Updated 20 May 2025

Sustainability management has become an integral part of business operations in 2025. Where some measures were once innovative, they are now considered mainstream. Both the market and legislation are responding to this shift with new ideas and concepts. In 2024, for example, the European Commission introduced the Corporate Sustainability Reporting Directive (CSRD), a directive requiring companies to report on their impact on people and the environment. And in early 2025, SKAO launched a new version of the CO₂ Performance Ladder: version 4.0.

What do these developments mean for your organisation? To what extent are the CSRD and the CO₂ Performance Ladder aligned? And how effectively do CSRD and the CO₂ Performance Ladder 4.0 promote sustainability? In this article, we answer the most frequently asked questions on this topic.

CSRD in brief

CSRD is EU legislation requiring organisations to report on environmental, social, and governance (ESG) topics in a publicly available sustainability report. How do these sustainability factors (environmental, social, governance) influence the organisation, and what is the organisation’s impact on its surroundings? Stakeholders and other interested parties should be able to determine the organisation’s level of sustainability based on this report, which must be included in the management report. The CSRD stems from the Green Deal, a series of policy initiatives aimed at making the EU climate-neutral by 2050.

Who does CSRD apply to?

CSRD applies to large companies in the EU. Currently, ‘large’ refers to companies with at least 250 employees and a net turnover of more than €40 million or a balance sheet total of more than €20 million.

Fewer companies subject to CSRD due to Omnibus Proposal

However, in February 2025 the European Commission published the Omnibus Proposal, aimed at simplifying several climate-related directives. The idea behind this is to reduce the administrative burden for businesses, thereby improving the business climate and competitiveness within the EU. The proposal is currently awaiting approval from the European Council and the European Parliament.

One of the proposals is to limit CSRD obligations to companies with at least 1,000 employees and a turnover of at least €50 million or a balance sheet total of at least €25 million. This change would mean that around 80 percent of companies would no longer be subject to CSRD. For companies not subject to CSRD, the EU has published voluntary standards, known as VSME.

Omnibus Proposal postpones CSRD implementation date for many companies

Another change in the Omnibus Proposal is the postponement of the reporting requirement for companies in Wave 2 (large non-listed companies) and Wave 3 (listed SMEs). These two groups will not be required to publish a CSRD report on the previous financial year until 2028 and 2029, respectively. The only group for whom the delay does not apply are companies that must report in 2025 on the 2024 financial year (Wave 1).

What requirements must the CSRD sustainability report meet?

The requirements for the CSRD sustainability report are described in the so-called ESRS: European Sustainability Reporting Standards. The first set of twelve ESRS has already been published. These ESRS apply to all companies subject to CSRD (and are therefore also called ‘sector-agnostic’ ESRS). Additional ESRS are expected to be developed for specific sectors.

ESRS may also be amended by the Omnibus Proposal

In the Omnibus Proposal, the European Commission indicated that it intends to revise the first set of ESRS. Among other things, the Commission wants to reduce the number of mandatory data points companies must report on. It also proposes not to develop any further sector-specific reporting standards.

What is the relationship between the CO₂ Performance Ladder 4.0 and CSRD?

By meeting the requirements of the CO₂ Performance Ladder version 4.0, an organisation covers part of the ESRS set, specifically ESRS E1 on climate change. This also applies to the VSME. ESRS E1 requires organisations to disclose their impact on climate change. This includes the positive and negative effects of their business activities – from energy consumption to the procurement of materials.

During the development of the CO₂ Performance Ladder 4.0, CSRD was taken into account. As a result, the CO₂ Performance Ladder 4.0 applies the same framework conditions as CSRD wherever possible. For example, the footprint produced by the organisation in accordance with the CO₂ Performance Ladder requirements can be used directly in the CSRD report, since the same scope classification is used, all greenhouse gases (not just CO₂) are included, and it is permitted to report tank-to-wheel emissions separately. Of course, it is essential that the organisation uses the same organisational boundaries for both.

>> Want to know more about CO₂ Performance Ladder version 4.0? Also take a look at our previously published articles: