NESRS: CSRD reporting standards for non-EU companies

Who will be impacted by the CSRD (EU and non-EU) and when?

Non-EU companies fall under the CSRD for 2029 reporting if they meet these thresholds:

• Net turnover of their subsidiaries / branches in the EU > EUR 150 million for the last two consecutive financial years, and

• Either serve as the ultimate parent of EU subsidiaries that are "large undertakings" or listed SMEs as defined in the CSRD, or

• Have EU branches with net turnover > EUR 40 million in the previous financial year. 

If these thresholds are met, the non-EU parent company must prepare a group-level non-financial report starting in 2029 (for financial years beginning on or after 1 January 2028).

In advance of that and pursuant to a related Directive, EU undertakings already under the Non-Financial Reporting Directive (NFRD) must report in line with the CSRD from 2025 (financial year starting on/after 1 January 2024). Large EU undertakings and parent undertakings of large groups must report in line with the CSRD from 2026 (financial year starting on/after 1 January 2025). 

"Large undertakings" are those meeting two of the following criteria for two consecutive financial years:

• Net turnover > EUR 50 million
• Balance sheet total > EUR 25 million
• More than 250 employees (on average)

Large groups are defined as those with a European parent that meet at least two of the above criteria on a consolidated basis (i.e. including their EU and non-EU consolidated subsidiaries). Listed EU SMEs must report from 2027 (financial year starting on/after 1 January 2026).

Reporting requirements for non-EU companies

NESRS relate to the articles 40a - 40d Accounting Directive, whilst the ESRS relates to the articles 19a and 29a. There are practical and substantive differences in the reporting requirements between these directives for EU and non-EU companies. 

For example: article 40a requires a "Sustainability Report" that doesn't have to be included in the management report and will require less information than the "Sustainability Statements" which are required to be part of the management report for EU companies. The "Sustainability Report" will cover less information than what's in ESRS Set 1 that was already published 

 Furthermore, no digital format is required i.e. the report can be a PDF, it doesn't need to be machine readable.

Exemptions under the CSRD:

• EU subsidiaries or subgroups can be exempted from reporting if included in the parent company's consolidated management report, subject to conditions.

• Until 6 January 2030, EU undertakings required to report can form an "artificial" consolidation, where the largest EU subsidiary by turnover prepares a consolidated sustainability report covering all EU subsidiaries in scope.

• Non-EU entities may voluntarily report using ESRS instead of NESRS, allowing EU subsidiaries or those with EU-listed debt/equity to rely on the parent’s sustainability report under the subsidiary exemption.

Assurance

• Mandatory assurance obligation for reported sustainability information. 

• The requirement would begin with limited assurance and expand to reasonable assurance at a later date.  

• Limited assurance is a negative form of assurance stating that no matter has been identified by the auditor to conclude that the subject matter is materially misstated. 

Implications of not complying

Sanctions for non-compliance against companies and directors will vary across the EU but could lead to:

• Fines; Criminal sanction and prosecution;  
• Audit failure;  
• Public censure;  
• Reputational risk and exposure to litigation.