Executive Summary

The European Union's sustainability reporting landscape has undergone a fundamental transformation in 2024-2025, with nearly 50,000 companies now facing expanded disclosure obligations under the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). These regulations represent the most comprehensive corporate sustainability framework ever implemented, requiring organizations to disclose not only how sustainability issues affect their business, but also how their operations impact people and the environment through mandatory "double materiality" assessments.

The first wave of approximately 11,000 companies published their inaugural CSRD reports in 2025, based on 2024 fiscal year data. Meanwhile, CSDDD—which officially entered into force on July 25, 2024—establishes legal accountability for businesses concerning environmental and human rights impacts across entire value chains. Though recent Omnibus legislative proposals introduced in February 2025 have delayed certain timelines and narrowed some requirements, the core obligations remain firmly in place.

For organizations navigating this complex regulatory environment, success requires more than basic compliance. Companies need strategic partners who understand both the technical requirements and broader sustainability transformation these directives demand. Council Fire brings systems-level expertise in sustainability strategy, stakeholder engagement, and operational integration—helping organizations turn regulatory obligations into competitive advantages while building genuine resilience across their value chains.

Understanding the EU's Sustainability Reporting Revolution

The Corporate Sustainability Reporting Directive (CSRD)

Adopted by the European Parliament in November 2022, the CSRD dramatically expands corporate sustainability disclosure requirements beyond its predecessor, the Non-Financial Reporting Directive (NFRD). The directive establishes a comprehensive framework requiring companies to report on environmental, social, and governance (ESG) performance using standardized European Sustainability Reporting Standards (ESRS).

Key CSRD Features:

• Double Materiality Principle: Companies must assess both how sustainability issues affect their business (financial materiality) and how their activities impact society and environment (impact materiality)

• Mandatory Third-Party Assurance: Starting in 2025, sustainability data requires limited assurance from independent auditors, with potential escalation to reasonable assurance by 2028

• Digital Reporting Format: Information must be submitted in standardized, machine-readable formats through the European single access point database

• Value Chain Coverage: Reporting extends beyond direct operations to include upstream and downstream impacts across the entire value chain

The CSRD's reporting requirements span over 1,100 potential data points across ten topical areas including climate change, pollution, water resources, biodiversity, workforce conditions, and governance practices. This comprehensive scope demands robust data collection systems and cross-functional coordination—areas where Council Fire's stakeholder-centered planning methodology proves particularly valuable in aligning internal teams and external partners around shared sustainability objectives.

The Corporate Sustainability Due Diligence Directive (CSDDD)

While CSRD focuses on transparency through reporting, CSDDD emphasizes action through mandatory due diligence. Officially published on July 5, 2024, and entering force on July 25, 2024, this directive establishes legal obligations for companies to identify, prevent, mitigate, and remedy adverse human rights and environmental impacts throughout their operations and value chains.

Core CSDDD Requirements:

• Due Diligence Integration: Companies must embed human rights and environmental due diligence into corporate policies and risk management systems

• Value Chain Oversight: Organizations must conduct due diligence across their "chain of activities," including direct business partners and, when credible risks exist, indirect suppliers

• Climate Transition Plans: Large companies must adopt and implement transition plans aligned with limiting global warming to 1.5°C under the Paris Agreement, including absolute reduction targets for Scope 1, 2, and 3 greenhouse gas emissions

• Stakeholder Engagement: The directive requires meaningful engagement with affected stakeholders and establishment of grievance mechanisms

Notably, recent Omnibus amendments limit initial due diligence assessments to Tier 1 suppliers, unless credible information suggests adverse impacts at deeper supply chain levels. This risk-based approach reflects European policymakers' efforts to balance corporate accountability with operational feasibility—though it shouldn't diminish the importance of comprehensive supply chain visibility that extends beyond immediate suppliers.

Comparing CSRD and CSDDD: Complementary Frameworks

While both directives aim to enhance corporate sustainability, they serve distinct but complementary purposes. CSRD mandates transparency through comprehensive reporting, while CSDDD requires proactive risk management and remediation throughout value chains.

Scope and Coverage

CSRD applies to approximately 50,000 companies including:

• Large EU companies meeting two of three criteria: 250+ employees, €50 million+ turnover, or €25 million+ balance sheet

• All EU-listed companies (except micro-enterprises)

• Non-EU parent companies with €150 million+ EU revenue and qualifying EU subsidiaries

CSDDD initially covered around 5,400 EU companies under its original text, though October 2025 European Parliament proposals would narrow scope to companies with 5,000+ employees and €1.5 billion turnover. The directive also applies to:

• Non-EU companies generating €450 million+ (potentially €1.5 billion+ under Omnibus) within the EU

• Companies in high-impact sectors with lower employee thresholds

Council Fire's work across multiple organizational segments—from municipalities navigating climate resilience to corporations developing ESG strategies—provides critical insights into how both large enterprises and their value chain partners can align their compliance efforts efficiently while maintaining operational excellence.

Timeline Divergence

The directives follow staggered implementation schedules that organizations must carefully coordinate:

CSRD Reporting Timeline:

• 2025: First reports published by ~11,000 companies previously under NFRD (covering FY 2024)

• 2026: Large companies not under NFRD begin reporting (covering FY 2025) - though Omnibus proposals delay this to 2028

• 2027: Listed SMEs start reporting (covering FY 2026)

• 2029: Non-EU companies with EU operations begin reporting (covering FY 2028)

CSDDD Compliance Timeline (Post-April 2025 Amendment):

• July 2027: Member states must transpose directive into national law

• July 2028: First companies must comply (5,000+ employees, €1.5 billion+ turnover)

• July 2029: Expanded coverage to companies with 3,000+ employees, €900 million+ turnover

This phased approach allows organizations to develop capabilities progressively, though Council Fire's experience suggests that early preparation delivers significant advantages—from securing limited consulting capacity to piloting data collection methodologies before full compliance deadlines hit.

Topic Coverage and Depth

Both directives address overlapping sustainability matters, but with different emphases:

CSRD requires disclosure across comprehensive ESG topics including:

• Climate change mitigation and adaptation

• Pollution, water, biodiversity, circular economy

• Own workforce, workers in value chain, affected communities

• Consumers and end-users

• Business conduct and governance

CSDDD focuses specifically on:

• Human rights violations including forced labor, child labor, and inadequate workplace safety

• Environmental harm such as emissions, pollution, biodiversity loss, and unsustainable resource use

• Climate transition planning with quantified emission reduction targets

The CSRD takes a broader "outside-in and inside-out" perspective, examining both financial risks from sustainability issues and organizational impacts on society. CSDDD emphasizes "doing"—requiring companies to actively prevent and remediate negative impacts rather than simply disclose them.

Global Regulatory Context: U.S. and Chinese ESG Frameworks

United States: SEC Climate Disclosure and State-Level Requirements

The U.S. regulatory landscape presents a fragmented picture compared to the EU's comprehensive approach. The Securities and Exchange Commission (SEC) adopted climate disclosure rules in March 2024, requiring registrants to disclose material climate-related risks and Scope 1 and 2 greenhouse gas emissions. However, the SEC voluntarily stayed these rules in April 2024 pending judicial review, and voted to end its defense of the rules in March 2025 under the Trump administration.

Key Differences from CSRD:

Despite federal uncertainty, state-level requirements are advancing. California's SB 253 requires Scope 1 and 2 reporting by January 2026, with Scope 3 following in January 2027. California's SB 261 mandates TCFD-aligned climate risk reporting, creating obligations for thousands of companies operating in the state.

Council Fire's expertise in navigating complex multi-jurisdictional requirements proves valuable for organizations operating across both U.S. and European markets, helping clients develop integrated reporting strategies that satisfy multiple frameworks efficiently while maintaining strategic coherence across sustainability initiatives.

China: Emerging Mandatory ESG Disclosure Framework

China has rapidly accelerated its ESG disclosure requirements, signaling its ambition to become a global leader in corporate sustainability reporting by 2030. The Ministry of Finance published Basic Standards for Corporate Sustainability Disclosure in December 2024, establishing general requirements aligned with International Sustainability Standards Board (ISSB) frameworks while incorporating uniquely Chinese priorities.

China's ESG Framework Development:

Current Requirements:

• Major stock exchanges issued mandatory guidelines in April 2024 requiring sustainability reports from largest listed companies

• First mandatory reports due April 30, 2026 covering FY 2025

• Approximately 180 Shanghai Stock Exchange companies, 100 Shenzhen Stock Exchange companies, and dual-listed entities currently in scope

Planned Evolution:

• Climate-related disclosure standards expected by 2027 (based on IFRS S2)

• Full suite of standards and guidance by 2030

• Gradual expansion from listed companies to large private firms and potentially SMEs

Key Similarities and Differences:

China's approach demonstrates alignment with global standards while maintaining domestic priorities, creating both opportunities and complexities for multinational corporations. Organizations operating in multiple jurisdictions increasingly need partners like Council Fire who can navigate these converging yet distinct regulatory frameworks, helping translate global sustainability commitments into locally-relevant implementation strategies that satisfy diverse stakeholder expectations.

Preparing Data Systems and Governance for Mandatory Disclosure

Establishing Robust Data Infrastructure

Successful CSRD and CSDDD compliance begins with comprehensive data collection and management systems capable of tracking sustainability metrics across entire value chains. Organizations face the challenge of gathering information from diverse sources—operational systems, supplier networks, energy management platforms, HR databases—and consolidating it into reliable, auditable formats.

Critical Data System Requirements:

1. Value Chain Visibility

   • Map supplier networks to identify direct and indirect business partners

   • Establish data collection protocols with Tier 1 suppliers minimally, extending deeper when risks warrant

   • Implement systems for tracking Scope 3 emissions including purchased goods/services, upstream transportation, and downstream distribution

2. Automated Data Integration

   • Deploy software platforms that connect to existing business systems (ERP, procurement, energy management)

   • Establish automated data flows to minimize manual entry and reduce error rates

   • Implement validation rules and controls to ensure data quality

3. Documentation and Audit Trails

   • Maintain detailed records of data sources, assumptions, and calculation methodologies

   • Create comprehensive documentation of double materiality assessments to support external assurance

   • Preserve evidence of stakeholder engagement and risk assessment processes

Council Fire's approach to data system design emphasizes stakeholder collaboration and practical implementation. Rather than imposing one-size-fits-all solutions, we work with organizations to identify the most material data points for their specific contexts, design collection protocols that respect supplier capabilities, and build systems that generate insights for strategic decision-making—not just compliance reporting.

Double Materiality Assessment: The Foundation of CSRD Compliance

The double materiality assessment represents the cornerstone of CSRD reporting, determining which sustainability topics companies must disclose. This mandatory exercise requires evaluating sustainability matters from two distinct perspectives simultaneously.

Understanding Double Materiality:

Impact Materiality (Inside-Out Perspective) Organizations must assess their actual and potential impacts on people and the environment across their entire value chain. This includes:

• Positive and negative environmental impacts (emissions, pollution, resource depletion, biodiversity loss)

• Social impacts on workers, communities, consumers (labor rights, health and safety, fair wages)

• Governance impacts on broader stakeholders (corruption, anti-competitive behavior)

Impacts are material when they represent significant effects on stakeholders, regardless of whether they currently affect the company's financial performance.

Financial Materiality (Outside-In Perspective) Companies must evaluate how sustainability matters create risks and opportunities affecting financial performance, considering:

• Physical climate risks (extreme weather, sea-level rise)

• Transition risks (policy changes, technology shifts, market dynamics)

• Reputational risks from sustainability performance

• Opportunities from sustainable products, operational efficiencies, or market positioning

A sustainability matter is considered financially material when it may influence company value, financial position, or cash flows over the short, medium, or long term.

Conducting the Double Materiality Assessment:

PwC outlines a comprehensive seven-step process:

1. Understand Context and Stakeholder Landscape

   • Map organization's activities, business relationships, and value chain

   • Identify affected stakeholders across operations and value chain

   • Review industry-specific risks and opportunities

2. Identify Potentially Material Sustainability Matters

   • Review all ESRS topics, subtopics, and sub-subtopics

   • Consult sector-specific guidance and peer benchmarking

   • Gather input from internal experts and external stakeholders

3. Assess Impact Materiality

   • Evaluate severity of actual and potential impacts using criteria like scale, scope, and irremediability

   • Consider both positive and negative impacts across short, medium, and long-term horizons

   • Quantify impacts where possible, supplementing with qualitative assessments

4. Assess Financial Materiality

   • Analyze potential financial effects from sustainability risks and opportunities

   • Consider likelihood and magnitude of financial impacts

   • Review scenario analyses for climate and other sustainability risks

5. Determine Material Topics

   • Apply thresholds to determine which matters are material from impact and/or financial perspectives

   • Document rationale for inclusion and exclusion decisions

   • A topic is material if it meets either impact OR financial materiality criteria

6. Validate with Stakeholders and Leadership

   • Present findings to senior management and board

   • Solicit feedback from key stakeholder groups on assessment outcomes

   • Refine materiality determinations based on input received

7. Document and Disclose Process

   • Create comprehensive documentation of methodology, assumptions, and conclusions

   • Prepare ESRS 2 disclosures explaining materiality assessment process

   • Establish protocols for periodic reassessment (typically every 2-3 years)

Common Pitfalls to Avoid:

Research by PwC identifies critical mistakes companies should avoid:

• Rushing assessment without adequate documentation

• Failing to independently evaluate impact and financial materiality

• Underestimating value chain complexity and data requirements

• Neglecting meaningful stakeholder engagement

• Treating assessment as one-time exercise rather than ongoing process

Council Fire's stakeholder-centered planning methodology proves particularly valuable during double materiality assessments. Our approach ensures that assessments don't become purely technical exercises disconnected from organizational reality. We facilitate genuine dialogue with diverse stakeholders—from frontline workers to community representatives to investors—surfacing material issues that desktop analyses might overlook while building the trust and buy-in necessary for successful implementation.

Supply Chain Due Diligence Under CSDDD

While CSRD demands comprehensive reporting, CSDDD requires proactive due diligence throughout value chains to identify, prevent, mitigate, and remedy adverse human rights and environmental impacts. This represents a fundamental shift from reactive risk management to systematic, forward-looking oversight.

Core Due Diligence Requirements:

1. Integrate Due Diligence into Policies

   • Develop written due diligence policies addressing human rights and environmental risks

   • Embed policies throughout corporate governance structures

   • Assign clear accountability for implementation to senior management

2. Identify Actual and Potential Adverse Impacts

   • Map value chain relationships identifying all business partners (initially focusing on direct/Tier 1)

   • Conduct risk assessments considering sector, geographic location, and business relationship nature

   • Gather information from suppliers, though Omnibus amendments emphasize risk-based rather than blanket approaches

3. Prevent and Mitigate Adverse Impacts

   • Develop and implement prevention and mitigation action plans with clear timelines

   • Seek contractual assurances from business partners

   • Provide support to suppliers (particularly SMEs) to help build capabilities

   • Adjust purchasing practices that may contribute to adverse impacts

4. Bring Adverse Impacts to an End or Minimize Extent

   • Take appropriate remedial action when impacts occur

   • Cooperate with stakeholders to address harms

   • Only terminate business relationships as last resort after other remediation efforts fail

5. Establish Grievance Mechanism

   • Create accessible channels for affected stakeholders to raise concerns

   • Ensure legitimacy, accessibility, and protection for complainants

   • Respond appropriately to grievances received

6. Monitor Effectiveness and Communicate

   • Periodically assess due diligence effectiveness (assessment frequency reduced from annual to every five years under Omnibus)

   • Publicly report on due diligence activities and outcomes

   • Maintain comprehensive documentation for supervisory authorities

Climate Transition Planning:

CSDDD uniquely requires large companies to adopt transition plans aligned with Paris Agreement goals, including:

• Time-bound targets with conclusive scientific basis

• Absolute reduction targets for Scope 1, 2, and 3 emissions across significant categories

• Key actions and decarbonization levers

• Financial and investment plans for transition

• Explanation of role of directors in implementation

Though Omnibus amendments remove requirement to implement transition plans—only requiring adoption—companies should recognize that credible plans necessarily include implementation roadmaps to demonstrate genuine commitment.

Council Fire's experience in sustainable supply chain development and climate resilience planning positions us to guide organizations through CSDDD's complex requirements. We help clients move beyond compliance checklists to build genuinely resilient supply networks—identifying high-leverage interventions, facilitating productive supplier partnerships, and designing grievance mechanisms that build trust rather than create bureaucratic burdens. Our "radical partnership" approach recognizes that sustainable supply chains require collaboration, not just contractual mandates.

Implementation Checklists and Strategic Frameworks

CSRD Compliance Readiness Checklist

Governance and Leadership

• [ ] Educate board and senior management on CSRD requirements and implications

• [ ] Assign executive accountability for sustainability reporting

• [ ] Establish cross-functional steering committee spanning finance, operations, sustainability, legal

• [ ] Define clear roles and responsibilities across all involved functions

• [ ] Integrate sustainability considerations into strategic planning

Double Materiality Assessment

• [ ] Conduct comprehensive stakeholder mapping

• [ ] Review all ESRS topics for potential relevance

• [ ] Perform impact materiality assessment (inside-out)

• [ ] Execute financial materiality assessment (outside-in)

• [ ] Document methodology, assumptions, and conclusions thoroughly

• [ ] Validate findings with leadership and key stakeholders

• [ ] Plan periodic reassessment (every 2-3 years)

Data Collection and Management

• [ ] Inventory existing data sources and identify gaps

• [ ] Establish data collection protocols with internal departments

• [ ] Develop supplier engagement strategy for value chain data

• [ ] Implement sustainability data management software

• [ ] Create validation controls and quality assurance processes

• [ ] Establish audit trail documentation

• [ ] Conduct trial data collection for material topics

Reporting Systems

• [ ] Select appropriate reporting software platform

• [ ] Develop templates aligned with ESRS disclosure requirements

• [ ] Create internal review and approval workflows

• [ ] Prepare for digital tagging in machine-readable format

• [ ] Coordinate with financial reporting timelines

• [ ] Establish processes for comparative year data

Assurance Readiness

• [ ] Engage assurance provider early in process

• [ ] Strengthen internal controls over sustainability data

• [ ] Document data lineage and calculation methodologies

• [ ] Conduct internal audit of key processes

• [ ] Address control deficiencies identified

• [ ] Prepare for limited assurance engagement

CSDDD Due Diligence Implementation Framework

Foundation Setting

• [ ] Develop comprehensive due diligence policy

• [ ] Integrate policy into corporate governance structures

• [ ] Assign senior management accountability

• [ ] Communicate expectations throughout organization

• [ ] Establish grievance mechanism for affected stakeholders

Risk Identification

• [ ] Map complete supplier network focusing initially on Tier 1

• [ ] Conduct sector and geographic risk assessments

• [ ] Identify high-risk business relationships

• [ ] Gather information from direct business partners

• [ ] Investigate deeper tiers when credible risk information emerges

• [ ] Document risk assessment methodology

Prevention and Mitigation

• [ ] Develop action plans for identified risks

• [ ] Seek contractual commitments from business partners

• [ ] Provide capacity building support, particularly to SME suppliers

• [ ] Adjust purchasing practices contributing to adverse impacts

• [ ] Implement monitoring systems

• [ ] Establish KPIs for effectiveness measurement

Remediation

• [ ] Create protocols for addressing identified impacts

• [ ] Engage affected stakeholders in remediation design

• [ ] Track remediation progress against timelines

• [ ] Consider business relationship termination only as last resort

• [ ] Document remediation efforts comprehensively

Climate Transition Planning

• [ ] Develop Paris Agreement-aligned transition plan

• [ ] Set time-bound targets with scientific basis

• [ ] Establish absolute reduction targets for Scope 1, 2, 3 emissions

• [ ] Identify decarbonization levers and key actions

• [ ] Create financial and investment plan

• [ ] Assign board and management responsibilities

• [ ] Establish monitoring and review processes

Reporting and Communication

• [ ] Prepare public reports on due diligence activities

• [ ] Conduct periodic effectiveness assessments

• [ ] Maintain documentation for supervisory authorities

• [ ] Communicate transparently with stakeholders

• [ ] Report through grievance mechanism annually

Council Fire works with organizations at every stage of these implementation journeys. Whether you're just beginning to understand obligations or refining established programs, our systems-thinking approach helps connect compliance activities to broader business strategy—ensuring sustainability efforts drive genuine value rather than simply satisfying regulatory minimums.

Tools, Software, and Expert Partners

Leading CSRD Compliance Platforms

Organizations need robust software solutions to manage the complexity of CSRD's 1,100+ potential data points. Multiple comprehensive platforms have emerged offering varied capabilities:

Top-Tier Enterprise Solutions:

Sweep

• Comprehensive carbon accounting and ESG data management

• Automated data collection from existing business systems

• Double materiality assessment tools

• Real-time progress tracking and reporting

• Best for: Large multinational corporations with complex value chains

Watershed

• Intuitive platform for tracking sustainability data

• Built-in governance for audit standards

• Machine learning for gap identification and anomaly detection

• 60+ pre-built integrations

• Best for: Companies prioritizing user experience and system integration

Position Green

• Automated compliance with flexible software architecture

• Support for multiple frameworks beyond CSRD

• Focus on reducing manual tasks

• Best for: Organizations reporting across multiple jurisdictions

IBM Envizi

• Comprehensive ESG management across multiple frameworks

• Powerful analytics and strategic decision support

• Robust supply chain sustainability tracking

• Best for: Global enterprises with diverse geographical operations

Mid-Market Solutions:

Coolset

• Built specifically for mid-market companies

• TÜV-certified emissions calculations

• Guided templates with suggested answers

• Best for: Companies with small sustainability teams facing big demands

Greenly

• Focused on small to medium-sized businesses

• Automatic emission factor matching

• Expert-verified reports

• Best for: SMEs approaching mandatory reporting thresholds

Plan A

• Certified B-Corp sustainability platform

• Comprehensive decarbonization support

• All-in-one CSRD compliance

• Best for: Companies seeking integrated climate action with compliance

Specialized Capabilities:

Sphera

• Corporate sustainability reporting with built-in CSRD compliance

• Supply chain due diligence integration

• Best for: Organizations prioritizing supply chain oversight

Persefoni

• Comprehensive environmental impact assessments

• Streamlined disclosure workflows

• Best for: Companies needing detailed environmental analytics

Selecting the Right Platform

When evaluating CSRD software, critical factors include:

Essential Features:

• Automated data collection from multiple sources

• Double materiality assessment capabilities

• Audit-ready documentation and trails

• Support for multiple frameworks (CSRD, ISSB, GRI, TCFD)

• Real-time collaboration across teams

• Customizable reporting templates

• Regular regulatory updates

Scalability and Integration:

• Ability to grow with organizational complexity

• Connections to existing ERP, procurement, and operational systems

• Support for multi-entity and multi-geography reporting

User Experience:

• Intuitive interface reducing training requirements

• Mobile accessibility for distributed teams

• Clear visualization of compliance status

While technology platforms provide essential infrastructure, successful implementation requires strategic guidance that technology alone cannot deliver. Council Fire complements these tools by helping organizations develop materiality assessments, design stakeholder engagement processes, create actionable climate transition plans, and build organizational capabilities that extend well beyond software adoption.

The Strategic Value of Expert Consultants

Despite sophisticated software platforms, 83% of companies find collecting accurate CSRD data significantly challenging, and 29% feel unprepared for ESG data audits. Expert consultants bridge critical gaps between technical compliance and strategic transformation:

Strategic Services Consultants Provide:

1. Double Materiality Excellence

   • Facilitation of stakeholder engagement across diverse groups

   • Objective analysis of impacts and financial risks

   • Documentation meeting assurance standards

   • Integration of findings into business strategy

2. Data Strategy and Architecture

   • Assessment of existing systems and gap identification

   • Design of value chain data collection approaches

   • Creation of data governance frameworks

   • Quality assurance protocol development

3. Supply Chain Due Diligence

   • Risk mapping across value chains

   • Supplier engagement and capacity building

   • Grievance mechanism design

   • Remediation program development

4. Climate Transition Planning

   • Science-based target setting across Scopes 1, 2, 3

   • Decarbonization pathway development

   • Financial and investment planning

   • Progress monitoring frameworks

5. Organizational Change Management

   • Leadership education and buy-in

   • Cross-functional coordination

   • Capability building throughout organization

   • Cultural transformation supporting sustainability integration

Why Council Fire?

Council Fire brings distinctive advantages to organizations navigating CSRD and CSDDD compliance:

Systems-Level Expertise: We don't treat sustainability regulations as isolated compliance exercises. Our systems thinking approach connects sustainability reporting to broader organizational strategy, helping clients identify how compliance efforts can strengthen resilience, improve stakeholder relationships, and create competitive advantages.

Stakeholder-Centered Planning: Our "radical partnership" methodology ensures that materiality assessments, supply chain due diligence, and climate planning genuinely engage affected stakeholders. We facilitate meaningful dialogue that surfaces material issues, builds trust, and creates shared ownership of solutions.

Cross-Sector Experience: From municipalities managing climate resilience to corporations developing ESG strategies to NGOs measuring impact, we understand sustainability challenges across diverse organizational contexts. This breadth enables us to translate best practices across sectors and help clients learn from analogous situations.

Action Over Abstraction: Consistent with Council Fire's core commitment to practical, measurable results, we design compliance programs that generate genuine operational improvements—not just paperwork. Our deliverables include implementation roadmaps, capacity-building programs, and change management support that help organizations actually achieve their sustainability commitments.

Bridge Technical and Strategic: We combine deep technical knowledge of EU sustainability regulations with strategic acumen, helping leadership teams understand both compliance obligations and transformational opportunities. Our communications make complex requirements accessible while respecting organizational sophistication.

Organizations facing CSRD and CSDDD obligations need partners who can deliver both immediate compliance support and long-term strategic guidance. Council Fire's unique combination of technical expertise, stakeholder engagement capabilities, and systems-level thinking positions us as the ideal collaborator for companies committed to turning regulatory requirements into genuine sustainability transformation.

Frequently Asked Questions

What is the difference between CSRD and CSDDD?

CSRD focuses on transparency through comprehensive sustainability reporting, requiring companies to disclose environmental, social, and governance performance using standardized European Sustainability Reporting Standards. CSDDD emphasizes action through mandatory due diligence, requiring companies to identify, prevent, mitigate, and remedy adverse human rights and environmental impacts throughout value chains.

The directives complement each other: CSRD mandates reporting on sustainability matters, while CSDDD requires companies to actively manage and address negative impacts. Companies subject to both directives must report on their due diligence activities under CSRD while implementing the substantive due diligence requirements under CSDDD.

Does my company need to comply with CSRD or CSDDD?

CSRD applies to:

• Large EU companies meeting two of three criteria: 250+ employees, €50+ million turnover, €25+ million balance sheet

• All EU-listed companies except micro-enterprises

• Non-EU companies with €150+ million EU revenue and qualifying EU subsidiaries

CSDDD applies to (pending final Omnibus approval):

• Large EU companies with 5,000+ employees and €1.5+ billion turnover

• Non-EU companies with €450+ million (potentially €1.5+ billion) EU-generated revenue

Companies below these thresholds may still be indirectly affected if they're part of larger companies' supply chains. Council Fire helps organizations at all levels of value chains understand their obligations and develop appropriate responses.

What is double materiality and why is it important?

Double materiality requires assessing sustainability from two perspectives simultaneously: how sustainability issues affect the company financially (financial materiality/outside-in), and how the company impacts people and environment (impact materiality/inside-out).

This approach is important because it provides comprehensive understanding of sustainability risks and opportunities. Traditional single materiality focuses only on financial impacts to the company, potentially overlooking significant environmental or social harms that don't immediately affect business performance. Double materiality ensures companies account for their broader societal impacts while also managing sustainability-related business risks.

A topic is material—and must be reported—if it meets either impact OR financial materiality criteria, not necessarily both.

How do I conduct a double materiality assessment?

Effective double materiality assessments follow structured approaches:

1. Map Context: Understand business activities, value chain, and stakeholder landscape

2. Identify Topics: Review all ESRS sustainability matters for potential relevance

3. Assess Impacts: Evaluate severity of actual and potential impacts on people and environment

4. Assess Financial Effects: Analyze how sustainability matters affect financial performance

5. Determine Materiality: Apply thresholds to identify material topics

6. Validate and Engage: Obtain stakeholder and leadership input

7. Document Thoroughly: Create audit-ready documentation

Council Fire facilitates double materiality assessments that go beyond compliance checklists, helping organizations surface genuinely material issues through meaningful stakeholder engagement while building internal consensus around sustainability priorities.

What are Scope 3 emissions and how do I measure them?

Scope 3 emissions are indirect greenhouse gas emissions occurring throughout a company's value chain—both upstream (purchased goods/services, business travel, employee commuting) and downstream (product use, end-of-life treatment). These typically represent the largest portion of most organizations' carbon footprints.

Measuring Scope 3 requires:

• Mapping value chain activities systematically

• Collecting activity data from suppliers and customers

• Applying appropriate emission factors

• Using spend-based, activity-based, or supplier-specific methodologies

• Establishing data quality hierarchies

Scope 3 measurement is notoriously complex because it extends beyond direct organizational control and involves numerous external parties. Many companies use specialized carbon accounting platforms while working with consultants like Council Fire to develop robust supplier engagement strategies that balance data accuracy with supplier relationship maintenance.

How does CSRD/CSDDD differ from U.S. ESG regulations?

Key differences include:

Materiality Approach:

• EU uses double materiality (financial + impact)

• U.S. (if SEC rules were implemented) uses single financial materiality

Topic Coverage:

• CSRD covers comprehensive ESG matters

• SEC rules focused specifically on climate

Scope 3 Emissions:

• CSRD requires Scope 3 disclosure if material

• SEC rules (stayed) excluded Scope 3

Assurance:

• CSRD mandates limited assurance from 2025

• SEC proposed limited assurance for emissions only

Current Status:

• CSRD actively enforced and expanding

• SEC rules stayed since April 2024; defense ended March 2025

However, California's state-level requirements remain in effect, creating ongoing U.S. disclosure obligations for many companies.

What are the penalties for non-compliance?

CSRD penalties are determined by individual EU member states during national transposition. Member states must establish rules ensuring sanctions are effective, proportionate, and dissuasive, considering factors like breach gravity and duration.

CSDDD penalties can reach up to 5% of company's net worldwide turnover or €40 million, whichever is higher. Member states designate supervisory authorities with enforcement powers including fines and compliance orders.

Beyond financial penalties, non-compliance risks include:

• Reputational damage affecting brand value and customer relationships

• Loss of investor confidence and potentially reduced access to capital

• Strained relationships with business partners requiring compliance verification

• Operational disruptions from supply chain investigations

These consequences often far exceed direct financial penalties, emphasizing the strategic importance of robust compliance programs that Council Fire helps organizations develop.

How can Council Fire help with CSRD and CSDDD compliance?

Council Fire provides comprehensive support throughout the compliance journey:

Strategic Planning and Assessment

• Facilitating double materiality assessments with genuine stakeholder engagement

• Developing climate transition plans with science-based targets

• Conducting value chain risk mapping and prioritization

• Creating integrated compliance strategies spanning multiple regulations

Data and Systems Development

• Designing data collection protocols respecting supplier capabilities

• Establishing data governance frameworks and quality assurance

• Supporting software platform selection and implementation

• Building organizational data literacy and management capacity

Stakeholder Engagement and Due Diligence

• Implementing supplier engagement programs for value chain data

• Designing and operating grievance mechanisms

• Facilitating multi-stakeholder dialogue on material issues

• Supporting capacity building for SME suppliers

Implementation and Change Management

• Creating practical roadmaps for phased compliance

• Building cross-functional coordination mechanisms

• Developing training and capability-building programs

• Providing ongoing advisory support as regulations evolve

Council Fire's distinctive approach combines technical regulatory expertise with systems-level strategic thinking, helping organizations transform compliance obligations into opportunities for building genuine resilience, strengthening stakeholder relationships, and creating competitive advantages through sustainability leadership.

Contact Council Fire to discuss how our sustainability strategy, stakeholder engagement, and operational integration expertise can support your CSRD and CSDDD compliance journey.

Conclusion: From Compliance to Competitive Advantage

The European Union's Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive represent a fundamental shift in corporate accountability—moving sustainability from voluntary initiatives to mandatory, enforceable obligations backed by standardized frameworks and third-party verification. With first CSRD reports already published in 2025 and CSDDD compliance beginning in 2028, these regulations are actively reshaping how companies operate across global value chains.

Yet compliance alone represents a minimalist response to these transformative requirements. Organizations that view CSRD and CSDDD merely as reporting exercises miss the strategic opportunity these directives present. The most successful companies will use these frameworks to:

• Build Genuine Resilience: Understanding material sustainability risks and opportunities enables proactive adaptation rather than reactive crisis management

• Strengthen Stakeholder Relationships: Meaningful engagement with workers, communities, suppliers, and investors builds trust that extends well beyond regulatory requirements

• Drive Operational Excellence: Comprehensive value chain visibility and data systems create insights for improving efficiency, reducing waste, and managing costs

• Attract Capital and Talent: Transparent sustainability leadership increasingly differentiates companies in competitive markets for investment and human capital

Council Fire partners with organizations committed to this higher ambition—helping transform regulatory compliance into strategic advantage through systems thinking, stakeholder-centered planning, and relentless focus on measurable results. Whether you're beginning to understand your obligations or refining established programs, Council Fire brings the expertise, methodology, and strategic perspective to help you navigate complexity, build capabilities, and achieve genuine transformation.

The regulatory landscape will continue evolving as Omnibus amendments proceed through European institutions and other jurisdictions develop their own frameworks. Organizations need partners who can help them stay ahead of these changes while maintaining focus on long-term sustainability goals that transcend any single regulation.

Ready to transform sustainability obligations into strategic opportunities? Contact Council Fire to discuss how our comprehensive approach to sustainability strategy, stakeholder engagement, and organizational transformation can support your CSRD and CSDDD compliance journey while building lasting competitive advantages.

Council Fire is a global change agency specializing in sustainability strategy, climate resilience, and stakeholder engagement. We help governments, foundations, NGOs, and visionary companies navigate complex regulatory requirements while building genuine resilience and creating measurable impact. Learn more at councilfire.com.