Corporate Sustainability Reporting Directive (CSRD) replaced the Non-Financial Reporting Directive (NFRD) in 2022; however, the enforcement started in 2024. The goal of this change was to expand the scope, depth and standardisation of corporate ESG (Environmental, Social and Governance) reporting.
One thing that most UK businesses don’t know is that CSRD still affects them, even with Brexit. That is especially true if your business trades with the EU directly or sits in EU supply chains. In this article, we will discuss who needs to comply with these laws and how to prepare for compliance.
Does the CSRD Apply to Your Business?
Who Needs to Comply?
Not every UK business is directly covered, but don’t relax too early. If your company fits in these categories, CSRD affects you:
- Large EU companies – the law primarily targets the largest organisations in Europe. These are companies that have 1000+ employees and over €450 million in net turnover.
- Listed companies – the rules also apply to all companies with securities (like stocks and bonds) traded on any EEA-regulated market. That includes small and medium enterprises (SMEs) – micro-enterprises are exempt.
- Non-EU companies – CSRD also applies to international businesses – non-European companies that meet these two criteria: generate over €450 million in net turnover within the EU and have at least one EU subsidiary/branch.
UK businesses can’t afford to ignore CSRD because, even though the country left the European Union, their businesses are still tightly integrated with Europe. That means the directive will impact your UK business either through its corporate structure or indirectly through your commercial relationships.
In addition, you can’t ignore CSRD because of an overlap with pending UK regulations. The UK is developing its own sustainability reporting system called Sustainability Reporting Standards (SRS). It has a few structural differences with CSRD (like the EU’s strict “double materiality” rule), but the rules are basically the same. In other words, SRS is basically the UK version of CSRD.
How to Prepare for CSRD Compliance in 2026
If your business is affected by CSRD, the next step is learning how to prepare for compliance. Here are the steps:
Assess Your Reporting Gaps
The first step towards compliance is assessing what you already have. If you are like most businesses, you will have some ESG data, but it’s incomplete or inconsistent. This data is often spread across the organisation – in HR, finance, operations and procurement.
This first step is about checking what ESG/sustainability data already exists. Identify gaps like missing emissions data and inconsistent reporting formats, etc.
The trick is not to assume you are starting from zero, but don’t assume you are ready either.
Build a Reliable Reporting Process
The next step is to build a reliable reporting process. As a business, you are required to have a clean internal reporting process, which standardises how data is collected, so that it can be repeated yearly.
You can create a team and assign it this specific task (this ensures consistency). It is all about internal organisation – it helps the bureaucratic stage (with auditors) go a lot easier.
CSRD requires detailed ESG datasets for things like emissions, workforce and governance. For small businesses, this is usually a walk in the park, but manual tracking becomes quite difficult as the organisation scales. That’s why many companies today use digital CSRD tools to centralise data, automate reporting and simplify compliance.
Conclusion
CSRD is quickly becoming a requirement, not just a sustainability initiative. And in order to minimise compliance risks, businesses need to consider early preparation. What this really comes down to is structure. You need to take time to understand what data you already have, close the gaps in your ESG information and then organise your reporting processes.
David Prior
David Prior is the editor of Today News, responsible for the overall editorial strategy. He is an NCTJ-qualified journalist with over 20 years’ experience, and is also editor of the award-winning hyperlocal news title Altrincham Today. His LinkedIn profile is here.
