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.

For CSRD screening, do not rely on employee count alone. Keep the financial statement evidence for balance sheet total and net turnover beside the headcount evidence, and identify whether national law has transposed the relevant size criteria for the reporting year being tested.

The first CSRD companies had to apply the new rules for the 2024 financial year, with reports published in 2025. Directive 2022/2464 then grouped later application by entity type: other large undertakings and large-group parents were wave two, while listed SMEs, in-scope small and non-complex institutions, and in-scope captive insurance or reinsurance undertakings were wave three.

Do not treat those original wave-two and wave-three dates as a final calendar without a later-law check. The Commission's corporate sustainability reporting page states that the stop-the-clock Directive postpones the entry into application of reporting requirements for companies previously required to report first for financial years 2025 or 2026.

A non-EU group can have a CSRD-related reporting obligation even when the ultimate parent is not governed by Member State law. Article 40a applies where the third-country undertaking has more than EUR 150 million net turnover in the Union for each of the last two consecutive financial years and has an EU subsidiary that meets the Article 19a or 29a route, or, if there is no such subsidiary, an EU branch with more than EUR 40 million net turnover in the preceding financial year.

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, ESRS determines the sustainability reporting content. ESRS 2 is mandatory for companies under CSRD scope, while other ESRS topical standards and datapoints depend on the materiality assessment, except where the standards require specific explanations for omitted matters.

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.