The European Union’s (EU’s) Corporate Sustainability Reporting Directive (CSRD) aims to harmonize and improve the availability and quality of sustainability-related information by introducing mandatory sustainability reporting standards, known as the European Sustainability Reporting Standards (ESRS).
The ESRS introduce comprehensive disclosure requirements for EU entities. In addition to EU companies, the CSRD also mandates non-EU companies that have significant EU operations to prepare non-financial reports from 2029 on a group level.
Companies subject to the CSRD should monitor the European Union’s Omnibus Simplification Package. This package aims to streamline EU sustainability reporting rules related to the EU Green Deal, including the CSRD, the Directive on Corporate Due Diligence (CSDDD), and the EU Taxonomy.
Despite the proposed Omnibus amendments, the CSRD continues to hold significant relevance for global enterprises, and it remains a benchmark for achieving consistent and transparent sustainability reporting.
The CSRD, in its current form, affects an estimated 50,000 companies of varying size, listing status and reporting readiness, according to SE Advisory Services. The Omnibus proposal is expected to reduce the number of companies subject to the reporting requirements by 80%, leaving approximately 10,000 companies in scope of CSRD reporting.
What should Canadian companies be doing right now?
1. Assess whether your company or group is in scope
Many Canadian companies are surprised to discover they fall in scope of the CSRD. This is why it’s important to carefully review the applicability criteria against your organizational structure.
There are three common ways Canadian companies may be subject to CSRD:
The company, or its subsidiary, has securities listed on an EU-regulated market (e.g. a dual listing)
The company has a large (see definition below) EU subsidiary or EU branch
The company has a large EU group (e.g. an EU parent of a large group or an EU holding company)
An EU subsidiary or an EU consolidated group is considered “large” if it exceeds at least two of the following three metrics on two consecutive annual balance sheet dates:
- Total assets of €25 million
- Net turnover (revenue) of €50 million
- Average of 1,000 employees
Additionally, non-EU companies fall under the CSRD through the Non-EU Sustainability Reporting Standards (NESRS). Non-EU companies will have to follow specific reporting criteria to meet NESRS requirements, reporting under CSRD for the 2028 financial year, with their first reports due in 2029.
There are three ways for companies to fall within scope:
Generating at least €150 million in revenue within the European Union at the group level for two consecutive years
Being the ultimate parent of large EU companies or small or medium enterprises (SMEs) listed on an EU regulated market (except micro-enterprises) with securities traded in the European Union
Having an EU branch that generates over €50 million in net turnover within the European Union
2. Work out the reporting deadlines that apply to your organization
On April 3, 2025, the European Parliament adopted the Omnibus Stop-the-clock proposal, which specifically addresses the CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD). This proposal delays the application of the CSRD for large companies by two years, and it postpones the transposition and application of the CSDDD for large companies by one year. Subsequently, on June 23, 2025, the Council of the European Union reached an agreement on the Omnibus simplification package, proposing modifications to the substantive content of both the CSRD and CSDDD.
With the adoption of the Omnibus Stop-the-clock proposal, some Canadian companies in scope of the CSRD will receive an extension in their CSRD reporting timelines. Wave 1 entities won’t be impacted by this proposal, but they are required to report on or after January 2024. Wave 2 and Wave 3 entities will both experience a two-year delay in effective reporting date with the Stop-the-clock proposal, with Wave 2 reporting in 2027, and Wave 3 reporting in 2028.
| Current requirements | Stop-the-clock proposal | Content proposal |
|---|---|---|
Wave 1: (1) Entities in the scope of Non-Financial Reporting Directive (NFRD); (2) “Large” entities that are listed on a European exchange and have more than 500 employees
Required reporting: ESRS and EU Taxonomy |
|
The requirements for all entities are aligned and depend on the type of entity:
|
Wave 2: All other “large" EU undertakings and EU undertakings that are parents of a “large” group
Required reporting: ESRS and EU Taxonomy |
|
|
Wave 3: Listed SMEs; certain small and non-complex credit institutions, captive insurance entities, and captive reinsurance entities
Required reporting: ESRS for LSME and EU Taxonomy |
|
|
Non-EU entities with significant activities in the European Union
Required reporting: Non-EU ESRS |
|
Would change threshold for reporting:
Required reporting: Non-EU ESRS |
3. Conduct a double-materiality assessment (DMA)
After determining your company is in scope for CSRD reporting, performing a double- materiality assessment (DMA) is essential. This approach examines both the financial effects of environmental, social and governance factors on your organization’s value and the influence of your activities on sustainable development.
Furthermore, the DMA prioritizes actions that support sustainable growth and regulatory compliance. The DMA helps align what topical standards are in scope, including relevant sub-topics and data points, laying the groundwork for a robust disclosure gap assessment and enabling the integration of sustainability strategy with overall business strategy.
4. Run a disclosure gap assessment
Once you’ve determined your company falls under the scope for CSRD reporting, you need to conduct a disclosure gap assessment against the requirements of the ESRS to identify which sustainability-related impacts, risks, opportunities and metrics you currently disclose and which disclosures and underlying data are missing. Despite the Omnibus efforts to streamline reporting, the volume of specific data points needed can run into the hundreds per entity.
By undertaking a thorough gap analysis early, your organization can understand areas to prioritize when enhancing data quality and disclosures, including the current use of technology across the data collection and reporting process to comply with regulations.
Additionally, for Canadian companies with a significant business presence in the European Union, it's important to consider the Non-EU Sustainability Reporting Standards (NESRS) currently being developed by EFRAG. These standards, expected to be adopted by June 2026, will apply to non-EU parent companies meeting certain criteria. Including NESRS in your gap assessment enables your disclosures to be aligned with both ESRS and upcoming NESRS.
5. Develop a strategic roadmap
Compliance with CSRD involves developing an integrated sustainability program that extends well beyond disclosure requirements. It should include strategy, governance and management of impacts, risks and opportunities (IROs) to support disclosures and associated metrics and targets.
Once focus areas are identified from the DMA and gap assessment, your organization can build a strategic roadmap towards developing a sustainability program. This roadmap outlines your company’s plan for addressing identified gaps, aligning resources and prioritizing key sustainability initiatives. It should provide a clear timeline for implementing changes, measures for tracking progress, and contingencies for navigating challenges.
By establishing a comprehensive roadmap, your organization can ensure a systematic approach to meeting CSRD requirements, while driving long-term sustainability success effectively.
CSRD implementation timeline
- Prepare phase
- Design phase
- Implement phase
Prepare phase
Scoping assessment
Conduct a detailed scoping assessment to confirm CSRD applicability to your company.
Identify key impacts and requirements imposed by the Omnibus proposal.
Materiality and risk identification
Perform a DMA to pinpoint material sustainability risks and opportunities.
Review and document critical sustainability metrics.
Internal communication
Communicate findings and action items to management and relevant departments.
Disclosure gap assessment
Perform a comprehensive gap analysis to evaluate existing disclosures against CSRD requirements.
Identify areas for improvement and prioritize key disclosure elements.
Design phase
Framework development
Develop tailored ESG reporting frameworks aligned with CSRD's requirements.
System and process refinement
Evaluate and refine data collection systems for efficient tracking of required sustainability metrics.
Align reporting processes with EU Taxonomy and ESRS standards.
Strategic roadmap
Develop and finalize a strategic roadmap to address identified gaps, align resources and guide implementation.
Establish timelines for key milestones and ensure alignment with broader business objectives.
Implement phase
Finalization and validation
Finalize report structure and verify content for compliance and completeness.
Full integration
Fully integrate sustainability metrics into corporate reporting mechanisms.
The CSRD’s effect on value creation
The CSRD is a real driver for value. By effectively setting up a sustainability program to report under CSRD, organizations have an opportunity to realize significant gains:
The CSRD integrates sustainability into strategy by identifying material risks, impacts, and opportunities across the value chain, engaging diverse internal stakeholders to align strategy and risk management with sustainability goals.
It emphasizes actionable policies, clear performance metrics and targets that demonstrate progress toward sustainability objectives while highlighting the company’s most significant financial and environmental impacts.
It enhances decision making by providing comprehensive data that incorporates third-party stakeholder perspectives, supporting informed choices over the short, medium and long term.
Implementing these standards now can give companies a head start in their reporting journey, especially those that are—or will be—affected by disclosure requirements adopted by the California Air Resources Board (CARB), Australian Sustainability Reporting Standards and/or the International Sustainability Standards Board.
An integrated approach to data collection and enabling technology systems will make reporting more efficient, particularly if multiple reports are needed. Once data is being tracked, companies will have the information they need to inform targets and provide performance metrics. This allows for a more integrated communication of long-term value and sustainability with investors and stakeholders.
Looking ahead: Adapting to the future of CSRD and ESRS reporting
The recent release of the Omnibus package, together with the ongoing simplification exercise led by the European Financial Reporting Advisory Group (EFRAG), shows the European Union is entering a new phase of simplification in sustainability reporting. The Omnibus package ushers in a new phase aimed at streamlining regulatory requirements, while EFRAG’s efforts are focused on refining the European Sustainability Reporting Standards (ESRS). Key milestones for EFRAG’s process include the publication of exposure drafts on July 31, 2025, which indicated a 60-day consultation period. These drafts propose a more flexible approach to materiality, streamlined disclosure requirements, and the removal of voluntary data points to make reporting more accessible and aligned with global frameworks. EFRAG will continue to provide updates to the revisions directly on their website, with a recently announced conference dedicated to the new drafts set for December 4, 2025.
For Canadian multinationals operating in or with significant revenues from the European Union, these developments underscore the importance of proactive adaptation. Aligning with the evolving CSRD and ESRS not only helps ensure compliance but also strengthens your organization’s sustainability credentials, enhancing appeal to investors and stakeholders alike. While sustainability reporting introduces costs and operational challenges, companies that invest early in data collection, governance and transparency will be well positioned to navigate future regulatory demands and unlock long-term value.
No matter what sector you’re part of, in this quickly shifting regulatory environment, staying informed and responsive to upcoming changes is critical. Companies that effectively consider these factors now will be able to realize significant value from investing in sustainability reporting while advancing transparency and resilience in an increasingly complex regulatory environment.
See our detailed overview of the CSRD’s scope and requirements
Contact us
Partner, Sustainability Strategy & Transformation, PwC Canada
Tel: +1 416-301-8585
National and Global Accounting Consulting Services Partner, PwC Canada
Tel: +1 403 509 6659
