An individual undertaking must include sustainability information in its management report only where, at the balance sheet date, it exceeds both EUR 450 million net turnover and 1,000 average employees during the financial year.
The requirement, in our words
Individual sustainability reporting in the management report is now required only of undertakings that, on their balance sheet dates, exceed both a net turnover of EUR 450 million and an average of 1 000 employees averaged over the year. Such undertakings must explain how they affect people and the environment and how sustainability issues bear on their results, position and outlook. Large and listed small and medium undertakings below the new thresholds fall out of the individual duty.
Why it matters
This is the scope provision the buyer is looking for. The statement itself must explain the undertaking's impacts on sustainability matters and how those matters affect its development, performance and position. The test is conjunctive and strict: both figures must be exceeded. A company with EUR 500 million turnover and 900 employees is out. A company with EUR 400 million turnover and 5,000 employees is out. The measurement point is the balance sheet date, and the headcount is an average for the financial year, which means the answer can change from one year to the next without a change in the business.
What changed
The old Article 19a(1) applied to large undertakings and to public-interest entities above 500 employees in the transitional years. The replacement sets one population for financial years starting on or after 1 January 2027: both figures, at the balance sheet date.
What to do
- Build a scoping memo with the turnover figure, the average headcount, the balance sheet date and the source of each.
- Test the boundary at exactly EUR 450 million and exactly 1,000 employees, because the text says exceeds.
- Have the board or audit committee approve the conclusion and the year it applies to.
Evidence to have ready
| Category | Artefact |
|---|---|
| Scoping | Annual scoping memo applying both thresholds at the balance sheet date, with the turnover and headcount figures and their sources |
| Scoping | Board or audit committee minute confirming whether the undertaking reports |
| Scoping | Headcount calculation method note (average over the year, treatment of part-time staff) |
Common failures
- Only one of the two thresholds tested, although both must be exceeded
- Scoping based on the prior year's figures instead of the current balance sheet date
Dates
Financial years starting on or after 1 January 2027. For earlier years, the transitional rule in Article 5(2) of the CSRD applies instead.
The question to test
Can you show the two figures at the balance sheet date, and does your answer change if either is exactly at the threshold?
Cross-references
A2-2 Key intangible resources · A2-8 Consolidated statement threshold
Source
Article 2(4)(a), replacing the first subparagraph of Article 19a(1) of Directive 2013/34/EU; OJ L 2026/470, 26 February 2026; https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32026L0470. Our statement of the duty, read from the Official Journal text and the held control record, not the instrument verbatim.
Not legal advice; does not certify. A reading of the duty and the evidence commonly sampled, not a substitute for the Official Journal text, the national transposing measure or your auditor's judgement.