Introduction of the CSRD in Germany

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The Corporate Sustainability Reporting Directive (CSRD) came into effect at the EU level on January 5, 2023. Germany and other EU member states are required to transpose the directive into national law within 18 months of its adoption at the EU level.

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Timeline for Applicability:

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• From January 1, 2024: Applicable to companies already subject to the Non-Financial Reporting Directive (NFRD), with reporting required in 2025 for the 2024 financial year.

• From January 1, 2025: Applicable to large companies not currently covered by the NFRD/CSRD, regardless of whether they are publicly listed. A company is classified as large if it meets two of the following three criteria:

  • Over 250 employees

  • More than €50 million in annual turnover

  • More than €25 million in total assets

• From January 1, 2026: Applicable to capital market-oriented small and medium-sized enterprises (SMEs), excluding micro-enterprises, as well as small and non-complex institutions and captive insurance/reinsurance companies. A company is classified as small if it meets two of the following three criteria:

  • More than €350,000 in total assets

  • More than €700,000 in annual turnover

  • At least 10 employees

• From January 1, 2028: Applicable to third-country companies if:

  • Their consolidated or individual annual net turnover exceeds €150 million for each of the last two consecutive tax years, and

  • They have a qualifying EU subsidiary or branch generating annual net turnover exceeding €40 million in the preceding tax year.

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Scope of Impact:
 

It is estimated that approximately 50,000 companies across the EU will be directly affected by the CSRD, including about 15,000 in Germany.

 

In addition to the directly affected companies, their suppliers and business partners will be indirectly impacted. This is because companies subject to the CSRD must fulfill legal reporting requirements, which include ensuring complete and accurate information along their supply chains. Consequently, they will require suppliers and partners to collect and provide the necessary data. As a result, a significant number of medium-sized companies in Germany will also be indirectly affected by the CSRD.