Why CSRD reporting will transform sustainability practices in 2025.
It’s finally happening – the European Union’s Corporate Sustainability Reporting Directive (CSRD) kicks into full gear in 2025. Technically, it’s already started for companies under its predecessor, the Non-Financial Reporting Directive (NFRD), as they’re reporting on the 2024 financial year. But for the rest? Thanks to an April 2025 update, the deadline got pushed back two years. Lucky them.
At first glance, CSRD might seem like just another compliance headache. But trust us – the ripple effects are way bigger. We’re talking a global shake-up in how businesses approach sustainability. Exactly what the EU was aiming for.
In this opinion piece, we’re taking a closer look at the immediate effects of CSRD, beginning in 2025, how its implementation impacts business practices, reporting, and emissions, and why it’s not just a box-ticking exercise – it’s a game-changer.
From voluntary to mandatory: Time to report (whether you like it or not)
The most obvious impact of CSRD is that reporting, at least for large companies operating in the EU, is no longer voluntary. They have to report data based on up to 12 categories identified in the European Sustainability Reporting Standards (ESRS), which is the framework that supports CSRD reporting.
What that means is that companies have to make environmental data public, which creates impetus for companies to set climate targets and take initiatives. Although not every company may have caps on emissions, the mere disclosure of data will push them to work to bring down their emissions.
Investors and consumers are paying attention too. McKinsey found investors increasingly expect detailed ESG disclosures that tie directly to business strategy and financial outcomes. Translation? If you’re not serious about sustainability, you’re losing money, market share – and relevance.
Data-driven sustainability (not just pretty brochures)
CSRD doesn’t just ask for a few figures – it demands data-driven sustainability.
With over 1,200 mandatory data points baked into ESRS, companies are forced to move beyond vague promises and start operating with actual metrics. It's painful, sure – but it also means real insight into environmental performance.
Of course, it’s easier said than done. According to a recent survey by Workiva, 83% of companies find collecting accurate data for CSRD a challenge. Not shocking when you consider global supply chains are basically a tangled spaghetti bowl of complexity.
Still, with CSRD being law (not a suggestion), companies have no choice but to step up. And in doing so, they'll uncover better data, clearer strategies – and stronger sustainability initiatives across their entire supply chain.
A supply chain shake-up
One of the biggest bombshells? Scope 3 emissions reporting is mandatory.
Until now, most companies focused on direct emissions (Scope 1 and 2) and politely ignored the messy stuff (Scope 3). No longer.
Scope 3 covers all the emissions from a company’s value chain – including suppliers. That means smaller vendors halfway around the world are being pulled into the CSRD spotlight. They may not be legally required to report under CSRD themselves, but their customers will demand it anyway.
The ability to provide relevant, accurate data may even impact supplier selection going forward. Companies may choose to work with suppliers that follow environmentally friendly practices in a bid to reduce their emissions, or at the very least, appear green.
What this means is that vendors outside the EU may also be indirectly affected by CSRD, and will need to rethink their sustainability efforts if they want to stay in business with EU companies.
Why sustainability is becoming core business (not just a side hustle)
Sustainability used to be a nice-to-have. A feel-good section in annual reports. Not anymore. It has evolved into a core element of business strategy, driven in part by increasing regulatory pressure and stakeholder expectations.
Frameworks like the CSRD in the EU are reshaping the way companies approach ESG issues. Unlike previous voluntary guidelines, the CSRD mandates detailed, standardised reporting on sustainability risks, impacts, and performance across a company’s operations and value chain. This regulatory shift is part of the broader trend: sustainability is no longer a peripheral concern, but a material business issue that’s supposed to influence everything from investment decisions to supply chain management.
Research shows that making sustainability a core part of strategy is actually quite beneficial. For instance, sustainability can affect profits by up to 60%. As sustainability reporting becomes more rigorous and transparent, companies are recognising that long-term value creation depends on their ability to operate responsibly and resiliently.
On the other hand, investors, consumers, and business partners are demanding greater accountability. Companies that fail to adapt and make sustainability the core of their business model may fall behind.
Companies making sustainability a core pillar are doing a few things right:
- Leadership support: The executives and decision-makers support and champion sustainability goals
- Clear, measurable targets: Business has specific ESG objectives tied to business outcomes (e.g., net-zero emissions, waste reduction)
- Integrated sustainability strategy: Considering environmental and social considerations in product design, operations, and supply chain decisions becomes the norm
- Engaged stakeholders: Employees, customers, suppliers, and communities are involved in sustainability initiatives
- Education and training: Employees are provided with the knowledge and tools to make sustainable choices
- Technology: The right tools are adopted to track emissions, reduce energy use, and improve efficiency
Meanwhile, companies stuck in the “we’ll get to it later” mindset? They’re already falling behind.
Competitive advantage: Being good at ESG pays
According to Workiva’s survey, 88% of respondents stated that having a strong ESG reporting system provides a competitive edge. It’s easy to see why. Comprehensive, accurate, and transparent ESG reports build trust – and trust drives investment, customer loyalty, and long-term success.
With the right data, businesses can also compete in terms of environmental initiatives. After all, it’s a race to reach net zero, so whoever ends up first has the clear advantage. CSRD is simply increasing the impetus for such competitive moves, which are good for financial performance and, of course, the environment.
Plus, once all this data becomes public (thanks, CSRD), the comparison game gets real. If one competitor’s ESG efforts are better documented and more ambitious than yours? You’ll feel the heat.
CSRD isn’t just about surviving audits – it’s about using transparency to win in the market.
What’s next?
The first wave of CSRD reporting is now in full effect, with some of the largest companies in the EU making their 2024 ESG data publicly available. However, the remaining waves for other large companies, listed small and medium enterprises (SMEs), and non-EU companies have been delayed by two years. The EU voted in early April 2025 to give affected companies more time to prepare.
However, there’s more – the EU is now proposing amendments to the CSRD and CSDDD, as part of broader amendments for all reporting initiatives, to simplify reporting. However, these amendments are also supposed to reduce the threshold of CSRD. If adopted, many companies may no longer be subject to the CSRD. That will have serious consequences on the proposed benefits and impact of CSRD.
Currently, CSRD, in its original form, is poised to transform ESG reporting in the EU, and by extension, globally. After all, the EU is a leading trade partner of some of the world's largest economies, including the US, China, and India. Its implementation will usher in new, stricter sustainability strategies across industries.
In short? Sustainability just got real.
