CSRD Compliance for Tech Companies: What You Need to Know in 2026
The Corporate Sustainability Reporting Directive is the most significant regulatory shift in ESG since the Paris Agreement. For tech companies — especially those with EU customers, EU employees, or EU investors — ignoring it is no longer an option. This post cuts through the noise and gives you a precise picture of what CSRD requires, who it actually affects after the 2025 Omnibus revision, and how to build a compliant reporting operation.
What CSRD Actually Is
CSRD replaced the Non-Financial Reporting Directive (NFRD) and fundamentally changed the scope and rigor of sustainability reporting in the EU. Where NFRD applied to roughly 11,000 large public-interest entities with light-touch requirements, CSRD was originally designed to reach ~50,000 companies with detailed, audited disclosures under a unified standard set: the European Sustainability Reporting Standards (ESRS).
The April 2025 Omnibus Simplification Package revised those numbers significantly. Mandatory scope is now approximately 5,000 companies — but the reporting bar for those that remain in scope is unchanged.
Who Is In Scope After the Omnibus Revision
The revised thresholds apply to large EU companies that meet all three criteria:
- More than 1,000 employees (down from the original 250+ trajectory)
- Net turnover exceeding €50 million
- Balance sheet total exceeding €25 million
For non-EU companies (including US-headquartered tech firms), the third-country undertaking rule applies: if your EU-generated revenue exceeds €150 million in two consecutive years and you have either an EU-listed subsidiary or an EU branch generating over €40 million, you must file a CSRD-equivalent group-level report.
What this means for tech companies specifically:
| Company Type | Scope Trigger | | --- | --- | | EU-incorporated SaaS (Series C+) | Likely in scope at 1,000+ headcount | | US HQ with EU subsidiary | In scope if EU revenue >€150M | | EU-listed company any size | In scope immediately | | SME tech company (<1,000 employees) | Out of mandatory scope; may face value chain requests |
The "value chain" carve-out matters: even if your company is not directly in scope, large in-scope customers will request ESRS-aligned data from you as part of their own supply chain disclosures. Being CSRD-ready is a sales and procurement advantage.
The ESRS Standards: What You Actually Have to Report
ESRS is a set of 12 standards organized across three pillars:
Cross-cutting standards (apply to all reporters):
- ESRS 1: General requirements (materiality assessment methodology, double materiality)
- ESRS 2: General disclosures (governance, strategy, risk management, targets)
Environmental standards (E1–E5):
- E1: Climate change (Scope 1, 2, 3 emissions, TCFD-aligned)
- E2: Pollution
- E3: Water and marine resources
- E4: Biodiversity and ecosystems
- E5: Resource use and circular economy
Social standards (S1–S4):
- S1: Own workforce
- S2: Workers in value chain
- S3: Affected communities
- S4: Consumers and end-users
Governance standard:
- G1: Business conduct
Not every standard is mandatory for every company. ESRS 1 and 2 are always required. The remaining 10 are subject to a double materiality assessment — you disclose based on what is material to your specific business, either from an impact perspective (how your operations affect the world) or a financial materiality perspective (how ESG factors affect your financial performance).
For tech companies, the material standards typically cluster around:
- E1 (climate): Data center energy use, cloud provider emissions, business travel, Scope 3 from software supply chain
- S1 (workforce): Diversity metrics, pay equity, working conditions for contract workers
- G1 (governance): Anti-corruption policies, supplier codes of conduct, data ethics
Timeline and Penalties
The revised CSRD timeline post-Omnibus:
| Cohort | First Report Covers | Filing Deadline | | --- | --- | --- | | Large EU PIEs (already under NFRD) | FY 2024 | 2025 (already due) | | Other large EU undertakings (>1,000 employees) | FY 2026 | Mid-2027 | | Third-country undertakings | FY 2028 | Mid-2029 | | EU-listed SMEs (opt-in) | FY 2026 | Mid-2027 |
For companies newly in scope for FY 2026, you have until approximately mid-2027 to file — but the data collection window for FY 2026 opens January 1, 2026. If you're not already tracking the right metrics, you've lost 2026 data.
Penalties vary by member state since CSRD is a directive (not a regulation), meaning EU countries implement it into national law with their own enforcement regimes. In practice:
- Germany, France, and the Netherlands have fines in the range of €50,000 to €500,000 for material misstatements or non-filing
- Audit failure can result in withdrawal of the auditor's license
- Reputational risk from public enforcement actions is increasingly real — the EU's sustainability reporting enforcement is modeled on financial reporting enforcement
What "Limited Assurance" Actually Requires
CSRD mandates third-party assurance of sustainability reports — initially limited assurance (equivalent to a review engagement), with the expectation of transitioning to reasonable assurance by 2028 for large companies.
Limited assurance is not a checkbox. Your auditor (statutory auditor or accredited third-party) will:
- Review your materiality assessment methodology for consistency with ESRS 1
- Test data collection processes for selected KPIs (typically E1 and S1)
- Trace emission calculations back to source data (utility invoices, fuel receipts, API exports from cloud providers)
- Review internal controls over sustainability reporting
This means your ESG data infrastructure needs audit-grade traceability. An Excel spreadsheet with manually typed numbers will not survive limited assurance.
Practical Preparation Roadmap for Tech Companies
Q1 2026 — Foundation:
- Conduct a double materiality assessment (interview key stakeholders, review industry peers)
- Map current data sources for E1: energy bills, cloud spend, travel expense systems
- Identify gaps in S1 workforce data (pay gap analysis, headcount by category)
- Appoint an ESG reporting owner (usually in Finance or Legal)
Q2 2026 — Data Infrastructure:
- Implement automated ESG reporting workflows — from data ingestion pipelines to scheduled report generation — to replace manual spreadsheet-based collection
- Implement automated data collection for Scope 1 and 2 emissions (utility API integrations or OCR pipeline for invoices)
- Engage your Scope 3 Category 11 (use of sold products) calculation — the hardest and most material category for SaaS companies
- Select a reporting platform or build internal tooling with audit trails
Q3 2026 — Drafting and Review:
- Draft ESRS 2 general disclosures (governance structure, risk management)
- Complete quantitative disclosures for material topics
- Internal review by legal, finance, and technical owners
Q4 2026 — Assurance Preparation:
- Pre-engagement with auditor
- Data validation and control documentation
- Final report preparation
Practical tip: The double materiality assessment is the most underestimated workload. ESRS 1 requires a documented, stakeholder-informed process. A credible assessment takes 6–10 weeks and involves structured interviews with customers, investors, suppliers, and employees. Starting this in Q3 2026 will leave you scrambling.
The Technology Stack Problem
Most tech companies discover their data infrastructure is completely unfit for ESRS when they start preparing. Common failure modes:
- No centralized energy data: Utility invoices are in email, PDF, or Accounts Payable systems not connected to any analytics layer
- Cloud emissions fragmented: AWS, GCP, and Azure each have their own carbon dashboards with incompatible methodologies
- Employee data siloed: HR systems don't export the demographic cuts required for S1 pay gap disclosures
- No audit trail: Numbers in reports can't be traced to source documents
Solving this requires either a purpose-built ESG data platform or custom data engineering work to normalize, store, and audit the underlying data.
Security and compliance go hand-in-hand. Companies building ESG reporting infrastructure often find it the right moment to also implement SOC2 compliance controls — the same audit-readiness culture, access controls, and data lineage requirements overlap significantly. See our Security & SOC2 Compliance offering for more. The market for ESG software is crowded but immature — most platforms are strong on reporting templates and weak on actual data ingestion and transformation.
What 100x Engineering Does
We build the data infrastructure layer that makes CSRD reporting defensible. That means OCR pipelines for utility and travel invoices, API integrations with AWS/GCP/Azure carbon APIs, emission factor calculation engines tied to IPCC and DEFRA databases, and audit-ready data stores with full lineage.
Our ESG practice delivers compliance-ready infrastructure in 3 weeks — not a consultancy engagement that takes 18 months.
Ready to assess your CSRD readiness? Talk to our ESG team and we'll map your current data gaps against ESRS requirements in a free 30-minute call.
The regulatory environment described here reflects the CSRD Omnibus Simplification Package as of early 2026. Member state transposition timelines vary. This post is informational; consult legal counsel for compliance decisions specific to your company.
Related Resources
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Free Tool: Check if CSRD applies to your tech company and get prioritized action items. → CSRD Readiness Calculator