No ESG manager but need to get to grips with EU legislation? We got you!

The European Union (EU) is leading the charge with ambitious climate policies to achieve its near- and long-term sustainability targets. New legislation adopted by the member states will directly impact businesses' environmental, social, and governance (ESG) reporting.

Keeping track of climate regulations is essential to avoid non-compliance and ensure you do your part to curb carbon emissions. Unfortunately, not every business has the capacity or resources to have a dedicated ESG manager to keep track of policy changes.

So, what should you do? Fork out tons of cash? Hire an ESG manager on the cheap? Google it? Maybe not. With the right information and a little bit of elbow grease, you can quickly get up to speed on everything related to ESG legislation.

In this article, we'll provide all the details regarding the new ESG legislation passed in the EU, particularly the Corporate Sustainability Reporting Directive (CSRD), so that you can get by without needing a dedicated ESG manager. Woohoo!

Europe's climate ambitions

Before we discuss the new reporting requirements applicable in the EU and the greater European Economic Area (EEA), it's worth revisiting the climate targets set by the bloc. These targets are tied to the Paris Agreement, and they're the reason the reporting rules exist in the first place.

• The Paris Agreement commits countries to keeping global warming well below 2 °C above pre-industrial levels – and to pursuing efforts to limit it to 1.5 °C
• The EU has committed to reducing its net carbon emissions by 55% by 2030 (compared to levels in 1990)
• 'Fit for 55' is a package of proposals to revise EU legislation regarding emissions reporting, trade, and carbon credits to help the bloc reach a 55% reduction in emissions by 2030
• In March 2026, the EU also agreed a 2040 target: a 90% cut on 1990 levels
• By 2050, the EU is legally bound to reach climate neutrality – net-zero greenhouse gas emissions, with anything left over balanced by removals
• For buildings, the recast Energy Performance of Buildings Directive sets the goal of a zero-emission building stock by 2050 – with minimum energy standards along the way for the worst-performing buildings
• The Emissions Trading System (ETS) aims to reduce emissions of the impacted sectors (large industries and power plants) by 62% by 2030 (compared to 2005 levels)

New EU ESG reporting requirements

To ramp up efforts to reach its climate goals by 2030 and 2050, the EU has adopted new legislation, the CSRD. This directive replaces the 2014 Non-Financial Reporting Directive (NFRD) in phases. The CSRD was originally set to bring around 50,000 companies into mandatory reporting. Since 2026, it covers far fewer – more on that below. To implement the directive, the EU has introduced the European Sustainability Reporting Standards (ESRS).

CSRD and ESRS

First off, here's everything you need to know about the CSRD:

• CSRD began its phased rollout in January 2024. Wave 1 – large companies already reporting under the NFRD – reported for FY 2024. In April 2025, the Stop-the-Clock Directive delayed Waves 2 and 3 by two years. Then Omnibus I (in force March 2026) scrapped the waves altogether and replaced them with a single size test (see below). EU companies that meet it report for FY 2027, with first reports in 2028. Non-EU groups follow a year later
• It mandates ESG reporting for EU and EEA companies and non-EU businesses with a presence in member countries through subsidiaries
• It requires in-scope companies to get their sustainability reporting checked by a third party – known as limited assurance. A planned move to the stricter reasonable assurance was dropped in 2026
• Companies must perform a double-materiality assessment to determine their environmental and climate change impact (this was already required under the NFRD)
• Companies must report material impacts, risks, and opportunities (IRO) for business operations and the value chain (upstream and downstream)
• Companies must provide targets and metrics to measure material sustainability and tie them to their financial reporting
• The directive's scope has been significantly narrowed since it was first adopted
• It targets the companies' direct and indirect emissions (Scope 1, 2, and 3)

And now, the ESRS. Introduced in July 2023, the ESRS provides a common framework for reporting for companies impacted by CSRD. ESRS consists of 12 standards covering various aspects of ESG reporting. This includes two general standards, five environmental standards, four social standards, and one governance standard. In brief, the ESRS provides guidance for preparing ESG reports by companies as per the CSRD.

Update: the ESRS have since been simplified. EFRAG submitted draft revisions in December 2025, the European Commission adopted them in July 2026, and they were published in the EU's Official Journal in September. The 12-standard structure stays the same, but mandatory data points have been cut by more than 60%. The revised standards are mandatory from FY 2027, and companies can choose to use them early for FY 2026.

It's a lot of initialisms, we know.

Who is affected by the new ESG reporting requirements?

Short answer: fewer companies than you might think. Being medium-sized doesn't put you in scope. Neither does being listed on a stock exchange. Since 2026, size is the only test.

Following the EU Omnibus Directive (Omnibus I, in force March 2026), the eligibility criteria have changed. The previous two-out-of-three threshold no longer applies. Companies must now meet both of the following conditions to fall within the mandatory CSRD scope:

• More than 1,000 employees
• More than €450 million net annual turnover

For non-EU companies, the threshold has also been substantially raised. Reporting now applies where the parent undertaking has a net EU turnover above €450 million, and the EU subsidiary or branch has a net turnover above €200 million.

Companies in scope report for FY 2027, with first reports in 2028. And if you were in Wave 1 but no longer meet the new thresholds, your country can exempt you for FY 2025 and FY 2026. Denmark did exactly that in February 2026.

Breathe a sigh of relief because you may not need an ESG manager right now after all if you're part of a small or medium-sized enterprise (SME). Under Omnibus I, listed small and medium-sized companies are no longer in the mandatory CSRD scope.

Instead, there's a voluntary standard. The European Commission adopted it in July 2026, and it does two jobs. If you want to report, it gives you a simple, recognised format. And from FY 2027, it caps what large companies can ask of suppliers, tenants, and partners with 1,000 or fewer employees. If a customer sends you a 200-question ESG survey, that cap is worth knowing about.

That's a wrap

If you're a business in the EU or abroad impacted by the CSRD, you'll need to follow the new standards for ESG reporting. The rules now cover fewer companies than first planned. But the companies still in scope will be asking their suppliers and tenants for better data – and so will banks and investors. And you know, help save the world.

It's high time European and international organisations took even stronger initiatives to reduce and offset emissions. Fortunately, the CSRD and ESRS will push and inspire companies to do more and assess the carbon footprint of their operations, subsidiaries, and supply chains.