Corporate Sustainability Reporting Directive (CSRD) in Procurement

The Corporate Sustainability Reporting Directive (CSRD, Directive 2022/2464/EU) is the EU's overhaul of corporate sustainability disclosure requirements. It replaces and substantially expands the Non-Financial Reporting Directive (NFRD), requiring in-scope companies to report standardised, audited sustainability information under the European Sustainability Reporting Standards (ESRS). In a public procurement context, CSRD creates a new layer of publicly available, verified environmental and social data that contracting authorities can draw on when assessing suppliers and designing sustainability requirements.

What is the CSRD in a Procurement Context?

CSRD mandates disclosure across a wide range of environmental, social, and governance topics, including climate change, pollution, water and marine resources, biodiversity, resource use and circular economy, workforce issues, human rights in the supply chain, business conduct, and governance. Disclosures must be audited by an accredited third party and filed in a machine-readable format (XBRL tagging) in the European Single Electronic Format, enabling automated data extraction.

In procurement, CSRD data becomes relevant in several ways:

Pre-qualification evidence. Contracting authorities assessing suppliers' track record on sustainability commitments can reference CSRD disclosures rather than requiring bespoke supplier questionnaires. A company's disclosed scope 1, 2, and material scope 3 emissions, together with its emissions reduction targets and progress, provide a richer and more credible base for assessment than self-completed questionnaires.

Selection criteria. For high-value contracts with significant sustainability dimensions, buyers may set selection criteria related to suppliers' sustainability management systems or sustainability reporting capacity. CSRD compliance itself (where applicable) demonstrates a structured, audited approach to sustainability governance.

Award criteria. Where a buyer scores sustainability credentials in the award evaluation, CSRD-derived data (for example, a supplier's verified carbon intensity metric or its reported circularity indicators) provides a comparable, third-party confirmed basis for scoring rather than relying on unverified marketing claims.

Contract performance monitoring. CSRD requires ongoing reporting, meaning that suppliers' sustainability performance is disclosed annually for the life of a contract. Authorities can build contractual performance conditions that reference CSRD reporting commitments, for example requiring the supplier to maintain its disclosed scope 1 and 2 reduction trajectory during the contract period.

EU Taxonomy alignment. CSRD requires in-scope companies to disclose their taxonomy-eligible and taxonomy-aligned revenue, capital expenditure, and operational expenditure. This enables buyers to identify whether a supplier's core activities are aligned with the taxonomy's environmental objectives, a proxy for structural sustainability performance.

CSRD applies in phases: large public-interest entities (with more than 500 employees) began reporting on 2024 data. Large companies meeting two of three size criteria (more than 250 employees, more than 40 million euros turnover, more than 20 million euros total assets) began reporting on 2025 data. Listed SMEs are expected to report from 2027, with opt-out options until 2028. Companies in Norway, Iceland, and Liechtenstein are covered through the EEA Agreement. The UK is developing its own Sustainability Disclosure Standards (SDS), aligned with the International Sustainability Standards Board (ISSB) framework rather than ESRS, creating some divergence between EU and UK supplier disclosure landscapes.

Why CSRD matters for bidders

CSRD creates both an obligation and an opportunity for in-scope suppliers. The obligation is to invest in data collection, assurance, and reporting systems. The opportunity is that the resulting audited disclosure becomes reusable evidence across multiple public and private procurement processes, reducing the per-tender cost of providing sustainability evidence. Suppliers subject to CSRD who present their ESRS disclosures proactively in bids can distinguish themselves from competitors who can offer only unverified self-assessments.

For suppliers below the CSRD threshold, including most SMEs, the indirect effect matters: CSRD requires in-scope companies to report on material sustainability impacts throughout their supply chains, which means that Tier 1 suppliers to large companies face sustainability data requests from their customers. This "trickle-down" dynamic is reshaping expectations across the European supplier ecosystem regardless of direct CSRD applicability.

Example

An Italian public authority issues a call for a long-term facility management services contract worth 80 million euros and includes an award criterion for climate performance worth 15 points. Bidders who are CSRD-compliant large companies submit their audited ESRS E1 (climate change) disclosure showing a verified 30% scope 1 and 2 reduction since 2019 and a Paris-aligned target. Smaller bidders without CSRD obligations are asked to complete a simplified carbon questionnaire validated by the authority's assessors. The scoring formula applies the same calculation to both, ensuring equal treatment while rewarding genuine verified performance.

Frequently Asked Questions

Does CSRD apply to non-EU companies?

CSRD applies to non-EU companies with significant EU activity: specifically, companies that generate more than 150 million euros in net turnover in the EU and have at least one large subsidiary or branch in the EU. Such companies must report under CSRD from 2029 on 2028 data. This means that large non-European bidders for EU public contracts, including UK and US companies, may be subject to CSRD disclosure obligations.

Can a buyer require CSRD compliance as a selection criterion?

A buyer cannot require CSRD compliance as a mandatory selection criterion, because CSRD compliance depends on company size and listing status, and not all eligible suppliers will be in scope regardless of capability. However, buyers can reference CSRD disclosures as accepted evidence for specific sustainability characteristics in selection criteria, provided equivalent evidence from non-CSRD companies is also accepted.

How does CSRD relate to the UK's sustainability disclosure requirements?

The UK is implementing sustainability disclosure standards under the Companies Act based on ISSB standards (IFRS S1 and S2) rather than the EU's ESRS. The frameworks share common foundations but differ in detail, scope, and assurance requirements. UK suppliers reporting under ISSB-aligned UK SDS provide comparable but not identical data to EU ESRS reporters, and procurement authorities should be prepared to assess both frameworks when specifying sustainability evidence requirements in cross-border tenders.