Why early preparation for CSRD reporting in 2026 is essential for compliance
The Corporate Sustainability Reporting Directive (CSRD) is setting new standards for sustainability reporting across the European Union.
According to Greenomy, building on the foundations of the Non-Financial Reporting Directive (NFRD), the CSRD aims to enhance transparency and create a uniform reporting landscape for over 50,000 companies. This directive compels businesses to provide detailed accounts of their impacts on environmental, social, and governance (ESG) aspects, incorporating up to 1,200 distinct data points.
For firms previously governed by the NFRD, the transition might seem less daunting due to their experience in materiality assessments and sustainability reporting. However, for many entering this arena for the first time, the CSRD represents a significant challenge. As the 2026 deadline for the fiscal year 2025 reports approaches, it’s a common error for businesses to postpone preparation until mid-2025, a strategy that risks the comprehensive and timely gathering of necessary data and could complicate auditing processes.
The path to compliance starts now. Understanding the timeline and requirements is crucial. The CSRD dictates that large companies not covered by the NFRD must prepare their reports based on data from 2025, which means they must meet at least two of these criteria: more than 250 employees, a net turnover exceeding €50m, or total assets over €25m. Reports for the fiscal year must be published within 6 to 12 months after year-end, depending on national transpositions of the directive.
Many large entities hold the misconception that the first reporting year will serve as a trial period, underestimating the rigor required. The European Commission has granted additional preparation time to these “Wave 2” companies, not as a grace period, but as a critical window to establish processes, conduct dry runs, and ensure data accuracy for the initial reporting cycle. Moreover, with penalties for non-compliance already steep in countries like France and Germany, it’s evident that regulatory leniency in the first year is unlikely.
The preparation process is comprehensive. Most companies are initiating their Double Materiality Assessments (DMA), with findings aiding the subsequent data Gap Analysis. It’s advisable to break down the extensive disclosure requirements of the European Sustainability Reporting Standards (ESRS) into manageable segments, beginning with areas where some data may already be available, such as E1 (Climate Change) and S1 (Own Workforce).
To expedite the Gap Analysis, leveraging a digital reporting tool can be highly beneficial. These tools facilitate data consolidation across departments, highlight deficiencies, and accelerate remediation efforts. Engaging auditors early can also prevent potential roadblocks, ensuring that the data collated meets audit standards from the outset.
For companies yet to commence their DMA, it’s imperative to start immediately. Completing this assessment typically spans three to four months, with the Gap Analysis and data collection for material ESRS extending into early 2025. This proactive approach not only aligns with regulatory expectations but also solidifies the foundation for successful and compliant reporting in 2026.
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