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CSRD: What the EU's Sustainability Reporting Directive Means for Carbon Data and Compliance

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The Corporate Sustainability Reporting Directive (CSRD) is the European Union's landmark regulation for corporate sustainability reporting. It replaces the earlier Non-Financial Reporting Directive (NFRD) and dramatically expands both the number of companies required to report and the depth of information they must disclose. Under CSRD, large companies — and eventually listed SMEs and non-EU companies with significant EU operations — must publish detailed, standardized sustainability disclosures covering their environmental, social, and governance (ESG) performance according to the European Sustainability Reporting Standards (ESRS).

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At its core, CSRD is about making sustainability data as rigorous and comparable as financial data. It introduces mandatory third-party assurance, a principle of double materiality, and — crucially for manufacturers and industrial companies — a requirement to disclose Scope 1, 2, and 3 emissions across the full value chain.

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What CSRD requires companies to disclose

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CSRD reporting goes far beyond a general sustainability statement. Companies must disclose:

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• GHG emissions across all three scopes — direct emissions (Scope 1), energy-related emissions (Scope 2), and all indirect value chain emissions (Scope 3), including upstream supply chain and downstream product use
• Climate transition plans — how the company intends to align with the Paris Agreement and reach Net Zero
• Double materiality assessment — both how sustainability risks affect the company financially and how the company's activities impact people and the planet
• Governance structures overseeing sustainability matters
• Supply chain impacts — upstream and downstream environmental and social effects
• Measurable targets and KPIs, with year-on-year progress tracking aligned with ESRS requirements

All disclosures must be audit-ready and subject to external assurance — making data quality and traceability non-negotiable requirements, not just best practices.

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Who must report under CSRD, and when

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CSRD is being introduced in phases:

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• 2025 (reporting on 2024 data): Large public-interest companies already covered under NFRD (500+ employees, listed in the EU)
• 2026 (reporting on 2025 data): All other large EU companies meeting at least two of: 250+ employees, €50M+ turnover, €25M+ total assets
• 2027 (reporting on 2026 data): Listed SMEs (with opt-out possibility until 2028)
• 2029 (reporting on 2028 data): Non-EU companies with €150M+ net turnover in the EU and at least one EU subsidiary or branch

Even companies not yet in scope are increasingly affected indirectly: CSRD requires in-scope companies to collect Scope 3 data from their suppliers, which means supplier companies — regardless of their own reporting obligations — face growing data requests from customers.

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Why Scope 3 makes CSRD a supply chain challenge

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Of all the disclosures CSRD requires, Scope 3 emissions represent the most significant data challenge. For most manufacturers, Scope 3 accounts for 70 to 90 percent of the total carbon footprint — and it is the category most dependent on external data: from raw material suppliers, logistics providers, and downstream product use.

To meet ESRS E1 requirements (the climate-focused ESRS standard), companies need granular, verifiable CO₂e data at material and process level across their supply chains. Generic or estimated data will not hold up to third-party assurance. This is why reliable primary and secondary emission factors — aligned with GHG Protocol and ISO 14067 methodology — are not just useful for PCF calculations, but essential for CSRD compliance.

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CSRD and product-level carbon reporting

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CSRD intersects directly with Product Carbon Footprint (PCF) calculations and Life Cycle Assessment (LCA) methodology. Product-level emissions data is increasingly required both as an input to Scope 3 category reporting and as a standalone deliverable for customer-facing disclosures and regulatory submissions. Companies that invest in systematic PCF calculation — covering their full product lifecycle from raw material extraction through end-of-life — are building the same data infrastructure that CSRD requires at the corporate level.

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This overlap with other sustainability regulations is also significant: CSRD, CBAM, the EU Battery Regulation, and ESPR all draw on similar underlying data — verified CO₂e values at material and process level. Companies managing these requirements in isolation are duplicating effort; those that integrate their carbon data infrastructure get CSRD-ready and PCF-ready simultaneously.

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CSRD and double materiality

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One of CSRD's most distinctive requirements is double materiality: companies must assess sustainability topics from two angles simultaneously. Financial materiality asks how sustainability issues — climate risks, regulatory changes, resource scarcity — affect the company's own financial performance and business model. Impact materiality asks how the company's operations affect the environment and society. Both perspectives must be disclosed, which makes CSRD significantly more demanding than voluntary ESG frameworks like CDP or GRI, which typically focus on financial materiality alone.

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How to prepare for CSRD

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CSRD preparation involves several interconnected steps. Companies need to conduct a double materiality assessment to identify which ESRS topics are relevant to their business; establish a data collection and management infrastructure capable of capturing Scope 1, 2, and 3 emissions with audit-level traceability; close supply chain data gaps by engaging suppliers or using verified secondary emission factors where primary data is unavailable; and integrate carbon reporting workflows with existing sustainability, finance, and procurement systems. Understanding how LCA and PCF methodologies connect to CSRD disclosures is a practical starting point for product-oriented companies. For procurement teams, CSRD creates a direct business case for supplier CO₂e data collection programs.

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Want to build audit-ready carbon data for CSRD compliance?

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Explore our CO₂e database and PCF calculation tools, or contact our team to access the sustamizer® and generate verified, ESRS-aligned emissions data across your full value chain.

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