---
title: NFRD vs. CSRD | Sustainability reporting in EU | RISMA
description: Read about NFRD and CSRD as well as the difference between the directives. Get to know more about what it will mean for you and your organization.
image: https://www.rismasystems.com/hubfs/Marketing/Website/Blog/NFRD-vs.-CSRD.jpg
---

We take a closer look at NFRD compared to CSRD and compare the differences between the two directives, and what that essentially means for you

The NFRD (Non-Financial Reporting Directive), which was the previous directive for non-financial reporting, will be replaced by the [CSRD](https://www.rismasystems.com/en/resources/articles/what-is-csrd) (Corporate Sustainability Reporting Directive), the EU's new initiative that is now applicable. The CSRD aims to ensure that sustainability reporting is on an equal footing with financial reporting.

So, what are the differences between the two directives? Is the CSRD simply a successor to the NFRD, or will companies in the EU have to navigate two different reporting systems?

## What is the NFRD?

The NFRD - or the less colloquial Directive 2014/95/EU - set out the rules for the disclosure of non-financial and diversity information relating to the ESG areas for EU companies with more than 500 employees, including listed companies, insurance companies, and banks.

The directive had two main objectives:

- to make non-financial information available to stakeholders and investors
- to encourage society to take responsibility for social and environmental issues.

Under the directive, companies were required to report on, for example, business development, performance, impact, and position in relation to a predefined list of non-financial issues and publish their annual and sustainability reports.

## What is the CSRD?

CSRD is a new EU directive that changes and strengthens the current requirements for companies' sustainability reporting.

The purpose of the new directive is to standardize reporting and to a much greater extent enable easy comparison of companies' sustainability data across entities and focus areas. This should increase transparency in the area and encourage an even greater focus on companies' internal and external sustainability efforts.

## NFRD vs. CSRD - what are the key differences?

The primary purpose of the switch to the CSRD was to address the shortcomings of the NFRD. For instance, at the European level, the scope of affected companies was expanded from around 11,700 to around 49,000.

Regarding the reporting requirements of the CSRD, there were modifications made compared to those presented by the NFRD. In addition to the NFRD, the following topics were introduced:

- [**Double Materiality**](https://www.rismasystems.com/en/resources/articles/what-is-double-materialty) - analyzing and reporting on both the impact the company has on society and the environment (Impact Materiality) and the sustainability risks the company faces (Financial Materiality) - e.g. due to climate change and resource scarcity
- **Formulation** of long-term environmental, social and governance goals and policies
- **Due diligence** on the company's operations and supply chain
- **Disclosure of information** regarding intangible assets (social, human and intellectual intellectual capital)
- **Reporting** in accordance with the Sustainable Finance Disclosure Regulation (SFDR) and the [EU Taxonomy](https://www.rismasystems.com/en/resources/articles/eu-taxonomy-what-is-it) Regulation
- **Integrated reporting** and mandatory external verification
- **Digital tagging** of information for machine readability
- **External third-party auditing**

## When does CSRD come into effect and what does it mean for you?

The scope of the new EU measure is broader than its predecessor. Originally, CSRD applied to companies listed on a regulated market in the EU that met two out of the following three thresholds:

- An average of 250 or more full-time employees
- A balance sheet total of more than €20 million
- €40 million or more in net turnover

In some European countries, the previous directive - the NFRD - has been over-implemented in the sense that since 2018, it has been applied to selected companies with up to 250 full-time employees. This means that the new directive will not include more companies than those already used for non-financial reporting.

However, in February 2025, the European Commission presented [the Omnibus proposal](https://commission.europa.eu/publications/omnibus-i_en), which adjusts the reporting obligations. The Commission proposes to limit the number of companies required to report under CSRD. Going forward, the requirements will only apply to companies with more than 1,000 employees and either a turnover above €50 million or a balance sheet total exceeding €25 million, with the first reporting expected in November 2025.

This means that many smaller companies, including listed SMEs, will no longer be subject to mandatory reporting requirements. Instead, SMEs can choose to follow the voluntary [VSME standard](https://www.rismasystems.com/en/resources/articles/vsme-sustainability-reporting), which is designed to make sustainability reporting more accessible and scalable for smaller companies.

![Logo](https://www.rismasystems.com/hubfs/raw_assets/public/RISMA_Systems_December2021/images/risma_ikoner-logo-slutsnippet.svg)

## Other Articles

### [CSRD: New EU Directive on Sustainability Reporting ![Time Reading](https://www.rismasystems.com/hubfs/raw_assets/public/RISMA_Systems_December2021/images/Time-reading.png) 5 minutes of reading ● ESG](https://www.rismasystems.com/en/resources/articles/what-is-csrd)

### [NIS2 Compliance: What does the NIS2 directive require? ![Time Reading](https://www.rismasystems.com/hubfs/raw_assets/public/RISMA_Systems_December2021/images/Time-reading.png) 5 minutes of reading ● NIS](https://www.rismasystems.com/en/resources/articles/nis2-krav-0)

### [VSME - a new standard for sustainability reporting ![Time Reading](https://www.rismasystems.com/hubfs/raw_assets/public/RISMA_Systems_December2021/images/Time-reading.png) 5 minutes of reading ● ESG](https://www.rismasystems.com/en/resources/articles/vsme-sustainability-reporting)

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