Are You Still In Scope for CSRD? The New Threshold Explained

CSRD scope threshold data requirements have shifted materially since Directive (EU) 2026/470 entered into force, and many finance and sustainability teams are now reassessing whether their company still carries a mandatory reporting obligation. This article works through the amended thresholds step by step, covering individual companies, consolidated groups and non-EU parents, before turning briefly to what happens once a company knows its status.

CSRD scope threshold: What Changed Under Directive (EU) 2026/470?

Directive (EU) 2026/470 was adopted on 24 February 2026, published two days later, and entered into force on 18 March 2026. It amends the earlier CSRD framework by replacing the former two-out-of-three size criteria with a narrower, cumulative test. The full legal text is available on EUR-Lex, and the Council’s summary of the simplification agreement is published in its press release of 24 February 2026.

The amendment does not remove sustainability reporting as a concept. It narrows who must produce it under mandatory rules, while leaving room for voluntary reporting by companies that fall outside scope.

The New CSRD Threshold for EU Companies

For financial years starting on or after 1 January 2027, an EU undertaking sits within the main CSRD reporting scope only when it meets both conditions at once, not either one in isolation.

1. Net turnover exceeding €450 million for the financial year.
2. An average of more than 1,000 employees during that same financial year.

Both conditions must be satisfied together. A company with €600 million turnover but 700 employees falls outside this test. A company with 1,200 employees but €300 million turnover also falls outside it. The balance-sheet total, previously part of the size test, no longer plays a role in this main scope assessment.

How the Threshold Applies to Consolidated Groups

Where a parent undertaking prepares consolidated financial statements, the same €450 million turnover and 1,000-employee conditions apply on a consolidated basis. This means the group’s combined figures, not the parent’s standalone figures, determine whether the qualifying parent undertaking is in scope.

A holding company with modest standalone turnover can still trigger a group-level obligation if its subsidiaries collectively push consolidated turnover and headcount past both thresholds. Group finance teams should map subsidiary turnover and average employee counts before assuming the parent is exempt. Our CSRD applicability review works through this consolidation logic in detail.

The Test for Non-EU Parent Companies

Third-country groups face a distinct, two-part test rather than the EU company thresholds above.

1. The third-country undertaking or group generates more than €450 million in the EU, in each of the last two consecutive financial years.
2. It has a qualifying EU subsidiary or branch that exceeded €200 million net turnover in the preceding financial year.

Both elements must be present. A non-EU exporter with significant EU sales but no qualifying subsidiary or branch above the €200 million mark does not trigger this test on its own. This distinction matters for steel, aluminium, fertiliser and hydrogen supply chains already navigating CBAM obligations alongside CSRD questions.

Are Listed SMEs Still in Scope?

No. Under the amended scope, listed SMEs are no longer subject to mandatory CSRD sustainability reporting. This is a permanent removal from the mandatory framework, not a delayed wave or a temporary opt-out window. Listed SMEs that previously prepared for a future reporting obligation can now redirect that work toward voluntary frameworks if they still want investor-facing sustainability disclosure.

When the Amended Rules Apply

Timing detail matters as much as the threshold figures themselves.

1. The main threshold test applies for financial years starting on or after 1 January 2027.
2. For financial years beginning between 1 January 2025 and 31 December 2026, Member States may exempt undertakings and issuers below either new threshold, but treatment varies by country.
3. Member States must transpose the amendments in Articles 1, 2 and 3 by 19 March 2027.
4. The deadline for EU limited-assurance standards is 1 July 2027; the earlier plan for reasonable assurance has been removed.

Because national transposition can introduce local variation, always check the specific transposing measure in the relevant Member State rather than relying on the directive text alone. The European Commission’s corporate sustainability reporting page tracks transposition progress across the EU.

CSRD Scope Decision Tree

1. Is your undertaking established in the EU? If yes, apply the €450 million turnover and 1,000-employee cumulative test.
2. Does your undertaking prepare consolidated financial statements? If yes, apply both thresholds on a consolidated basis.
3. Is your undertaking a listed SME? If yes, you are outside mandatory scope regardless of size.
4. Is the ultimate parent based outside the EU? If yes, apply the third-country test instead of the EU company test.
5. Does the third-country group exceed €450 million in the EU for two consecutive years, with a qualifying EU subsidiary or branch above €200 million? If yes, the group is in scope.
6. If none of the above thresholds are met, mandatory CSRD reporting does not apply, though voluntary reporting remains available.

Worked Examples

These figures are illustrative only, intended to demonstrate the arithmetic, not real client data.

Example A: An EU manufacturer reports €480 million net turnover and an average of 1,100 employees. Both conditions are met, so the company is in scope from financial years starting on or after 1 January 2027.

Example B: An EU distributor reports €500 million turnover but only 650 employees. The turnover condition is met; the employee condition is not. Because both conditions are required, this company is outside the main mandatory scope.

Example C: A non-EU parent generates €520 million EU turnover for two consecutive years and owns an EU subsidiary with €210 million turnover in the preceding year. Both third-country conditions are satisfied, so the group falls within scope.

What If Your Company Is Now Out of Scope?

Falling outside mandatory CSRD scope does not remove sustainability reporting from the table entirely. Companies below the thresholds may still choose voluntary sustainability reporting, including VSME-related reporting designed for smaller undertakings. Many also receive proportionate value-chain data requests from larger customers or lenders who remain in mandatory scope and need supply-chain emissions data for their own ESRS disclosures.

These commercial requests are not the same as a legal CSRD reporting obligation. A request from a customer for Scope 3 activity data is a contractual or commercial expectation, not a statutory duty under the directive. Understanding this distinction prevents companies from over-building compliance infrastructure for an obligation they do not legally hold, while still responding credibly to buyers who need the data. The ESG reporting tool supports this lighter-touch, voluntary approach.

What to Do If You Remain in Scope

Companies confirmed within mandatory scope move into a distinct set of downstream tasks: double materiality assessment, ESRS-aligned data collection, internal controls over sustainability data, and preparation for limited assurance. This is a shorter phase in this article by design, since the threshold question comes first, but it deserves brief treatment.

1. Run a double materiality assessment to identify which ESRS topics apply, referencing EFRAG’s sustainability reporting guidance.
2. Map data sources across finance, procurement and operations against ESRS disclosure requirements, detailed on our ESRS standards page.
3. Establish internal controls for sustainability data comparable to financial reporting controls.
4. Prepare for limited assurance, the current EU requirement, rather than reasonable assurance.
5. Align supplementary disclosures with GRI, SBTi or ISSB where investors expect broader context, using our GRI standards and ISSB standards resources.

Common Mistakes When Assessing CSRD Scope

Teams frequently apply the old two-out-of-three test out of habit, missing that turnover and headcount now both must be exceeded together. Others assess only the parent’s standalone figures and overlook the consolidated group test. Non-EU groups sometimes check EU turnover but forget the separate €200 million EU subsidiary or branch condition, which is a distinct, mandatory second element.

How We Work and What You Receive

Zero Emissions Hub, based in Sofia with teams in Plovdiv and Varna, works with finance and sustainability teams to confirm scope status before any reporting work begins. Our review draws on ISO 14064-1 inventory practice and GHG Protocol boundaries, tailored to CSRD’s regulatory scope questions.

You receive a documented scope determination, a data-gap summary against ESRS requirements where applicable, and a short action plan distinguishing mandatory obligations from voluntary or commercial reporting choices. This connects directly to our broader carbon accounting and ESG reporting package and our carbon accounting services. We are advisers, not an accredited verification body; independent assurance is carried out by third-party verifiers.

Frequently Asked Questions

Does the €450 million threshold apply to worldwide turnover or EU turnover only?

For EU undertakings, the €450 million test applies to the company’s own net turnover. For third-country groups, the equivalent test specifically requires more than €450 million in the EU.

What happens if my company meets one threshold but not the other?

Both conditions must be met together. Meeting only the turnover or only the employee condition means the company falls outside the main mandatory scope.

Can a listed SME still choose to report voluntarily?

Yes. Listed SMEs are no longer in mandatory scope, but nothing prevents voluntary reporting, including simplified VSME-related disclosure for investor or customer transparency.

Does national transposition change the thresholds themselves?

The thresholds come from the directive, but Member States can apply exemptions for financial years beginning between 2025 and 2026, and transposition timing varies. Check the national measure directly.

Is limited assurance still required for in-scope companies?

Yes. Reasonable assurance was removed from the framework. Limited assurance remains the requirement, with EU assurance standards due by 1 July 2027.

Where can I check the official IFRS Sustainability Disclosure Standards referenced alongside ESRS?

The IFRS Sustainability Standards Navigator lists ISSB standards used by companies seeking global comparability alongside ESRS.

Request a CSRD Scope Assessment

If you need a documented answer on whether your company or group remains within mandatory CSRD scope, our team can review your turnover, headcount and group structure against the current thresholds. Contact Zero Emissions Hub to request an assessment, or call +359 889 537 131.

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