About
On 21 April 2021, the European Commission published a proposal for a comprehensive review of Directive 2014/95/EU on non-financial reporting (the "NFRD") by way of the CSRD. The CSRD was adopted by the European Council on 28 November 2022, and entered into force 5 January 2023. The EU member states were required to implement national legislation transposing CSRD by 5 July 2024.
The CSRD aims to ensure interoperability with other EU sustainable finance frameworks by, inter alia, facilitating disclosures by investee companies on the information financial market participants need in order to fulfil their reporting requirements under the SFDR.
The CSRD entails several changes in the European sustainability reporting regime.
First, the CSRD extends the scope of undertakings required to report sustainability-related information. The extended scope of entities subject to reporting will be phased in over a number of years, with the first group of undertakings set to report in 2025 for the financial year that started on or after 1 January 2024. A timeline of which entities will be covered and when is included under the "Who does it impact"-section below.
Second, the CSRD introduces more detailed reporting requirements based on the principle of double materiality, focusing both on an undertaking's positive or negative impact on sustainability matters (an inside-out perspective) and sustainability factors that financially affect the undertaking (an outside-in perspective).
Finally, the CSRD introduces reporting in accordance with detailed and mandatory European Sustainability Reporting Standards (ESRS). It is intended to publish two sets of ESRS. The first set, applicable from 1 January 2024, covers both certain general, "cross-cutting" standards, as well as environmental, social and governance-related standards. While the general disclosures are mandatory for all undertakings in scope of CSRD, the other standards and the individual disclosure requirements and datapoints are mandatory only if the information is considered material for its business model and activity pursuant to the undertaking's own materiality assessment.
The second set of ESRS, covering eight sector-specific reporting standards and standards for certain third country (i.e., non-EU/EEA) undertakings, remain under development and is expected 30 June 2026.
For undertakings with transferable securities (such as stocks or bonds) listed on an EEA regulated market, amendments to Directive 2004/109/EC (the Transparency Directive) require the sustainability report to be included in the annual report. The aim is to help investors, consumers and other stakeholders to evaluate the undertakings' sustainability performance.
The sustainability reporting by listed undertakings in Norway is supervised by the Norwegian Financial Supervisory Authority (NFSA) as competent authority under the Securities Trading Act. On 5 July 2024, ESMA published its final report guidelines for national competent authorities on enforcement of sustainability information, which it should be expected that the NFSA will look to in its supervisory activity.
On 26 February 2025, the European Commission proposed changes that, if adopted, would reduce the number of in-scope entities by 80% through increasing the relevant size thresholds. In addition, to alleviate companies that are set to report in 2026 and 2027 under the current regime from having to prepare reports in the period until the increased thresholds would enter into force, the Commission has proposed to postpone the first-time reporting dates for those companies with two years (the "Stop-the-Clock Directive"). The EU adopted the Stop-the-Clock Directive on 14 April 2025, and Norway implemented it on 3 July 2025. The Commission has also announced that it will simplify the existing ESRS and delete its empowerment to adopt the sector-specific ESRS currently set for adoption by June 2026. EFRAG, an expert group advising the Commission on financial and sustainability reporting, published a draft simplified ESRS on 25 July 2025. The draft is subject to public consultation until late September 2025, before EFRAG will provide its final technical advice to the Commission by 30 November 2025. The amendments would also entail significant simplifications of the value chain reporting requirements, reducing not only the regulatory burden of the reporting entities, but also the "trickle down" effect for entities in the value chain of the reporting entities.
An effect of the Stop-the-Clock Directive not capturing the "wave 1" companies, is that some companies will report in 2025 for 2024 and then subsequently fall out of scope of reporting obligations. In order to not increase the volume of reporting for these entities in the period until the changes in scope take effect, the Commission adopted on 11 July 2025 a "quick fix" that postponed the phase-in rules in the ESRS. It entered into force in Norway 13 November 2025.
Who does it impact?
The CRSD requirements are currently set to apply to the following EU/EEA entities according to the following timeline:
- Reporting in 2025 on the financial year 2024: Undertakings that are public-interest entities (meaning banks, insurance companies, and companies that are issuers of transferable securities trading on a regulated market in an EU/EEA state) that are large undertakings (see below) exceeding on their balance sheet dates the average number of 500 employees during the financial year. The same applies to public-interest entities that are parent undertakings of a large group that on a consolidated basis exceeds on their balance sheet dates the average number of 500 full-time equivalents during the financial year.
- Reporting in 2028 on the financial year 2027: All large undertakings and parent undertakings of a large group.
- Reporting in 2029 on the financial year 2028: Listed small and medium-sized enterprises (SMEs) that are not micro-undertakings, small and non-complex institutions, captive insurance undertakings, and captive reinsurance undertakings.
- Reporting in 2029 on the financial year 2028: Large undertakings that are subsidiaries in a group where the group parent is a parent company established outside the EEA, and branches of enterprises established outside the EEA or that have a parent company established outside the EEA.
For undertakings established outside the EU/EEA, we note especially that one should consider whether a nexus to the EU/EEA member states triggers reporting requirements. This could be the case if (i) the third country undertaking is listed on an EU/EEA regulated market and/or (ii) if the third country undertaking has an EU/EEA subsidiary or branch and earnings in the EU/EEA area exceeding certain thresholds.
Parent undertakings may report for their groups on a consolidated basis, thereby exempting from reporting subsidiaries that themselves exceed the thresholds.
The size categories referred to below are defined as follows in Norwegian law implementing the CSRD:
- A "large undertaking" is an undertaking that, on its balance sheet date, exceeds at least two of the following thresholds:
- balance sheet total of more than NOK 290 million,
- net turnover of more than NOK 580 million, and
- an average number of 250 employees during the financial year.
- A "large group" is a group that, on its parent's balance sheet date, exceeds at least two of the same three thresholds that define a "large undertaking".
- A "medium-sized undertaking" is an undertaking that is neither large, small, nor micro (see below).
- A "small undertaking" is an undertaking that, on its balance sheet date, exceeds one or none of the following thresholds:
- balance sheet total of more than NOK 84 million,
- net turnover of more than NOK 168 million, and
- an average number of 50 employees during the financial year.
- A "micro-undertaking" is an undertaking that, on its balance sheet date, exceeds one or none of the following thresholds:
- balance sheet total of more than NOK 5 million,
- net turnover of more than NOK 10 million, and
- an average number of 10 employees during the financial year. '
Under Norwegian law, the number of employees shall be counted on the basis of full-time equivalents (as opposed to a head-count).
If the adjusted size thresholds are adopted as proposed by the Commission, the reporting requirements would only apply to large undertakings with more than 1000 employees (i.e., undertakings that have more than 1000 employees and either a turnover above EUR 50 million or a balance sheet total above EUR 25 million).
Companies outside the adjusted scope (i.e., companies with up to 1,000 employees) may choose to report voluntarily on the basis of a simplified voluntary standard to be adopted by the Commission, based on the voluntary standards for SMEs (VSME) developed by EFRAG published in December 2024 and adopted by the Commission in the form of a recommendation in July 2025.
Status: In force
In force in the EU and in Norway.
The CSRD entered into force in the EU 5 January 2023, and EU member states were required to transpose the rules into national law by 5 July 2024.
The first set of ESRS were adopted by the European Commission 31 July 2023, in the form of a delegated regulation, and apply from 1 January 2024. This first set of ESRS covers both certain general, "cross-cutting" standards, as well as environmental, social and governance-related disclosure requirements. While the general disclosures are mandatory for all undertakings in scope of CSRD, the other standards and the individual disclosure requirements and datapoints are mandatory only if the information is material to its business model and activity.
The second set of ESRS, covering eight sector-specific reporting standards and standards for certain third country (i.e., non-EU/EEA) undertakings, were originally scheduled for 30 June 2024 but was 7 February postponed to 30 June 2026. The stated purpose of the delay is to allow companies to focus on the implementation of the first set of ESRS, and allow more time to develop sector-specific sustainability standards as well as standards for specific third-country companies.
The Norwegian amendment act implementing the CSRD into Norwegian law through amendments in, inter alia, the Accounting Act and Securities Trading Act, was adopted in June 2024 and entered into force 1 November 2024. Transitional rules effective from the same date set out a timeline for the phasing in of reporting requirements that correspond to the timeline set out for the EU countries.
The Norwegian implementation has been completed despite the CSRD not yet being incorporated into the EEA Agreement. A draft Joint Committee Decision regarding such incorporation was sent to the European Commission on 9 October 2024.
On 26 February 2025, the European Commission proposed changes that, if adopted, would reduce the number of in-scope entities by 80% through increasing the relevant size thresholds. In addition, to alleviate companies that are set to report in 2026 and 2027 under the current regime from having to prepare reports in the period until the increased thresholds would enter into force, the Commission proposed to postpone the first-time reporting dates for those companies with two years (the "Stop-the-Clock Directive"). The EU adopted the Stop-the-Clock Directive on 14 April 2025, and Norway implemented it on 3 July 2025.
The Commission has also announced that it will simplify the existing ESRS and delete its empowerment to adopt the sector-specific ESRS currently set for adoption by June 2026. EFRAG, an expert group advising the Commission on financial and sustainability reporting, published a draft simplified ESRS on 25 July 2025. The draft has been subject to public consultation, and EFRAG intends to provide its final technical advice to the Commission by 30 November 2025. The amendments would also entail significant simplifications of the value chain reporting requirements, reducing not only the regulatory burden of the reporting entities, but also the "trickle down" effect for entities in the value chain of the reporting entities.
On 13 November 2025, the European Parliament agreed on its position going into the trilogue with the Commission and the Council on the Omnibus I proposal. In respect of in-scope businesses, the Parliament wants to subject to reporting requirements only those businesses employing on average over 1750 employees and with a net annual turnover of over EUR 450 million.
Relation to other initiatives and regulations
- There is a high level of alignment between ESRS and the standards of the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI).
- Several data points correspond to reporting requirements under other EU/EEA disclosure frameworks, including the SFDR and banking regulation (namely, the pillar 3 requirements under CRR).
Participants
EU/EEA States
Thommessen's comments
The reporting obligations under the CSRD, detailed in the European Sustainability Reporting Standards (ESRS), have been widely criticised for being too burdensome and far-reaching, disproportionally affecting smaller companies. Against this backdrop, and as part of its broader "simplification agenda", proposed comprehensive amendments to the scope of entities subjected to reporting requirements as part of the so-called "Omnibus I"-package published 26 February 2026. It is also in the process of developing simplified ESRS.
While we expect that a reduced scope and simplified requirements would be welcomed by many stakeholders, the proposal and ongoing legislative process causes legal and commercial uncertainty in the midst of an ongoing phasing-in period of reporting requirements. Remedial measures have been taken, including the "Stop-the-Clock" Directive and the Commission's "Quick Fix", but the core uncertainty for many companies of whether they will ultimately be required to report or not, remains. The uncertainty is amplified by the differences in positions among the EU co-legislators. The Parliament's position going into the trilogue with the Council and the Commission is an even further reduction of scope than proposed by the Commission.
We also register criticism of the simplification agenda, especially related to the decreased focus on sustainability it may lead to among corporates, as well as to the legislative process itself due to a lack of an impact assessment.