If your clients include any of the 50,000+ corporations soon to be affected by the European Union’s Corporate Sustainability Reporting Directive (CSRD), getting up to speed can feel overwhelming. They’re looking to you for expertise, but it’s hard to be an expert in regulation that has only recently begun to roll out.
With the right resources to orient you and the tools to support your team, you can help your clients achieve CSRD compliance quickly and painlessly. This introduction and step-by-step guide will take you through the key things consultants need to know about the CSRD and how to prepare clients for the CSRD, no matter how ready they are.
Who is affected by the CSRD reporting requirements?
The CSRD applies to a broader range of companies than its predecessor, the Non-Financial Reporting Directive (NFRD). Private companies, large non-EU firms, and listed SMEs will now have reporting obligations.
These are the categories of companies that will be subject to CSRD reporting mandates:
1. Companies already covered by the NFRD
- Who: Large Public Interest Entities (PIEs) previously subject to the NFRD
- When: January 1, 2024 (first reports due in 2025)
2. All large EU companies
- Who: Any company—whether publicly listed or private—that meets at least two of the following criteria:
- 250+ employees
- €25 million+ in total assets (balance sheet total)
- €50 million+ in net turnover
- When: January 1, 2026 (reporting on FY 2025)
3. Listed small and medium-sized enterprises (SMEs)
- Who: SMEs listed on an EU-regulated market
- When: January 1, 2027 (reporting on FY 2026)
- Exception: SMEs can opt out for two years and delay reporting until 2029 if needed
4. Large non-EU companies with significant EU revenue
- Who: Companies headquartered outside the EU but generating substantial business within the EU. Specifically, those with:
- €150 million+ in net turnover from EU operations
- When: January 1, 2029 (reporting on FY 2028)
What are the CSRD reporting requirements?
The CSRD reporting requirements raise the bar on sustainability disclosures. Globally, they are the most rigorous ESG reporting requirements that have come into existence to date, including voluntary predecessors like the TCFD. The CSRD will likely set the standard for regulations from other jurisdictions in the future.
You can dive deeper into the CSRD by watching our free webinar, Unpacking the European Union’s CSRD.
Sustainability impacts and risks
To comply with CSRD, companies must assess and report on the sustainability-related impacts, risks, and opportunities that affect their business. This involves conducting a materiality assessment to identify environmental, social, and governance (ESG) factors that influence operations, strategy, and financial performance. The ESRS framework focuses not just on identifying risk but also on managing it. It requires businesses to disclose material risks—from climate change and resource depletion to human rights concerns—while also outlining how they mitigate these risks and seize sustainability-related opportunities.
Retrospective and forward-looking data
CSRD reporting is not just about past performance; it also asks companies to present short-, medium-, and long-term sustainability goals. By disclosing historical data alongside future projections, companies give a full picture of their sustainability journey, demonstrating where they’ve come from, where they’re going, and where they are now. Publicly disclosing their sustainability goals should, in theory, hold companies accountable for making progress on their ESG over time.
Double materiality
One of the most significant shifts under CSRD is the concept of double materiality. Companies must report on:
- Financial materiality: How sustainability issues impact the company’s performance, strategy, and financial health.
- Impact materiality: How the company’s operations, products, and services affect the environment and society.
This dual perspective ensures that sustainability reporting captures not just business risks but also the broader social and environmental consequences of corporate activities.
Comprehensive value chain reporting
To meet ESRS standards, businesses must go beyond their direct operations and report on their entire value chain. This includes both upstream and downstream relationships, covering suppliers, partners, and product life cycles. Companies must collect and disclose both qualitative and quantitative data, highlighting sustainability risks and opportunities across their extended business ecosystem.
Third-party assurance
The CSRD is designed to make sure sustainability disclosures are reliable. To this end, it requires that companies obtain third-party assurance on their disclosures, meaning that an independent auditor or certifier must verify the accuracy, reliability, and completeness of reported data. This external validation ensures the disclosures can be trusted. Initially, disclosures will only require ‘limited assurance,’ but this may expand to ‘reasonable assurance’ within a few years of the initial rollout, increasing your clients’ assurance burden.
Compliance with ESRS
Under the CSRD, companies must structure their reports according to the 12 European Sustainability Reporting Standards (ESRS). The first two standards, ESRS 1 and 2, are broader and are mandatory for all reporting companies.
The remaining 10 standards are the ‘topical standards.’ These cover a wide range of environmental, social, and governance topics, including:
- Climate change and biodiversity
- Resource use and circular economy
- Workforce diversity and labor practices
- Business ethics and governance policies
Not every company will need to report to every topical standard. Companies only need to report on standards that align with the sustainability risks identified during their materiality assessment.
Management reporting
The CSRD also dictates how sustainability data should be integrated into corporate reporting, which differs depending on the company’s location.
- EU-based companies: Sustainability disclosures must be included within the management report, ensuring that financial and sustainability data are presented together.
- Non-EU parent companies: If they meet CSRD thresholds, non-EU companies must provide a separate sustainability report covering their EU operations.
This integration reinforces the principle that sustainability is a core business consideration, not a separate initiative, while also acknowledging that CSRD disclosures may not be a core focus for non-EU companies.
Strategic sustainability reporting
Beyond compliance, the CSRD wants to see companies strategically embed sustainability into their business models. Companies must report on:
- Sustainability strategies and long-term objectives
- Specific targets and measurable progress
- Sustainable products and services
- Business relationships and supply chain sustainability
- Incentive programs tied to ESG performance
This emphasis on clear commitments and measurable results is one way that complying with CSRD can also improve a company’s credibility with other stakeholders, like investors, regulators, and the public.
12 steps to prepare your clients for CSRD reporting
Understanding what’s required is one thing, but guiding clients through complying with CSRD is a new and potentially daunting task for consultants. Manifest Climate’s experts have identified 12 key steps consultants should take to help clients get CSRD-ready.
1. Understand whether the company is subject to CSRD reporting requirements
Consultants can help clients identify whether their business activities, size, and industry fall under CSRD compliance requirements. This can offer much-needed clarity to companies that may be understandably confused about whether the CSRD will affect them. If they are subject to CSRD reporting requirements, the timing of these reporting requirements may depend on the company size and type (see above).
Remember, though a client may not be directly subject to CSRD reporting requirements if it supplies to companies that will be subject to CSRD, your client may still need to collect and report on ESG-related information to help their customers fulfill supply chain reporting requirements.
2. Get to know the client’s goals
As with any project, it’s important to understand the outcome your client wants to achieve. In the case of disclosure compliance, consultants often forget that compliance isn’t always the end goal. Ask your client whether strict compliance is their sole focus or whether they are looking to use CSRD reporting in other ways, such as as a catalyst for organizational change. Their answers may surprise you. Either way, knowing their goals upfront will help you steer the engagement toward a result the client will be happy with.
3. Set expectations on timing
It’s worth explaining to your clients that CSRD is not a one-and-done activity; it’s a year-round exercise with concentrated efforts in the months before the reporting deadline. Because there’s so much involved when complying with CSRD, be sure to establish a clear timeline for activities such as data collection, drafting, assurance, and feedback loops.
4. Evaluate existing reporting assets and capacity
It’s likely that many of your clients won’t be starting from absolute zero with sustainability data and reporting. If they’re large enough, they’ve likely produced a sustainability report in the past, provided sustainability-related information to their investors, or even conducted assessments for their own internal use.
This means you may not have to start from scratch when compiling their CSRD disclosures. The smartest step to take here is to run your client’s existing sustainability information through an AI-powered ESG compliance tool like Manifest Climate, which can give you a detailed breakdown of how compliant your client already is with various ESRS standards and highlight the key data gaps to fill. Conducting a first-pass compliance review with AI can speed up this stage of the process by as much as 10X.
Beyond reported content, it’s also worth asking your client how they’ve typically reported on sustainability information in the past, including the team members, processes, and tools they’ve used. This will help you integrate existing practices (if they’re working well) into a new, streamlined approach designed for more sophisticated disclosures like CSRD.
5. Determine reporting requirements
The CSRD is not a one-size-fits-all approach to sustainability reporting. Disclosure requirements vary dramatically depending on a company’s material sustainability risk factors. It’s important to work with your client early on to determine which of the CSRD’s 10 topical ESRSs they will need to report on and whether any industry-specific reliefs may apply. This will also help you gauge the scope and potential timeframe of the project.
6. Guide materiality assessments
Materiality assessments are complex undertakings. In the case of CSRD reporting, materiality assessments will directly affect the scope of your client’s reporting requests, so it’s important that clients don’t leave these assessments up to individual team members, under-resourced sustainability teams, or employees who have not done this before.
Instead, we recommend guiding your clients through the materiality assessment process to keep it highly aligned with CSRD requirements. Work collaboratively with a wide range of stakeholders within the company to identify sustainability-related risks and opportunities.
We also recommend bringing peer materiality assessments into the discussion, which is highly informative but difficult to do at scale without an AI tool like Manifest Climate. If you are using Manifest Climate, you’ll be able to quickly see line-item-specific information from as many peers as you choose via a quick search. This can make your own materiality assessment process go much faster, as you’re no longer starting from a blank slate.
7. Establish a detailed project plan
Work with your client (but take the leading role) to create a comprehensive roadmap that incorporates timelines, responsibilities, and key milestones, factoring in the findings from earlier steps.
8. Collect the data
This is probably the most critical and also the most difficult and time-consuming part of CSRD compliance. During this phase, you’ll need to work with your clients and do your best to make the data collection process as easy for them as possible, perhaps by setting up various tools and systems to make the process smoother. Help your clients account for all data needs and sources, gathering accurate and complete raw data that covers all their CSRD compliance needs.
9. Assess the data
The previous step typically leaves you with large amounts of unfiltered data that needs to be assessed, processed, and refined before it can become part of your CSRD report. Once you have all the data you think you’ll need, take your time combing through the data to ensure all of it is relevant for your report (if not, take it out of the equation—you don’t need unnecessary data clogging up the process).
Conduct your assessment with your materiality assessment and the ESRS standards close by to make sure the data you have is indeed the data you’ll need.
10. Draft the report
If you’ve got all the right data and, ideally, a report-drafting tool to help you, this stage of the process should be fairly painless. If possible, seek out best practice examples for each line item, something you can do rapidly and at scale with Manifest Climate.
No matter how comprehensive your initial data collection and assessments were, you’re still likely to find data gaps as you draft. That’s okay—just deal with these as early as you can, and don’t let them hold up other parts of the report.
11. Complete assurance
Every CSRD report must be externally validated to verify its accuracy and reliability. Your clients may be looking for your guidance here, so it can be helpful to recommend CSRD-competent assurance providers you may know of or have worked with before. Guide your clients through the vetting process for selecting an assurance provider. Although this is Step 11, we recommend vetting and selecting an assurance provider well before drafting your report so that this step does not hold up the actual assurance process.
12. Debrief and plan for future reporting
Although you may feel like you need a vacation after wrapping up a client’s CSRD reporting for the year, the immediate aftermath is the perfect time to set your team and your client up for success next year. We recommend conducting post-reporting interviews with clients to discuss what went well, what could be better next time, and how they can stay updated on future CSRD developments.
Manifest Climate helps your clients get CSRD-compliant faster
Complying with the EU’s new CSRD reporting requirements isn’t easy, and it’s not meant to be. But there are parts of the process—like combing through existing reports and reading through competitor disclosures—that don’t need to be done manually.
That’s where Manifest Climate comes in. We’re an AI-powered ESG compliance tool that helps consultants assess their clients’ compliance with regulations and standards like the CSRD, ISSB, and more.
With Manifest Climate, you can assess your clients’ compliance in less than a tenth of the time a traditional review would take, allowing you to spend more time ensuring the accuracy of a client’s report and guiding them toward more strategic initiatives.
Book a demo to find out how you can accelerate your clients’ CSRD compliance.
