The German government is pushing to make key changes to the European Commission’s Corporate Sustainability Reporting Directive (CSRD). These changes include delaying sustainability reporting requirements for smaller companies by two years and removing sector-specific reporting obligations.

While these updates could temporarily ease compliance pressures for private market firms and asset managers with portfolio companies in Germany, they may also make it harder for impact investors to assess sustainability efforts, potentially slowing progress toward long-term ESG goals.

Let’s dive deeper into Germany’s proposed CSRD delay and what it means.

About the EU Commission's CSRD in Germany

The Corporate Sustainability Reporting Directive is a set of rules or a regulatory framework that requires companies to report ESG performance. The standard was implemented in Germany through the Sustainability Reporting Directive Implementation Act, requiring affected companies to disclose detailed ESG information, such as carbon emissions, social impacts, and governance practices. 

The CSRD is expected to affect around 13,000 companies across Germany, including large, medium, and small-sized corporations, to publish standardized, auditable sustainability reports. For compliance, large companies start CSRD reporting in 2024, medium-sized companies in 2025, and small listed companies in 2026, with each phase expanding reporting requirements progressively.

Confirmed by the Federal Finance Minister

Federal Finance Minister of Germany Jörg Kukies confirmed the ambitions of delay in an interview with Börsen-Zeitung, Germany’s financial daily, mentioning points from a leaked letter signed by the officials to the European Commission. While the timing may be politically charged, the suggestions show a growing divide between aspirational sustainability ambitions and bureaucratic realities.

“The different reporting regimes should be synchronised so that each data point only has to be reported once. Every CFO could tell absurd stories about how the same data has to be reported multiple times. We need more fundamental regulations and less micromanagement. Additionally, European and international regulations must be aligned and interpreted uniformly.” said Jörg Kukies. 

Key changes in CSRD for Germany

• The proposal includes a delay of sustainability reporting obligations for smaller organizations by over two years, so companies that are initially required to report in 2026 may have till 2028 to implement CSRD requirements and align with sector-specific ESRS standards.
• Increasing the size threshold for companies that are required to report ESG performance, to eliminate the large number of businesses that need to comply with CSRD and make it easier for other companies.
• The elimination of sector-specific reporting obligations under the CSRD is part of the proposal to simplify the sustainability reporting framework.

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