CSRD Applicability Test

Start with the exact legal entity, parent undertaking, branch, or issuer. CSRD amended the Accounting Directive, so the first evidence record should show whether the entity is within the directive's undertaking types, is a public-interest entity, is a parent of a large group, or is a third-country undertaking with an EU subsidiary or branch.

For an EU group, test both standalone and consolidated status. A parent undertaking can be in scope through the consolidated large-group route even when the operating entity that collected the data is not the final reporting parent.

For ordinary undertaking-size classification, the consolidated Accounting Directive uses three criteria: balance sheet total, net turnover, and average employees during the financial year. A large undertaking exceeds at least two of the large-undertaking criteria; a medium-sized undertaking is not micro or small and does not exceed at least two of the medium-sized criteria.

Those Accounting Directive size categories explain the original CSRD waves, but they are no longer the complete current-scope test. Directive (EU) 2026/470 provides that, for financial years beginning in 2027, Articles 19a and 29a apply where the undertaking or parent group exceeds EUR 450 million net turnover and an average of 1,000 employees during the financial year. Keep turnover and headcount evidence together and confirm the amended rule in applicable national law.

The first CSRD companies applied the rules for the 2024 financial year, with reports published in 2025. The original directive placed other large undertakings and large-group parents in wave two and listed SMEs and specified financial undertakings in wave three. Directive (EU) 2025/794 then postponed the wave-two and wave-three application dates by two years.

Directive (EU) 2026/470 is the later enacted scope amendment, not merely an Omnibus proposal. It applies the narrowed Articles 19a and 29a scope from financial years beginning in 2027. Preserve the original wave analysis as history, but make the current reporting conclusion from the amended thresholds, exemptions, national law, and reporting year.

A non-EU group can have a separate CSRD-related reporting obligation even when the ultimate parent is not governed by Member State law. For financial years beginning in 2028, Directive (EU) 2026/470 raises the third-country undertaking threshold to more than EUR 450 million net turnover in the Union and the qualifying EU subsidiary or branch threshold to more than EUR 200 million net turnover.

This is not the same evidence package as an EU parent's Article 19a or 29a sustainability statement. Keep a separate Article 40a record for the EU subsidiary or branch that will publish and make accessible the third-country parent report, the group-level turnover calculation, the branch turnover calculation if relevant, the assurance opinion, and any statement that required parent information was not made available.

Once the entity is in scope, the ESRS edition applicable to the reporting year determines the sustainability reporting content. Under the 2023 ESRS, ESRS 2 is mandatory for companies under CSRD scope, while other topical standards and datapoints depend on the materiality assessment, except where the standards require specific explanations for omitted matters.

The Commission adopted revised ESRS and a voluntary reporting standard on 3 July 2026. They remain subject to Parliament and Council scrutiny and do not apply until that process ends, so keep the adopted 2023 ESRS and the pending revised standards as separate controlled versions.

The applicability file should therefore stop at scope, wave, boundary, and source evidence. The next work product is the ESRS materiality and datapoint file: materiality methodology, impacts, risks and opportunities, value-chain information, omitted-topic explanations, data owners, and assurance-ready support.