029, based on 2028 data.
However, in February 2026, the EU adopted the “Omnibus I” simplification package which reduced sustainability reporting requirements and narrowed the CSRD’s scope significantly.
Please refer to the “What’s the latest?” section for updates and changes.
Who’s impacted?*
- All large companies with securities listed on an EU-regulated market.
- "Large" EU companies that are not listed, with "large" defined as exceeding two of the three following criteria:
- Total assets of €25 million
- Net turnover (revenue) of €50 million
- Average of 250 employees
- EU companies of a "Large group" and not listed, with "Large group" defined the same as above, but for the consolidated group.
- Non-EU Companies that directly generate a net turnover of more than €150 million in the EU and have a subsidiary or branch in the EU that meets the criteria of a large company.
* The criteria listed here are guidelines only and should not be considered a substitute to professional / legal advice
What’s the latest?
On February 26, 2025, the European Commission adopted the “Omnibus I Package”, a set of legislative proposals to streamline EU sustainability regulations and reduce compliance burden for businesses.
Among other simplification measures, it proposed:
- That the CSRD apply to only the largest companies by increasing the employee threshold to those with more than 1,000 employees from 250;
- Postponing the initial reporting deadlines under the CSRD for Wave 2 and Wave 3 companies by 2 years ("Stop-the-Clock");
- Simplifying the European Sustainability Reporting Standards (ESRS), such as reducing the number of mandatory ESRS datapoints; and
- Keeping assurance level at "limited" assurance, not moving to "reasonable" assurance in the future.
The Stop-the-Clock proposal was approved by European Parliament on April 3, 2025 and the European Council on April 14, 2025.
The remaining proposals underwent the EU legislative process of review. They were adopted by the European Parliament on December 16, 2025 and the Council on February 24, 2026.
During the process, some of the proposals were further amended, notably:
- Listed SMEs (Wave 3) will be exempted from reporting.
- Thresholds for non-EU companies in scope of CSRD increased such that only companies that generate a net turnover of more than €450 million within the EU and have a subsidiary or branch in the EU with turnover exceeding €200 million are included.
The change in the CSRD scope will be applicable for financial years beginning on or after January 1, 2027.
What do Canadian CPAs need to know?
While the CSRD and therefore the ESRS do not directly apply to Canadian companies, Canadian companies with EU operations that meet the size requirements may be required to report sustainability information for their EU subsidiary(ies); or, if on a consolidated basis the criteria for a large group is met, consolidated sustainability reporting would be required, inclusive of non-EU operations.
It is not just companies that are subject to the CSRD regulation that will be impacted. The CSRD requires certain disclosures pertaining to the regulated entity’s value chain, which means companies that sit within the value chain of a regulated entity may be asked to provide information to the regulated entity. Refer to our article, Why Businesses Can’t Ignore Sustainability for more information.
However, when the Omnibus Directive amendments become effective in January 1, 2027, the impact on Canadian companies will be significantly reduced.
Where can I learn more?
For more information, please refer to our At a Glance: Sustainability Reporting Standards and Regulations and related FAQs.
You can also refer to: