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In September 2025, the German federal government approved a bill to transpose the European Corporate Sustainability Reporting Directive (CSRD) into national law. The new law comes into effect on January 1, 2026, while for certain categories of companies, it already applies to financial reporting for the 2025 fiscal year. This is a key step in developing ESG reporting and corporate sustainability in the country.
Under the bill, large companies, banks, and insurance organizations are required to provide enhanced non-financial reporting starting with the 2025 financial year. In the future, these requirements will also apply to medium-sized businesses if they exceed the established thresholds (more than 250 employees, turnover over €40 million, or total assets over €20 million).
Companies will need to disclose:
the environmental impact of their activities (carbon footprint, resource efficiency);
social aspects, including working conditions, equality, and human rights;
corporate governance, compliance, and anti-corruption measures.
Non-compliance with CSRD requirements may result in:
administrative fines of up to €10 million or 5% of annual turnover;
lawsuits from investors and consumers;
reputational damage, including reduced investment attractiveness.
We recommend:
conducting an audit of current ESG processes and preparing a “trial” report;
implementing systems for automated monitoring of ESG indicators;
training employees on CSRD requirements and compliance;
establishing collaboration with suppliers for timely data exchange.
The new CSRD transposition law is not merely a formal compliance with European regulations but an important step toward building responsible and sustainable business practices in Germany. Preparing for reporting in advance will help avoid penalties, facilitate interactions with investors, and open access to “green” financing.
