ESG Reporting Under CSRD: What's Required in 2026

The Corporate Sustainability Reporting Directive (CSRD) is the EU's answer to a decade of inconsistent, incomparable, and often misleading corporate sustainability reports. Before CSRD, companies could cherry-pick what to disclose, use whatever framework they liked, and bury unflattering data in appendices nobody read.

That flexibility is gone. From 2024 onward — with full roll-out by 2028 — affected companies must report according to the European Sustainability Reporting Standards (ESRS), get their reports externally assured, and publish them as part of their management report. The data becomes as auditable as financial statements.

For green claims compliance, CSRD creates both a challenge and an opportunity. The challenge: your marketing claims must now align with publicly available, audited sustainability data. The opportunity: CSRD data provides the substantiation the ECGT requires for environmental claims.

Who Must Report Under CSRD

The CSRD applies in phases:

Phase 1 — FY 2024 (Reports Published 2025)

Large public-interest entities with 500+ employees that were already reporting under the Non-Financial Reporting Directive (NFRD). Approximately 11,700 companies across the EU.

Phase 2 — FY 2025 (Reports Published 2026)

Large companies meeting two of three criteria: 250+ employees, €40M+ net turnover, €20M+ total assets. This expands coverage to approximately 50,000 companies.

Phase 3 — FY 2026 (Reports Published 2027)

Listed SMEs, small and non-complex credit institutions, and captive insurance undertakings. Listed SMEs can opt out until 2028.

Phase 4 — FY 2028 (Reports Published 2029)

Non-EU companies with €150M+ net turnover in the EU and at least one EU subsidiary or branch exceeding certain thresholds.

If you're reading this in 2026, Phase 2 companies are preparing their first reports right now. This is a massive operational lift — and the data generated has direct implications for green claims compliance.

The European Sustainability Reporting Standards (ESRS)

ESRS replaces the patchwork of voluntary frameworks (GRI, SASB, TCFD) with a single mandatory standard. Companies still have the option to use GRI or SASB for voluntary supplementary disclosure, but ESRS is the legal requirement.

The standards are organised into three layers:

Cross-Cutting Standards

• ESRS 1: General requirements — principles, scope, materiality assessment methodology
• ESRS 2: General disclosures — governance, strategy, impact/risk/opportunity management, metrics and targets. Mandatory for all reporting companies regardless of materiality assessment results.

Topical Standards — Environment

• ESRS E1: Climate change — GHG emissions (Scopes 1, 2, 3), transition plans, energy consumption
• ESRS E2: Pollution — air, water, soil pollution; substances of concern
• ESRS E3: Water and marine resources
• ESRS E4: Biodiversity and ecosystems
• ESRS E5: Resource use and circular economy

Topical Standards — Social and Governance

• ESRS S1-S4: Own workforce, workers in the value chain, affected communities, consumers and end-users
• ESRS G1: Business conduct — corruption, lobbying, payment practices

Subject to materiality assessment, companies report on the standards that are material to their business. However, ESRS E1 (Climate Change) is effectively mandatory for most large companies given its cross-cutting materiality.

What ESRS E1 Requires: Climate Data

ESRS E1 is the standard that matters most for green claims compliance. It requires disclosure of:

• Absolute Scope 1, 2, and material Scope 3 emissions in tonnes CO₂e
• Emissions intensity per revenue or other relevant metric
• Transition plan aligned with the 1.5°C pathway, including interim targets
• Carbon credits and offsets used, including quality and methodology
• Energy consumption by source (renewable vs. non-renewable)
• Climate risk assessment covering physical and transition risks

Once published, this data is public. Any marketing claim about your climate performance can be — and will be — compared against your ESRS E1 disclosures. A company marketing itself as "low carbon" while its CSRD report shows increasing emissions will face enforcement risk under both CSRD (for potential misstatement) and ECGT (for misleading marketing).

The Double Materiality Assessment

CSRD introduces "double materiality" — companies must assess sustainability topics from two perspectives:

1. Impact materiality: How does your business impact the environment and society? (Inside-out perspective)
2. Financial materiality: How do sustainability issues affect your financial performance? (Outside-in perspective)

A topic is material if it meets either threshold. This means a company whose operations have a significant biodiversity impact must report on ESRS E4 even if biodiversity loss doesn't currently affect its financial performance.

The double materiality assessment is also relevant for green claims. If your materiality assessment determines that water use is not material, but your marketing claims "responsible water management," there's a credibility gap. Why claim credit for something you've assessed as immaterial?

External Assurance

CSRD reports require external assurance — initially "limited assurance" (similar to a financial review), with plans to move to "reasonable assurance" (similar to a full audit) by 2028. This means a third party must verify that your sustainability data is materially correct.

For green claims purposes, assured CSRD data is powerful evidence. A marketing claim substantiated by externally assured ESRS data is significantly more defensible than one backed by internal estimates alone.

CSRD and ECGT: The Alignment Imperative

Here's the critical connection that many businesses are missing: CSRD creates a public evidence base that the ECGT requires for marketing claims.

Scenarios where misalignment creates legal risk:

• Marketing says: "We reduced our carbon footprint by 40%." CSRD reports: Scope 1+2 reduced 40%, but Scope 3 increased 15%. Total footprint change: -5%. The marketing claim is technically accurate but materially misleading.
• Marketing says: "100% renewable energy." CSRD reports: Market-based Scope 2 is zero, but location-based Scope 2 is 50,000 tonnes CO₂e. The claim is method-dependent and requires qualification.
• Marketing says: "Sustainable supply chain." CSRD reports: Scope 3 Category 1 (purchased goods) shows no reduction trajectory and limited supplier engagement. The claim lacks substantiation.

The solution: use CSRD data as the foundation for marketing claims. If your ESRS E1 data shows genuine progress, communicate that progress with specific numbers and proper context. If it doesn't, fix the underlying performance before making claims — not the other way around.

Practical Steps for Alignment

1. Brief your marketing team on CSRD data. Marketing and sustainability reporting often operate in silos. Break those silos now. Marketing needs to know what the CSRD report will say before making claims that might contradict it.
2. Create an approved claims library. Based on CSRD data, develop a set of pre-approved environmental statements that marketing can use. Each statement should reference the supporting ESRS data point.
3. Establish a review workflow. Before any new environmental claim is published, it must be checked against current CSRD data by someone outside the marketing team.
4. Use CSRD as substantiation. When making environmental claims, reference your CSRD report: "Per our 2025 sustainability report (externally assured by [assurer]), our Scope 1 and 2 emissions decreased 28% from the 2020 baseline."

For an initial assessment of how your website claims align with what regulators expect, use our Green Claims Scanner.

Related: Scope 1, 2, 3 Explained | EU Regulations Overview