The Corporate Sustainability Reporting Directive (CSRD) is transforming sustainability reporting across the European Union. The Directive, aimed at increasing transparency and uniformity in sustainability reporting expanded and replaced the Non-Financial Reporting Directive (NFRD). The CSRD requires companies to disclose detailed information on how their business activities impact the environment, society, and governance (ESG).
With over 50,000 companies now in scope, the CSRD introduces a standardised reporting framework, including up to 1,200 data points for many companies to consider. While some businesses previously subject to the NFRD may have a head start—having conducted materiality assessments and published sustainability statements—this will be an entirely new challenge for the majority.
As we approach the reporting deadline in 2026 for the financial year 2025, many companies in this "second wave" mistakenly believe they can wait until mid 2025 to begin preparing. This delay, however, can jeopardise the timely collection of required data and complicate the audit process.
Starting now is critical to ensure your CSRD reporting is both accurate and compliant. This article explores how you can effectively use the remaining time to prepare and set your company up for success.
In this article:
- Common Misconceptions about CSRD Reporting
- How are Companies Preparing Effectively for their CSRD Report?
- Get Started on Your CSRD Reporting
Common Misconceptions about CSRD Reporting
Before delving into what large companies can do to prepare for the first year of reporting, let us examine some preconceived notions companies have that affect how they use up their time until 2026.
Misjudging the CSRD Reporting Timeline
In 2026, large companies not previously subject to the NFRD have to prepare their CSRD reports on data from the financial year 2025. These include companies meeting at least two of the following criteria:
- More than 250 employees.
- A net turnover of more than €50 million.
- Total assets exceeding €25 million.
For these companies, the CSRD mandates reporting on financial year data starting on or after January 2025. Learn more about CSRD’s eligibility criteria in our dedicated article.
Once the fiscal year concludes, most countries require the CSRD report to be published within 6 to 12 months, though this timeline may vary based on how the directive is transposed into national law.
To meet these requirements, fiscal year 2025 must be dedicated to collecting the necessary data—assuming that data is already available and the company has identified its material topics. Achieving this readiness demands that critical preparatory steps, such as the Double Materiality Assessment (DMA) and a data Gap Analysis, be completed by the end of 2024.
More CSRD resources
- How to Conduct the Double Materiality Assessment in 6 Steps
- How to Conduct a Gap Analysis
- AI's Transformative Role in Streamlining ESG Reporting
The DMA process alone can take severl months for a mid-sized company, with additional weeks needed to select the right service provider. When mapped out, it becomes clear that FY 2024 should be dedicated to defining material topics and strategising for the CSRD reporting exercise.
For companies yet to begin their CSRD journey, the message is clear: the time to act is now.
Mistaking 2025 for a Prep Year for CSRD
"We report in 2026; FY 2025 will be our dry run."
"Auditors will just be in a learning phase for the first year of reporting."
"We’ll have a sound report by the time reasonable assurance is implemented."
These are some common sentiments shared by companies as they prepare for CSRD reporting. These misconceptions are particularly prevalent among large family-owned groups with limited or no dedicated ESG teams, reflecting low ESG maturity or prioritisation within these organisations.
A widespread misunderstanding we encounter is the idea that the first year of CSRD reporting can serve as a transition or trial year. However, from a compliance perspective, this approach is fundamentally flawed. Here’s why it is crucial to dispel these notions and take the first year of reporting as seriously as any subsequent year.
Treating 2025 as a Dry Run for CSRD Reporting
Wave 2 companies were granted additional time by the European Commission to prepare for CSRD reporting, recognising their limited experience in collecting ESG data and documenting policies. However, this extra time is not a grace period—it is an opportunity to ensure readiness.
The expectation is clear: companies should use this time to conduct dry runs and refine their processes, with these trial exercises ideally completed by the end of 2024. This preparation is essential for producing accurate and compliant reports for the FY 2025 reporting cycle.
Assuming that First Year of CSRD Reporting Will Not Be Subject to Non-Compliance Sanctions
The first CSRD report for FY 2025 will be audited under limited assurance, with national rules applying until EU-wide standards are adopted. Many countries have already implemented stringent penalties for non-compliance.
In France, for instance, a company director could face up to five years in prison and a fine of up to €75,000 for failing to have the required information certified or hindering the certification process. In Germany, fines can reach €10 million or 5% of the company’s total annual turnover. Importantly, there is no assurance from regulators that sanctions will be waived for the first year of reporting.
If your company is part of the Wave 2 group, it is critical to formally begin your CSRD reporting journey without delay. By taking immediate action, you can still produce an audit-ready report for 2025 and avoid the risks of non-compliance.
How are Companies Preparing Effectively for their CSRD Report?
Most Companies Are Already on Track With Their Double Materiality Assessment
According to recent documentation by our partner PwC, the majority of companies (77%) reporting in 2026 have already initiated their DMA. If your company is among them, you can leverage the preliminary findings from the DMA to start your Gap Analysis. This step enables you to begin collecting and refining data for the most relevant European Sustainability Reporting Standards (ESRS).
A practical approach is to work iteratively, dividing the disclosure requirements into manageable stages. Start with the key disclosure requirements from E1 (Climate Change) and S1 (Own Workforce)—areas where data is often at least partially available. This allows you to create an initial version of your report, focusing on the most critical disclosures, before progressing to additional ESRS.
To streamline your Gap Analysis, consider using a reporting tool. Such tools can digitise data ownership across teams, quickly identify gaps, and accelerate data remediation efforts.
Engaging your auditors early in the process is equally important. Addressing auditability concerns from the outset ensures a smoother review process. For instance, once data points for E1 and S1 have been validated, auditors should access the initial report draft. This approach allows you to incorporate valuable feedback as your teams move on to subsequent ESRS disclosures, enhancing the overall quality and compliance of your final report.
What if I Haven’t Started With My Double Materiality Assessment?
Performing an audit-proof DMA aligned with EFRAG standards typically takes three to four months for a mid-sized company. To stay on track, we strongly recommend starting the D&MA process as soon as possible. This ensures you can draw meaningful conclusions by the end of 2024, allowing you to dedicate Q1 2025 to the Gap Analysis and reporting.
If capacity allows, you should also consider gathering data for material ESRS in parallel with the DMA. For most companies, E1 (Climate Change) and S1 (Own Workforce) are known material topics, and starting data collection for these areas as soon as possible can provide a valuable head start. Understanding the scope of data points to be reported—and the type of data required—enables companies to develop well-informed strategies early.
The DMA process itself, with its inherently organisational focus, helps identify and assign topic and data ownership across teams. Integrating this ownership into a reporting tool streamlines the transition from DMA to Gap Analysis, ensuring a smoother and more time-efficient process.
CSRD Reporting Compliance: Acting now
Taking action starting early reduces risks, ensures compliance, and sets the foundation for successful reporting in 2026, here are the main considerations to take into account:
- Completing a Double Materiality Assessment (DMA) takes between three and four months, and selecting the right service provider adds even more time. Follow-up tasks like the Gap Analysis and data collection are time-intensive, requiring months of effort to ensure compliance.
- The first report for FY 2025 will be audited under limited assurance, with no leniency for non-compliance. Delaying preparations can lead to significant challenges in collecting accurate and complete data for FY 2025, as systems and processes need to be in place by January 2025.
- Engaging auditors early allows time to validate data points, conduct dry runs, and ensure a smoother compliance process aligned with European Sustainability Reporting Standards (ESRS).
- Viewing 2025 as a "prep year" is a misconception; groundwork such as DMA and strategy definition must be completed by the end of 2024 to ensure readiness.
- Regulators expect companies to fully prepare during the extended time before 2025, making early action critical to avoid rushed and error-prone reporting.
- Starting early allows companies to break the process into manageable stages and leverage tools like Greenomy for efficient data management and reporting.
Get Started on Your CSRD Reporting
Are you looking to streamline your CSRD reporting? Are you ready to kickstart your DMA or gap analysis? Greenomy provides a comprehensive blend of tools and advisory services to ensure you're audit-ready, with support from our local partners. Contact us today for a demo and a personalised quote!
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