At the heart of these changes are two interconnected regulatory frameworks – the Corporate Sustainability Reporting Directive (CSRD, Directive (EU) 2022/2464) and the European Sustainability Reporting Standards (ESRS).
CSRD is the regulatory framework that defines which companies are required to disclose sustainability information and sets out the main requirements for such reporting. ESRS, in turn, are the detailed technical standards developed by EFRAG and adopted by the European Commission, which define the specific indicators, methodologies and disclosure requirements.
Unlike the previous Non-Financial Reporting Directive (NFRD), which covered approximately 11,000 companies in the European Union, the new framework significantly expands its scope and is expected to affect more than 50,000 enterprises in the EU. Its main objective is to establish a unified, comparable and independently assured sustainability reporting system that provides investors, creditors, customers and regulators with reliable information on the environmental and social impact of companies.
When do the requirements apply?
The implementation of CSRD is taking place in stages.
The first companies began reporting under the new rules for the 2024 financial year, publishing their first reports in 2025. This group includes large public-interest entities that were already covered by the NFRD.
In the following years, the scope is gradually being expanded to include large enterprises and other categories of companies. In parallel, in 2025 the European Commission presented the “Omnibus” package, aimed at simplifying the requirements and reducing the administrative burden, with some of the proposed changes providing for an increase in the thresholds for mandatory reporting. Nevertheless, the overall direction remains unchanged – sustainability is becoming an integral part of corporate governance and reporting.
Which companies fall within the scope?
Under the current framework and the proposed amendments, the reporting obligation is mainly aimed at large enterprises that exceed certain economic indicators. In practical terms, this means companies with:
● more than 250 employees;
● more than EUR 50 million in net annual turnover;
● more than EUR 25 million in total assets.
At the same time, the European institutions are discussing an increase in some of these thresholds in order to focus the requirements on the largest enterprises.
Regardless of the specific scope, the actual impact of CSRD goes far beyond the number of companies that are directly required to prepare reports. The reason is that the standards require data to be collected across the entire value chain, including from suppliers, subcontractors and agricultural producers. In this way, many enterprises that do not formally fall within the scope of the directive will be indirectly affected through the requirements of their customers, investors or financial institutions.
ESRS E1 – More Than Emissions Reporting
ESRS E1 is often perceived as a standard for reporting the carbon footprint. In reality, its scope is much broader.
In addition to the quantitative reporting of greenhouse gas emissions, companies are required to provide information on:
● climate-related risks and opportunities that may affect the business; policies and governance mechanisms for addressing climate change;
● emission reduction targets and progress towards their achievement;
● transition plans towards a low-carbon economy;
● investments and resources directed towards decarbonisation;
● the use of carbon credits and other mechanisms for offsetting emissions.
Unlike previous voluntary ESG practices, the information provided must be supported by reliable data, documented methodologies and internal control processes that are subject to independent assurance.
The Importance of the Double Materiality Principle
One of the most significant new concepts within the ESRS framework is the principle of double materiality.
Companies are required to assess sustainability from two perspectives at the same time:
Financial materiality – how climate change and related risks may affect the financial performance and business model of the organisation.
Impact materiality – how the organisation’s activities affect the environment, the climate and society.
This means that enterprises can no longer limit themselves solely to assessing their own risks. They must also analyse the actual impact they create across their entire value chain.
Scope 3 Emissions – The New Challenge for Business
For many enterprises, the greatest challenge is not the direct emissions from their own operations, but the so-called Scope 3 emissions.
These include emissions generated by suppliers, raw materials, transport, the use of products and other activities outside the organisation’s direct control.
For companies in the food and beverage industry, food retail, agribusiness and the financial sector, emissions from agricultural production often represent a significant share of the overall carbon footprint.
For this reason, companies are increasingly requiring their suppliers to provide data on emissions, land management practices and the measures undertaken to reduce climate impact.
The Link Between CSRD, ESRS and Supply Chains
One of the most significant consequences of the new regulatory framework is the transfer of requirements along the value chain.
Companies that are required to report under CSRD must collect information from their suppliers and partners. This means that even enterprises that do not formally fall within the scope of the directive may be asked to provide data on:
● greenhouse gas emissions;
● the use of natural resources;
● impacts on biodiversity;
● climate change adaptation measures;
● applied sustainable practices.
In practice, this turns sustainability into a criterion for access to markets, investments and corporate partnerships.
What Does This Mean for Agriculture?
Agriculture occupies a special place in this process, as it is both exposed to significant climate risks and has the potential to contribute to climate change mitigation.
Practices such as the management of soil organic matter, reducing soil disturbance, using cover crops and optimising nutrient management are gradually becoming not only agronomic tools, but also sources of measurable sustainability indicators.
As a result, companies are increasingly seeking reliable data on the carbon balance of their agricultural supply chains and opportunities to document the climate benefits achieved.
From Voluntary ESG to Verifiable Results
The development of CSRD, ESRS and the European framework for the certification of carbon removals and carbon farming (CRCF) shows a clear trend – the focus is gradually shifting from declarations and intentions towards measurable, verifiable and scientifically grounded results.
For businesses, this means the need for higher-quality data and better management of climate-related information. For agricultural producers, it creates an opportunity for sustainable practices to be not only agronomically justified, but also to become a measurable contribution to the climate targets of companies across the entire value chain.
