ESG, CSRD and the future of sustainability work
A walkthrough of what ESG and CSRD actually mean, which companies are covered, and why sustainability reporting concerns far more than just the largest corporations.
Updated July 2026 · Reviewed by Anna Nyquist
What is ESG?
ESG is an umbrella term for how companies work with sustainability.
The abbreviation stands for:
Environmental
How the business affects the environment and climate.
Examples:
- Energy consumption
- Climate emissions
- Resource use
- Waste management
- Circularity
Social
How the company affects people.
Examples:
- Working environment
- Health and safety
- Skills development
- Diversity and inclusion
- Supplier responsibility
Governance
How the company is governed and led.
Examples:
- Business ethics
- Regulatory compliance
- Risk management
- Board work
- Internal control
ESG helps companies measure, track and improve their sustainability work in a structured way.
What is CSRD?
CSRD (Corporate Sustainability Reporting Directive) is the EU's framework for sustainability reporting.
Its purpose is for companies to report sustainability information in a more consistent, comparable and reliable way.
CSRD builds on ESG principles and requires companies to report both how sustainability issues affect the business, and how the business affects people, society and the environment.
Which companies are covered by CSRD?
Following the EU's latest simplifications (the Omnibus package), CSRD primarily covers the very largest companies. A company is mainly covered if it has:
1,000+
employees
EUR 450M
in revenue
Both criteria need to be met.
Sources: CSRD Directive (EU) 2022/2464 – EUR-Lex · European Commission – Corporate sustainability reporting
When do companies start reporting?
Already today
The largest companies in the EU began reporting under CSRD during 2025 for financial year 2024.
2028
Large companies covered by the new rules report for the first time for financial year 2027, published during 2028.
2029
Certain larger groups outside the EU are covered from financial year 2028, reporting during 2029.
Sources: European Commission – Corporate sustainability reporting
We aren't covered by CSRD — should we care?
For many companies the answer is: Yes.
Even if your company isn't directly covered by the legal requirement, you're often affected indirectly through:
Customers
Large companies need to collect sustainability data from their suppliers.
Banks
Lenders increasingly ask about ESG and sustainability risks.
Procurement
Sustainability requirements appear in more and more tenders.
Investors and owners
Many want to understand the company's sustainability work and risk exposure.
Employees
Sustainability is becoming increasingly important for attracting and retaining talent.
That means companies well below CSRD's thresholds already need to be able to answer questions about environment, working conditions, governance and sustainability work.