Ensuring Compliance with the Corporate Sustainability Reporting Directive (CSRD)

On November 10, 2025, representatives from nearly every world government congregated in Belém, Brazil, for the COP30 UN Climate Conference. Ahead of the event, UN Secretary-General António Guterres emphasized the world’s failure to fulfil the climate goals laid out in the Paris Agreement: “The plans received so far imply a 10% reduction in CO2 emissions, when a 60% reduction would be necessary”.

While global carbon emissions are falling, they are doing so far slower than the rate required to avoid a disastrous increase in global temperatures. The findings lay clear the stark reality that private companies will not adopt sufficient sustainability practices of their own accord – many countries have seen a backsliding in ESG practices and accountability in recent years, with potentially final consequences for the environment.

Wide-reaching and radical regulation is needed.

One such tool is the European Union’s Corporate Sustainability Reporting Directive (CSRD), which requires companies operating in the EU and EEA to provide public reporting of their environmental, social, and governance (ESG) impacts.

The financial sector sits at the heart of private industry. The potential that banks have to advance social and environmental causes is enormous. As investors, banks determine the success of and lend credence to private companies. To this end, the CSRD guidelines are designed to audit the sustainability of the financial sector and, in turn, the industries it supports.

What is the CSRD?

In 2024, the European Union introduced the Corporate Sustainability Reporting Directive (CSRD), a set of policies aimed at enhancing environmental accountability among companies, particularly regarding the recording, reporting, and disclosure of their social and ecological impacts.

In essence, the CSRD requires EU-based businesses to detail and audit their environmental and ethical effect with the same level of scrutiny as their financial reporting. The goal of the directive is to further transparency and accountability among large and SME businesses, providing investors and the public with a clearer image of the actual influence a company has on people and the planet.

While some level of ESG reporting is already present in many large companies, the CSRD widens the scope of the requirements, both in the level of detail in the reports and the number of businesses affected. CSRD requirements are currently being rolled out in phases, reflecting the unprecedented scale of the directive.

Timeline of the CSRD rollout

• July 2024: The CSRD is officially introduced. It initially applies only to “public-interest” EU companies with over 500 employees who already abide by the EU Non-Financial Reporting Directive (NFRD).

• 2025: The CSRD is extended to all EU companies with €40m in annual turnover, €20m in assets, and 250+ employees.

• 2026-2028: The rollout is widened to EU-based small and medium-sized companies.

• 2029: By 2029, some 50,000 companies must submit CSRD-compliant reports - four times more than previous EU-led ESG reporting initiatives.

Implementing CSRD in practice

While the CSRD provides opportunities for EU companies, any reporting change of this scale presents challenges too. The extent of the reporting, coupled with the defined deadline, means organizations are hurrying to implement new practices in record time.

• Doing so successfully requires interdepartmental collaboration between finance, compliance, ESG, and risk assessment teams.

• It also requires the adoption of new compliance services and technologies to ensure strict financial bookkeeping.

By incorporating external mobile recording and compliance services like 1GLOBAL Compliance, financial institutions can refocus their efforts on delivering stringent ESG reporting and fulfilling their CSRD obligations.

CSRD and supply chains

A key aspect of the new protocol, one that sets it apart from prior EU reporting directives, is that affected companies are obligated to detail all social and environmental impacts of their work, regardless of their relation to financial performance. From 2027 onwards, this extends to their wider supply chain as well as direct operations.

For financial institutions with far-reaching value chains across a number of regions and industries, like many multinational banks, producing compliant reporting of these impacts by the required deadline will require considerable administrative effort.

External compliance partners like 1GLOBAL and new technological developments are needed to simplify compliant reporting and allow businesses to focus on delivering accurate ESG audits.

At present, estimates show that 90% of large companies’ ESG impact lies in their supply chain – but nearly half of them have no visibility beyond their tier 1 suppliers.

This exposes a vast compliance gap and reinforces the need for a publicly regulated ESG requirement like the CSRD. It also underlines the scale of the task facing internal auditing and reporting teams. By providing a holistic overview of their operations’ realistic impact and ethics across multiple global jurisdictions, CSRD reports aim to minimize greenwashing and better inform the public, regulators, and investors of a company's values.

The level of detail required by CSRD reports will only increase in the coming years. While this is necessary to build an accurate image of an institution's actual influence, it requires considerably more research and documentation by compliance departments.

As well as supply chain oversight, the CSRD improves on previous ESG reporting strategies by specifying the need for double materiality.

Double materiality

ESG reporting has existed in some form or another for private companies operating in the EU for years – the CSRD codifies these regulations into a single, unified directive that will be continually expanded upon in the coming years. One such concrete requirement is the need for “double materiality”.

Under the new directive, companies must report both:

1. Impact materiality: How business activities affect people and the planet.

2. Financial materiality: How sustainability and social issues affect the company’s financial performance.

As the University of Cambridge points out, double materiality reporting “must cover both an entity’s own operations as well as its upstream and downstream value chain”. Where previously companies might only disclose environmental impacts that were closely tied to their financial performance, double materiality now provides a more realistic picture of all operations. Again, this major change will greatly impact the roles of reporting and compliance teams.

The CSRD and financial institutions

Financial institutions are already obligated to adhere to some of the strictest compliance and reporting standards in any industry. While the CSRD poses additional compliance hurdles, the financial sector is in a position to meet these, due to a deeply embedded auditing and reporting culture. Now, they must disclose how sustainability risks and opportunities influence their business model, strategy, and financial outcomes, complementing existing EU reporting directives like the Sustainable Finance Disclosure Regulation (SFDR).

The participation of this industry is also key to the success of the CSRD: financial institutions sit at the heart of Europe’s sustainable transition – ensuring transparency is vital to retaining public trust in the financial sector.

The challenges of CSRD reporting

One year into the rollout, the majority of affected companies are already facing difficulties complying with the CSRD: nearly half of the companies surveyed in a PwC report are concerned about having enough resources to accurately comply with the CSRD requirements, while the European Commission has already relaxed aspects of the policy to ease strain on reporting teams.

Companies under the CSRD need a partner with compliance expertise and new solutions that leverage technology to provide simplified, secure, and scalable reporting. This need for innovative solutions is also reflected in the report: over 80% of respondents are "planning to implement new technological solutions for CSRD reporting, or have already done so."

How 1GLOBAL Compliance helps companies meet their regulatory goals

With CSRD needs only increasing in the coming years, it's prudent for companies to implement scalable compliance solutions that can grow with their business, and with the phased rollout of new reporting obligations.

As a communications compliance partner to eight of the world’s 10 largest investment banks, 1GLOBAL is an industry-leading voice in the compliance and recording space. 1GLOBAL has an extensive record of providing financial institutions with secure, scalable, and simple solutions that support their digital transformation, including helping the financial sector prepare for the new EU reporting directives like MiFID III.

Similarly, 1GLOBAL can assist these firms with their CSRD obligations by simplifying the role of compliance departments through efficient, cost-effective, and industry-leading mobile recording solutions.

Learn more about how 1GLOBAL supports financial institutions in reaching their mobile recording and compliance goals, or contact our team directly to discuss 1GLOBAL solutions for your organization.

The opportunities the CSRD presents

The CSRD represents a turning point for financial institutions, placing sustainability at the heart of strategic decisions and delivering accountability across the global supply chain.

For investment banks, the CSRD presents unique business opportunities:

• Early compliance, backed by regular audits and partnerships with leading compliance services like 1GLOBAL, provides several reputational and financial advantages. The new wave of “ethical banking”, led by brands like Bunq, Tomorrow, and GLS, is an attempt to recast investment banks as drivers of positive change – the CSRD provides an opportunity for these institutions to underline their credentials, improve stakeholder trust, and stand out from the competition through increased ESG transparency.

• The directive discourages greenwashing and ineffective ESG policies.

• As investors, the CSRD allows banks to more accurately assess the sustainability credentials of potential options and build a more reliable sustainable finance industry.

While ramping up reporting to comply with the first series of regulations will require considerable effort and initial investment, building a reliable sustainability reporting strategy is key to ongoing, sustained business success. Some experts add that detailed reporting, as defined by the CSRD, will discourage investment in environmentally or socially volatile companies and allow for greater insights into data and AI-driven ESG policies.

Partnering with communications compliance experts like 1GLOBAL empowers compliance departments to dedicate their time to ensuring timely CSRD readiness.