As set out in our Proskauer Special Report  “Primarily Non-financial corporate reporting for U.S. companies – where to start?”, it may be complex to determine the applicability of the EU’s Corporate Sustainability Reporting Directive (“CSRD”).  The following provides a more in-depth analysis regarding the applicability of CSRD.  Non-EU companies, including those in the U.S., with operations in the EU may be within the scope of CSRD either on a solo basis or via a group through their subsidiaries or branches.  CSRD may apply to a group simultaneously or to different parts of the group at different times. 

The threshold for being within the scope of CSRD is primarily based on whether an entity is deemed “large”.  This is defined as exceeding two out of the three following criteria:

  • €25 million balance sheet;
  • €50 million turnover; and
  • 250 employees.

However, there are additional factors which also may trigger being within scope, including being listed on an EU regulated market. 

Exempted from scope are alternative investment funds (“AIFs”) under the Alternative Investment Fund Managers Directive, (“AIFMD”) which may be useful for some asset managers.  However, segregated accounts, co-investment, special vehicles and holding companies are not exempt, and may in each case qualify to be within the scope of CSRD.  There is a prescribed list of “undertakings” that fall within scope, as set out in the EU Accounting Directive which CSRD amends, and not all expected companies/partnerships are listed – e.g., the Lux SCSp is not in that list.

2024 financial year to be reported on in 2025Public interest entities – this typically covers banks, large insurers, large listed entities and such public interest entities that were previously subject to non-financial reporting under the EU’s Non-Financial Reporting Directive, which is superseded by CSRD:
  • Large EU companies that are public interest entities with 500 employees or more; and
  • EU public interest entities which are parent entities of a large group with 500 or more employees (on a consolidated basis) which could include U.S. entities within that group.
  •   Large issuers on an EU regulated market:*
  • Large EU and non-EU issuers with securities issued on an EU regulated market with 500 or more employees; and
  • EU and non-EU issuers with securities admitted to trading on an EU regulated market, that are parent companies of a large group with more than 500 employees on a consolidated basis – i.e., reporting will be required for the entire group.
  • 2025 financial year to be reported on in 2026
  • EU large entities;
  • EU parent companies of a large group (which may include U.S. entities);
  • Large EU and non-EU issuers with securities issued on an EU regulated market (without the 500-employee threshold required for reporting in the 2024 financial year);
  • and EU and non-EU issuer with securities admitted to trading on an EU regulated market that is a parent company of a large group.
  • 2026 financial year to be reported on in 2027EU small and medium‑sized enterprises that are listed on an EU regulated market or which are public interest entities, such as EU banks or EU insurance companies

    Small and medium‑sized issuers (regardless of whether EU or non-EU) whose securities are admitted to trading on an EU regulated market
    2028 financial year to be reported on in 2029 Non‑EU parent entities with a net turnover of > €150 million in the EU with either an:
  • EU large subsidiary or a listed small or medium enterprise; or
  • EU branch with €40 million turnover.
  • *Regulated market: CSRD amends the EU’s Transparency Directive to include issuers on an EU regulated market, but this does not apply to an issuer whose securities are traded only on a multilateral trading facility (“MTF”) or for debt instruments on an organised trading facility (“OTF”). 

    Please contact ukreg@proskauer.com for further information on CSRD.


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    Photo of Rachel Lowe Rachel Lowe

    Rachel E. Lowe is a special regulatory counsel in the Corporate Department and a member of the Private Investment Funds Group.

    Rachel advises on financial services regulation specializing in sustainable finance and ESG regulation. She has particular expertise in drafting and advising on…

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