NFRD vs CSRD: the key changes, requirements and preparation strategies

The transition from the Non-Financial Reporting Directive (NFRD) to the Corporate Sustainability Reporting Directive (CSRD) marks a profound shift in EU sustainability reporting. CSRD doesn’t just expand the scope of reporting; it also redefines who has to report — and how. Understanding these changes is critical to prepare effectively.

Expanded compliance under CSRD

Under NFRD, only large public-interest entities with more than 500 employees were required to report — listed companies, banks and insurers. CSRD goes significantly further:

All large companies: this includes every large company — regardless of whether they are of public interest. “Large” means meeting at least two of the following criteria — more than 250 employees, more than €20m total assets, more than €40m net turnover.

Companies listed on regulated markets: CSRD applies to every company listed on a regulated market — except micro companies. That significantly widens the group of reporting companies.

Non-EU companies: non-EU companies with €150m net turnover in the EU and at least one subsidiary or branch in the EU also fall under CSRD.

Key changes and their implications

Reporting scope: CSRD requires significantly more detailed reports across sustainability topics — from climate change to social rights to governance. Companies now have to report how sustainability topics affect their business — and vice versa.

Quality and depth of information: CSRD places special emphasis on quality, consistency and comparability of sustainability information. That means more detailed and more reliable data than was needed under NFRD.

Digital format and accessibility: CSRD introduces a “single electronic reporting format” — stakeholders can more easily retrieve, compare and analyse sustainability information.

Assurance of sustainability reporting: unlike NFRD, CSRD reports must be assured to ensure their reliability. That should significantly raise the rigour and accuracy of reporting.

Preparing for CSRD compliance

Assessment and gap analysis: companies should benchmark their current reporting practices against CSRD requirements to identify gaps.

Strengthen data collection and management: robust systems for data collection and management are indispensable given CSRD’s demands on detail and reliability.

Training and capacity building: training employees on CSRD requirements is critical for a successful rollout.

Engage auditors and advisors: early collaboration with auditors and sustainability consultants delivers best practices and accelerates the compliance process.

Technology and software solutions: investments in suitable tools help manage, report on and audit sustainability data efficiently.

Stakeholder engagement: proactive communication with investors, customers and employees on sustainability practices and reporting builds trust and transparency.

Bottom line

The transition from NFRD to CSRD is more than a regulatory change — it represents the shift toward a more sustainable and more transparent corporate world. Anyone who understands who is in scope, what is changing and how to prepare not only secures compliance, but also demonstrates a commitment to a sustainable future.

Sources

BDO USA, “Comparison of Draft CSRD to NFRD Requirements.” Read more

Grant Thornton, “CSRD reporting: What you need to know.” Read more

ESG Enterprise, “NFRD vs. CSRD: What are the differences?” Read more

BeCredible, “Understanding the EU Taxonomy: Differences between NFRD, CSRD, and SFDR.” Read more