California Climate Accountability Package: SB253, SB261, & SB252
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What is the California Climate Accountability Package, and how do SB 253 and SB 261 (SB 219), and SB 252 help the state work towards their environmental goals?
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How to comply with the CSRD reporting requirements
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By Kara Anderson, UK Copywriter, on 04/08/2024
Updated by Kara Anderson, on 01/09/2026
With the European Union’s Corporate Sustainability Reporting Directive (CSRD) now in effect, businesses are facing a new era of non-financial reporting, one that strengthens and modernises environmental, social, and governance (ESG) disclosures.
For companies operating within or connected to the EU, understanding and implementing the CSRD is crucial. This isn’t just about ticking boxes for compliance, it's about being part of a transformative movement towards sustainable and responsible business practices.
👉 In this guide, we'll take you through what it means to comply with the CSRD reporting, offering practical steps to ensure your business stays ahead of the curve in this evolving corporate landscape.
Understanding the CSRD
Introduced by the European Commission in 2021, the Corporate Sustainability Reporting Directive (CSRD) significantly elevates the standards of non-financial reporting for companies within its scope, improving the way environmental, social, and governance (ESG) factors are reported and evaluated. Its primary objective? To enhance transparency and consistency in publicly available corporate sustainability information.
The evolution from NFRD to CSRD
The CSRD is a more ambitious successor to the Non-Financial Reporting Directive (NFRD). While the NFRD laid the groundwork for sustainability reporting, the CSRD takes this a step further. It aims to close the gaps left by the NFRD, introducing more stringent, detailed reporting requirements. This change mirrors the increasing global focus on sustainable business practices and the growing investor demand for comprehensive ESG information.
Objectives and impact
The CSRD isn't merely a regulatory requirement, it represents a significant shift towards integrating sustainability into the core of corporate strategy. Its objectives are clear: ensure that sustainability reports across the EU are more consistent, comparable, and comprehensive. By doing so, the CSRD not only holds businesses accountable for their impacts on society and the environment but also plays a critical role in guiding investment decisions towards more sustainable business models.
A global reach
Importantly, the CSRD’s reach is not confined to the EU. It extends to non-EU companies that have substantial business activities within the EU, making its implications global. This broader scope underlines the EU's commitment to leading global efforts in sustainable development and corporate transparency.
👉 To learn more about the CSRD reporting requirement head over to our comprehensive guide.
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Who needs to comply with the CSRD?
Following the Omnibus I simplification package, the scope of the Corporate Sustainability Reporting Directive (CSRD) has been significantly narrowed. Mandatory reporting now applies to a more targeted group of large companies, while many smaller undertakings are exempt.
Here’s how the CSRD scope now works.
EU companies (listed and unlisted)
CSRD reporting is mandatory for EU companies that meet both of the following conditions:
Mandatory criteria:
- At least 1,000 employees
And either:
- Net turnover of €450 million or more, or
- Total assets of €25 million or more
Companies that do not meet the 1,000-employee threshold are classified as Protected Undertakings and are no longer subject to mandatory CSRD reporting.
Note: Listed SMEs are now exempt from mandatory CSRD reporting and fall outside the directive’s scope.
Non-EU (third-country) companies
Non-EU parent companies are required to comply with the CSRD only if they meet all of the following conditions:
- EU turnover exceeding €450 million in each of the last two consecutive financial years, and
One of the following forms of significant EU presence: - An EU subsidiary with at least 1,000 employees, or
- An EU branch generating more than €200 million in turnover
This ensures that CSRD reporting obligations apply only to non-EU companies with a material economic footprint in the EU.
What about smaller companies?
Companies with fewer than 1,000 employees are no longer required to report under the CSRD. However:
- They may still be asked to provide sustainability information by larger companies in their value chain.
- To address this, the Voluntary Sustainability Reporting Standard for SMEs (VSME) has been introduced by EFRAG.
- Companies subject to CSRD or CSDDD may only request data from SMEs that aligns with the VSME, unless additional information can be clearly justified.
Key requirements of CSRD reporting
Understanding the specific requirements of the CSRD is essential for companies to effectively comply with its reporting mandates. The CSRD sets a new standard in corporate sustainability reporting, demanding a level of detail and clarity that goes beyond previous directives.
Comprehensive reporting requirements
Companies are expected to provide extensive information on their impacts related to social, environmental, and governance issues. This includes not just the company's direct impact but also how it manages risks and opportunities related to these areas. The reporting must cover a broad range of topics from climate change and environmental damage to social rights and employee matters.
Technical standards and metrics
Under the CSRD, reporting is standardised through the European Sustainability Reporting Standards (ESRS). These standards are designed to ensure that the reports are consistent, comparable, and provide a clear picture of a company’s sustainability performance. Companies are required to report on a variety of metrics and indicators, which are crucial for assessing their ESG impacts comprehensively.
Double materiality in CSRD reporting
An important element of the CSRD is 'double materiality', requiring companies to report not just on how sustainability issues impact their financial performance (financial materiality) but also on how their operations affect the environment and society (environmental/social materiality). This dual focus ensures a comprehensive view of a company's sustainability impacts and responsibilities.
Regular and consistent reporting
The directive emphasises the need for regular and consistent reporting. Companies must integrate their sustainability reporting into their annual reporting cycles. This integration ensures that sustainability is not an afterthought but a core aspect of the company’s strategic and operational planning.
Auditing and verification
To enhance the credibility of the reports, the CSRD requires that they be verified by independent auditors. This verification process ensures that the information disclosed is accurate and meets the specified standards. The move towards independent auditing marks a significant shift towards greater transparency and reliability in sustainability reporting.
Steps to comply the CSRD reporting requirements
When it comes to ensuring compliance with the CSRD’s reporting requirements, it’s crucial to develop and implement an action plan for compliance. This process requires preparation, careful execution, and ongoing management. We’ve created a roadmap below to guide companies through this journey.
Note: The steps below apply primarily to companies that fall within the CSRD’s post-Omnibus scope, notably large undertakings with 1,000 or more employees.
Companies that are exempt from mandatory CSRD reporting may still find several of these steps relevant when responding to ESG data requests from customers, investors, or partners, particularly when reporting under the Voluntary Sustainability Reporting Standard for SMEs (VSME).
1. Initial assessment and gap analysis
- Understanding your current position - Begin with an assessment of your current reporting practices. How does your existing sustainability reporting align with the CSRD requirements? Identify the gaps and areas that need enhancement.
- Gap analysis - Conduct a detailed analysis to understand where your current practices fall short of the CSRD standards. This involves reviewing existing sustainability initiatives, data collection processes, and reporting mechanisms.
2. Data collection and management
- Robust data gathering - Data is the backbone of CSRD reporting. Establish a systematic process for collecting accurate and comprehensive data across all relevant ESG aspects.
- Integration of systems - Ensure that your data management systems can handle the complexity and volume of data required for CSRD reporting. Consider investing in software or tools that can aid in data aggregation and analysis.
3. Develop a reporting framework
- Aligning with ESRS - Adapt your reporting framework to align with the European Sustainability Reporting Standards. This includes determining the metrics and indicators that are relevant to your business.
- Structured reporting process - Develop a structured process for compiling the report. This should include guidelines for data inclusion, document formatting, and a timeline for report preparation.
4. Training and capacity building
- Internal training - Prepare your team with the necessary knowledge and skills. Conduct training sessions on the CSRD requirements, ESRS, and the importance of accurate reporting.
- Engaging with stakeholders - Involve various stakeholders in the process, including employees, suppliers, and customers, to ensure a comprehensive view of your company’s sustainability impact.
5. Verification and audit preparation
- Internal review - Before the external audit, conduct an internal review of your report. This helps in identifying any inconsistencies or areas that need further clarification.
- Audit preparation - Prepare for the external audit by gathering all necessary documentation and evidence to support the data and statements in your report.
6. Continuous improvement and updating
- Regular updates - The world of sustainability is always evolving. Keep your reporting process dynamic by regularly updating it with new information, standards, and best practices.
- Feedback loop - Create a feedback loop where you can learn from each reporting cycle. This will help in continually enhancing the quality and accuracy of your reports.
“Compliance with the CSRD is not a one-time effort but an ongoing process that requires dedication and attention to detail. By following these steps, companies can not only comply with the CSRD reporting but also embed sustainability deeply into their business strategies, reaping long-term benefits and contributing positively to global sustainability efforts.”
Challenges and solutions in CSRD reporting compliance
Navigating the CSRD’s requirements presents its unique set of challenges for businesses. Understanding these hurdles and having strategies in place to overcome them is crucial if you want to comply with the CSRD reporting requirements.
We’ve outlined a few of the main challenges that companies encounter along with solutions to help you overcome them.
Identifying common challenges
- Complex data management - One of the significant challenges is managing the vast amount of data required for comprehensive reporting. This includes data collection, verification, and analysis across various ESG aspects.
- Resource allocation - The resources required in terms of personnel, time, and financial investment can be substantial, especially for businesses new to detailed sustainability reporting.
- Staying abreast with standards - Keeping up with evolving standards and regulatory requirements can be daunting, as the landscape of sustainability reporting is continually changing. This challenge remains relevant despite the Omnibus I simplification package, as companies must still track changes to ESRS data points, quick-fix amendments, and evolving enforcement expectations at the national level.
Practical solutions and best practices
- Leveraging technology - Utilise software and technological tools designed for sustainability reporting. These can streamline data collection, management, and analysis, making the process more efficient and accurate.
- Building internal expertise - Invest in training and development for your team. Building internal expertise in sustainability reporting ensures that the process is well-understood and correctly executed.
- External consultation - Don’t hesitate to seek external expertise. Consulting with sustainability experts or auditors can provide insights and guidance on best practices and compliance strategies.
Incorporating flexibility and scalability
- Adaptive systems - Develop systems and processes that are adaptable to changes in reporting standards and requirements.
- Scalable approaches - Ensure that your approach to CSRD compliance is scalable, especially if you are a growing business. This means creating processes that can be expanded or adjusted as your company grows.
Communication and transparency
- Stakeholder engagement - Maintain open channels of communication with stakeholders, including employees, investors, and customers. This ensures transparency and can provide valuable feedback.
- Clear internal communication - Ensure that the objectives and requirements of CSRD reporting are communicated clearly within the organization. This helps in aligning efforts and ensuring that all departments contribute effectively to the process.
By proactively addressing these challenges and implementing effective solutions, companies can navigate the complexities of CSRD compliance more effectively. This not only ensures adherence to regulatory requirements but also strengthens the company’s overall approach to sustainability and corporate responsibility.
How Greenly can help you to comply with CSRD reporting requirements
Greenly’s CSRD solution is designed to simplify compliance while giving companies a robust foundation for long-term sustainability reporting.
- EFRAG-aligned double materiality assessment: Conduct your DMA using a structured methodology aligned with EFRAG, supported by sector and country benchmarks to accelerate topic and data-point prioritization.
- Full ESRS coverage, built in: Collect and manage all ESRS data points in one platform, with structured workflows for DMA, gap analysis, and data validation.
- Audit-ready by design: Built-in traceability, evidence management, and role-based access help secure your audit and streamline collaboration with external auditors.
- Automated CSRD reporting: Generate an ESRS-compliant sustainability report with automatic xHTML formatting and XBRL tagging, reducing manual effort at the reporting stage.
- AI-assisted data collection and reporting: Speed up reporting with AI support for indicator completion, evidence attachment, reminders, and draft narrative content.
- Scalable beyond CSRD: Use CSRD as a foundation to respond to other reporting needs - including tenders, investor requests, or additional frameworks (IFRS, GRI, CDP, Ecovadis, or custom frameworks) - without duplicating work.
- Training and expert support included: Continuous guidance and access to sustainability experts help teams build autonomy and stay aligned as requirements evolve.
Learn more about Greenly's CSRD offering on our website.
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