CSRD Compliance Guide for Mid-Market Companies

What is CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is a European Union regulation that requires companies to disclose detailed information about their environmental, social, and governance (ESG) performance. It replaces the Non-Financial Reporting Directive (NFRD) and dramatically expands both the number of companies required to report and the depth of information required.

CSRD-mandated disclosures are governed by the European Sustainability Reporting Standards (ESRS), developed by EFRAG. Unlike voluntary ESG frameworks such as GRI or SASB, CSRD compliance is legally required — companies that fail to comply face regulatory penalties in their EU member states.

Who is affected?

CSRD applies in a phased rollout based on company size:

• Large listed companies (already NFRD-subject): Reporting for financial year 2024.
• Other large EU companies (two of three: 250+ employees, €40M+ turnover, €20M+ balance sheet): Reporting for financial year 2025.
• Listed SMEs and non-EU companies with EU revenue > €150M: Reporting for financial years 2026-2028 (depending on category).

Mid-market companies outside the EU are frequently in scope because they operate EU subsidiaries, sell to EU customers who need supply-chain emissions data, or have EU-listed parent companies requiring consolidated CSRD reporting.

Note: the applicability thresholds above reflect the original CSRD timeline. EU member states have discretion in transposition, and the European Commission has proposed adjustments in the Omnibus package discussions of 2025-2026. Your legal counsel should confirm current applicability for your specific entity structure.

ESRS standards overview

The ESRS are organized into cross-cutting standards (ESRS 1 and ESRS 2) and topic-specific standards. For mid-market industrial companies, the most common material standards are:

• ESRS E1 — Climate change: GHG emissions (Scope 1, 2, and 3), climate targets, transition plans.
• ESRS E2 — Pollution: Air, water, and soil pollutants, particularly relevant for manufacturing.
• ESRS S1 — Own workforce: Working conditions, diversity, health and safety.
• ESRS G1 — Business conduct: Anti-corruption, supplier relationships, lobbying.

The double-materiality assessment (see below) determines which topic standards are mandatory for your specific company.

GHG Scope 1-2-3 under CSRD

ESRS E1 requires disclosure of Greenhouse Gas emissions in the three scopes defined by the GHG Protocol:

• Scope 1: Direct emissions from operations — combustion in boilers, furnaces, company vehicles.
• Scope 2: Indirect emissions from purchased electricity, steam, heat, and cooling.
• Scope 3: All other indirect emissions across the value chain — 15 categories covering purchased goods and services (Cat 1), business travel (Cat 6), employee commuting (Cat 7), and more.

For most mid-market manufacturers, Scope 3 Category 1 (purchased goods) and Scope 1 (direct combustion) represent the largest emission contributors. CSRD requires Scope 3 only where material — but for most industrial companies, Scope 3 will be material and must be disclosed.

Double-materiality assessment

Unlike traditional financial materiality, CSRD requires a "double-materiality" analysis: you must assess both impact materiality (the company's actual and potential effects on people and the environment) and financial materiality (sustainability risks and opportunities that affect the company's financial performance).

The double-materiality assessment is the starting point for CSRD preparation. Its output determines which ESRS topics are mandatory for your company. EFRAG provides guidance on conducting this assessment; it typically involves stakeholder interviews and scoring of material topics against defined criteria.

Reporting timelines

For mid-market companies entering scope in 2025-2026, the typical preparation timeline is 18-24 months before the first report:

• T-18 months: Complete double-materiality assessment, identify material ESRS topics, map data sources.
• T-12 months: Begin data collection baseline year, establish GHG inventory methodology, select assurance provider.
• T-6 months: Parallel-run first draft disclosures, identify data gaps, implement disclosure controls.
• T-0: Submit first CSRD-compliant annual report including ESRS disclosures.

Practical first steps

1. Confirm whether your company is in scope (EU entity, listed SME, or non-EU company with EU nexus).
2. Identify your ERP system and determine what sustainability-relevant data already exists in your GL and purchasing data.
3. Commission a double-materiality assessment (can be done by an external consultant).
4. Establish your GHG inventory approach for Scope 1-2 — this is the lowest-risk starting point.
5. Select a software or automation solution for ongoing data collection — manual Excel approaches are not sustainable at scale.

Greenopsiq handles steps 4 and 5 by connecting to your ERP, automating Scope 1-2-3 classification, and generating the ESRS E1 disclosure package. Request a walkthrough to see what this looks like for your industry.