What is the NFRD (Non-Financial Reporting Directive)?

The NFRD, formally known as Directive 2014/95/EU, required large public-interest entities to publish a non-financial statement as part of their annual management report. The goal was to improve transparency, comparability, and accountability around how companies manage sustainability risks and impacts.

Under the directive, companies had to explain how environmental and social considerations were integrated into their business model, strategy, and operations. This was a significant change from purely voluntary corporate social responsibility reporting.

The NFRD applied to large public-interest entities (PIEs) operating in the European Union. These included listed companies, banks, insurance companies, and other entities classified as public interest under national law. To fall within scope, companies also needed to employ more than 500 people.

In total, approximately 11,700 companies across the EU were required to report under the NFRD. Smaller companies and most private businesses were excluded, even if their operations had significant environmental or social impacts.

Companies subject to the NFRD were required to disclose information related to key ESG areas, including environmental matters, social and employee issues, human rights, anti-corruption and bribery, and board diversity. These disclosures had to cover the company’s policies, the outcomes of those policies, related risks, and relevant key performance indicators.

A major weakness of the NFRD was the lack of mandatory reporting standards. Companies could choose from frameworks such as GRI, UN Global Compact, or ISO 26000, which resulted in inconsistent reporting formats and limited comparability across companies and sectors.

No. The NFRD is no longer in force. As of January 2024, it has been fully replaced by the Corporate Sustainability Reporting Directive (CSRD). Companies that previously reported under the NFRD are now required to comply with CSRD requirements, starting with reporting on the 2024 financial year.

While the NFRD no longer applies, it forms the foundation on which the CSRD has been built. Understanding the NFRD helps explain why the EU introduced stricter, more standardised sustainability reporting rules.

The CSRD significantly expands and strengthens the NFRD framework. While the NFRD introduced the concept of mandatory non-financial reporting, the CSRD transforms it into a comprehensive and enforceable reporting system.

Key differences include a much broader scope of companies, mandatory use of the European Sustainability Reporting Standards (ESRS), the introduction of double materiality, digital reporting requirements, and mandatory third-party assurance. The CSRD also applies to certain non-EU companies with substantial operations in the EU, which was not the case under the NFRD.

The Corporate Sustainability Reporting Directive (CSRD) is the European Union’s response to the limitations of the Non-Financial Reporting Directive (NFRD). Officially adopted in 2022 and in force since January 2024, the CSRD significantly expands the scope and depth of corporate sustainability reporting. It now applies to nearly 50,000 companies, including large private firms, listed SMEs, and certain non-EU companies generating significant revenue within the EU. One of the directive’s key advancements is the mandatory use of European Sustainability Reporting Standards (ESRS), which standardise ESG disclosures to improve consistency, comparability, and decision-usefulness across sectors.

In addition to broadening the number of companies affected, the CSRD introduces several structural changes. Reports must now be submitted in a digital, machine-readable format (XHTML with XBRL tagging), making sustainability data easier to analyse and integrate. The directive also requires independent third-party assurance to verify the reliability of disclosures—addressing long-standing concerns about data quality under the NFRD. Finally, the CSRD is built around the concept of double materiality, requiring companies to assess both how sustainability issues affect their business and how their operations impact people and the planet. These measures position the CSRD as a cornerstone of the EU’s broader sustainable finance agenda.

Despite its importance, the NFRD faced widespread criticism. Its limited scope excluded many companies with material sustainability impacts. The flexibility in reporting frameworks led to vague, high-level disclosures that were often difficult to compare. Investors and regulators repeatedly highlighted the lack of reliable, decision-useful ESG data.

These shortcomings led to the development of the CSRD, which aims to treat sustainability information with the same level of rigor as financial reporting.

Complying with the Corporate Sustainability Reporting Directive (CSRD) requires more than just ticking boxes. It demands structured ESG data, accurate emissions tracking, and a deep understanding of both regulatory frameworks and sustainability impacts. Carbmee provides a comprehensive solution that combines carbon intelligence, advanced analytics, and regulatory alignment to help companies meet CSRD requirements efficiently and effectively.

At the heart of Carbmee’s platform is its ability to simplify and automate core aspects of CSRD reporting. Companies can conduct a complete double materiality assessment, identifying both how sustainability issues impact their business and how their operations affect people and the planet. This is supported by detailed Scope 1, 2, and 3 emissions tracking, leveraging life cycle assessment (LCA) methodology—particularly critical for companies with complex supply chains or product portfolios.

Carbmee helps organizations structure their ESG data in alignment with the European Sustainability Reporting Standards (ESRS), which underpin CSRD compliance. The platform also supports digital-ready reporting, with capabilities for exporting reports in XHTML format with XBRL tagging, streamlining the regulatory submission process.

Beyond technical functionality, Carbmee acts as a central ESG data hub, enabling cross-functional collaboration and ensuring consistency across departments and regions. For businesses seeking expert support, Carbmee connects users with a network of trusted advisors and implementation partners—helping accelerate audit readiness, close data gaps, and navigate evolving compliance requirements with confidence.

What is the NFRD?

The NFRD (Non-Financial Reporting Directive) was an EU regulation that required large public-interest companies to disclose information about their ESG practices and risks in annual reports.

Is the NFRD still in force?

No. The NFRD was officially replaced by the CSRD in January 2024.

Is the NFRD mandatory?

Yes, for companies that fell under its scope (large PIEs with 500+ employees), NFRD compliance was mandatory between 2018 and 2023.

Who is subject to the NFRD?

Public-interest entities with more than 500 employees, e.g., listed companies, banks, and insurance companies in the EU.

What are the key differences between CSRD and NFRD?

CSRD has a wider scope, requires digital and standardised reporting, enforces third-party assurance, and applies double materiality — far beyond the NFRD’s original framework.

How does the CSRD differ from the NFRD?

CSRD introduces mandatory standards (ESRS), double materiality, digital reporting, and applies to more companies, including some non-EU firms.

Who does the NFRD apply to?

The NFRD applied to about 11,700 large companies in the EU — specifically public-interest entities with over 500 employees.