CSRD compliance for non-EU companies

Your company is headquartered outside the EU. You do not have a stock market listing in Europe. And yet — a growing number of non-European businesses are discovering that the EU’s Corporate Sustainability Reporting Directive (CSRD) applies to them. Or will apply soon. The reason catches many finance directors off guard: the CSRD’s scope extends well beyond EU-incorporated companies, and the consequences of non-compliance are real. Here is what you need to know before the deadlines arrive.

The CSRD (Directive 2022/2464/EU) is the EU’s sustainability reporting framework. It requires companies to disclose detailed information about their environmental, social and governance (ESG) impacts — following the European Sustainability Reporting Standards (ESRS). While the Directive targets EU companies first, it specifically includes a third-country (non-EU) company obligation that many businesses have not yet planned for.

Which non-EU companies must comply with CSRD?

A non-EU parent company is subject to CSRD requirements if it meets both of the following conditions:

• It generates net turnover of more than €150 million in the EU for each of the last two consecutive financial years
• It has at least one subsidiary or branch in the EU that meets specific size thresholds

EU subsidiary threshold

The EU subsidiary of the non-EU parent triggers the obligation if it qualifies as a large company under the EU Accounting Directive — meaning it exceeds at least two of these three criteria:

• Balance sheet total above €25 million
• Net turnover above €50 million
• More than 250 employees on average during the financial year

EU branch threshold

If the non-EU company does not have a qualifying subsidiary but operates through a branch in the EU, the branch triggers the obligation if it generated net turnover of more than €40 million in the EU in the previous financial year.

In practice, this means that large non-EU multinationals with meaningful commercial activity in Europe — through a subsidiary in Spain, Germany, France, or any other EU country — will be within scope of CSRD.

When does the obligation apply to non-EU companies?

The CSRD implementation timeline for third-country companies is:

• Financial year 2028 (reports published in 2029): non-EU parent companies meeting the thresholds above
• The obligation falls on the EU subsidiary or branch to publish the group-level sustainability report prepared by the non-EU parent, or — if the parent does not prepare one — to prepare and publish its own report

This timeline is later than for EU companies (large EU companies began reporting from 2025), but 2028 is approaching faster than most organisations expect. Building the data collection and reporting infrastructure takes 2–3 years in most cases.

What must the CSRD report cover?

Reports must be prepared in accordance with the European Sustainability Reporting Standards (ESRS), developed by the European Financial Reporting Advisory Group (EFRAG). The ESRS cover:

• Climate change: greenhouse gas emissions (Scopes 1, 2 and 3), climate transition plans, physical and transition risks
• Environmental topics: pollution, water, biodiversity, circular economy
• Social: own workforce, workers in the value chain, affected communities
• Governance: business conduct, anti-corruption, political engagement

The reporting must follow a ‘double materiality’ approach: companies must assess both how ESG factors affect the business financially (financial materiality) and how the business impacts people and the environment (impact materiality). Both dimensions must be disclosed when material.

What role does Spain play in CSRD compliance for non-EU groups?

If your group’s EU footprint includes a Spanish subsidiary, Spain is a relevant jurisdiction for CSRD implementation. In Spain, the CSRD is being transposed into national law through amendments to the existing Non-Financial Information and Diversity Law (Ley 11/2018). The Spanish subsidiary may be the entity responsible for publishing the group’s sustainability report in the EU — and will need to ensure the information meets both EU and Spanish regulatory requirements.

Spain’s audit profession is also adapting: the CSRD requires that sustainability reports be subject to limited assurance by an accredited independent auditor. In Spain, the ICAC (Instituto de Contabilidad y Auditoría de Cuentas) is the regulator overseeing the accreditation of sustainability assurance providers.

What should non-EU companies start doing now?

Even with a 2028 obligation, the preparation work should begin now:

• Confirm scope: assess whether your group meets the €150 million EU turnover threshold and has a qualifying EU subsidiary or branch
• Gap analysis: compare your current ESG data collection against ESRS requirements to identify gaps
• Double materiality assessment: conduct a formal assessment to determine which ESRS topics are material for your business — this is the foundation of the entire report
• Data infrastructure: build systems to collect, validate and consolidate the required ESG data across all relevant entities
• Governance: assign internal ownership of the CSRD reporting process and engage the board
• Engage your EU auditor: the assurance requirement means your EU subsidiary’s auditor needs to be brought into the process early

Frequently asked questions

What happens if a non-EU company does not comply with CSRD?

Non-compliance exposes the EU subsidiary or branch to penalties under the national law of the EU member state where it is incorporated or registered. In Spain, failure to prepare or publish mandatory non-financial information is subject to sanctions under Spanish corporate law. Beyond legal penalties, non-compliant companies risk reputational damage, loss of access to EU capital markets, and exclusion from public procurement contracts.

Can a non-EU company use its own sustainability report instead of ESRS?

Potentially — but only under specific conditions. The European Commission may grant equivalence to third-country sustainability reporting standards, meaning a company reporting under those standards would be exempt from full ESRS compliance. As of 2025, the Commission has not yet adopted equivalence decisions for any third-country framework (including GRI, TCFD, or SEC climate rules). Companies should not assume equivalence until it is formally confirmed.

Does CSRD apply to US-listed companies with EU operations?

Yes — if the thresholds are met. A US-listed company with more than €150 million in EU revenues and a qualifying EU subsidiary or branch will be within scope of CSRD for its 2028 financial year reporting. This is separate from any SEC climate disclosure requirements the company may face in the US. Managing dual reporting obligations requires careful coordination between US and EU compliance programmes.

CSRD is complex, and the clock is already running. At Capital Auditors & Consultants, we help non-EU companies with Spanish and European operations assess their CSRD scope, conduct double materiality assessments, and build the reporting frameworks they need to comply on time. Contact our sustainability and audit team to start your CSRD readiness review.