Key Takeaways
- 1Non-EU companies with €150M+ EU turnover and an EU subsidiary face CSRD from FY 2028
- 2CSRD requires double materiality assessment — a fundamentally different analytical approach
- 3Value chain disclosures will require suppliers in India, APAC, and emerging markets to provide ESG data
- 4Early preparation is a financing advantage: CSRD-ready companies access EU sustainable finance markets more easily
Extraterritorial Reach: Who Is Actually Affected
The Corporate Sustainability Reporting Directive (CSRD) is widely understood to apply to large EU companies. What is less well understood — and creating significant compliance risk for non-European multinationals — is its extraterritorial scope.
Non-EU companies are in scope for CSRD if they generate net turnover of €150 million or more within the EU and have at least one large subsidiary (balance sheet total above €20 million, or net turnover above €40 million, or more than 250 employees) or listed securities (including debt securities) in the EU. For these companies, the first reporting obligation falls in FY 2028 — but the preparatory work required to produce compliant disclosures typically takes two to three years.
MindEarth estimates that several hundred Indian companies, and thousands of companies across Asia-Pacific, meet the threshold criteria and are currently unaware of or significantly under-prepared for their CSRD obligations.
Double Materiality: A Different Analytical Standard
CSRD requires companies to apply double materiality — assessing both financial materiality (how sustainability issues affect the company's financial performance and condition) and impact materiality (how the company affects society and the environment). This is a fundamentally different analytical approach from the single materiality standard used in BRSR, GRI, and most other frameworks, which focus primarily on issues that are material to the company.
Conducting a credible double materiality assessment requires engaging with a broad range of stakeholders — employees, suppliers, local communities, customers, and civil society — and using the outputs to determine which sustainability topics must be covered in the sustainability statement. The European Sustainability Reporting Standards (ESRS) provide 12 topical standards, but the double materiality assessment determines which are relevant to each company.
For non-European companies unfamiliar with the double materiality concept, the assessment process is often the most resource-intensive element of CSRD preparation.
“Double materiality requires companies to assess not just how sustainability affects them — but how they affect the world.”
Value Chain Disclosure: The Upstream Impact
CSRD's value chain disclosure requirements — embedded in the ESRS — will have significant implications for suppliers in India and across Asia-Pacific. EU-headquartered companies subject to CSRD are required to disclose information about their upstream and downstream value chain, including environmental and social performance data from significant suppliers.
In practice, this means EU buyers will impose ESG data collection obligations on their suppliers as part of routine procurement processes. Suppliers who cannot provide standardised ESG data — energy consumption, GHG emissions, water usage, labour practices, and supplier due diligence — risk being de-listed in favour of suppliers who can.
For Indian manufacturers, FMCG producers, textile companies, and IT services providers with significant EU customer exposure, building ESG data collection capability is not merely a regulatory exercise — it is a prerequisite for maintaining market access.
Strategic Response for Non-EU Multinationals
Companies facing CSRD obligations should treat the 2028 reporting deadline as a three-year preparation programme, not a two-quarter disclosure exercise. The critical path runs through three foundational capabilities that take time to build: double materiality assessment process, value chain data collection systems, and internal audit-quality data governance.
For companies that are also navigating BRSR, GRI, or TCFD requirements simultaneously, the most efficient approach is a framework convergence strategy — mapping ESRS requirements against other frameworks to identify overlapping data requirements and building a single data collection architecture that can serve multiple disclosure obligations simultaneously. This approach typically reduces the total compliance cost by 30-40% compared to treating each framework as a separate workstream.
MindEarth recommends beginning with a CSRD scoping and gap analysis in 2025, followed by double materiality assessment in 2026, and data architecture build-out in 2026-2027 — leaving the final year for drafting, assurance, and filing.
