CSRD guide for the manufacturing sector

When we analyse how CSRD (Corporate Sustainability Reporting Directive) impacts the manufacturing sector, the first thing we need to understand is that this isn't just another compliance exercise.

We're talking about a fundamental shift in how industrial companies measure, manage and communicate their environmental, social and governance impact. CSRD transforms sustainability data into a strategic asset that can determine competitiveness in today's market.

Manufacturing companies that understand their impact and convert it into a decision-making tool gain efficiency, reduce risks and prepare for the regulatory demands that are coming. Those that don't will simply be left behind.

This guide explores everything you need to know about CSRD in the manufacturing sector: what it requires, when it applies, which metrics matter most, and how to build a robust reporting system that goes beyond mere compliance.

What is CSRD and Why Does it Matter for Manufacturing?

The Corporate Sustainability Reporting Directive is the European regulation that replaces the old NFRD (Non-Financial Reporting Directive). It requires standardised and auditable ESG (Environmental, Social and Governance) disclosures based on double materiality.

Double materiality means two things:

• How your company's activities affect the environment and society
• How ESG risks and opportunities affect your business financially

Unlike previous regulations, CSRD applies to a much broader range of companies. It's not just for large listed corporations anymore. The directive covers:

All listed companies on regulated markets (except micro-enterprises) and large companies exceeding two of these three thresholds: 250 employees, €40M revenue, or €20M balance sheet. It also includes parent companies, substantial subsidiaries, and third-country companies with significant EU presence (e.g., >€150M EU revenue).

Before the "Omnibus" simplification package of December 2025, CSRD affected tens of thousands of European companies. The recent reforms have adjusted thresholds and timelines, but the core requirement remains: if you're a significant manufacturer in the UK or operating across Europe, CSRD will impact you.

Why Manufacturing Companies Can't Ignore This

For manufacturers, ESG data is operational data. Your energy consumption, emissions, raw materials, waste, water use, and supply chain practices are all part of your daily operations. CSRD simply requires you to measure, verify and report these activities with the same rigour you apply to financial reporting.

More importantly, not measuring means not competing. Increasingly, customers, investors, banks and regulators demand transparency on ESG performance. Companies that can demonstrate their impact with reliable data gain access to better financing, win more contracts and build stronger market positions.

CSRD Requirements Specific to the Manufacturing Sector

CSRD doesn't define sector-specific standards (the planned sectoral projects were postponed or made voluntary). However, the ESRS (European Sustainability Reporting Standards) framework establishes environmental and social indicators applicable to all industries.

In manufacturing, the most relevant topics are typically: energy consumption, greenhouse gas emissions (GHG), raw material use, waste, water consumption, pollution (e.g., NOₓ, SO₂, particulates) and circular economy.

Key Environmental Metrics for Manufacturers

According to ESRS, manufacturers must report on several critical areas:

Energy and Climate (ESRS E1)

• Total energy consumption and associated costs
• Breakdown by source (electricity, fuels, renewables)
• GHG emissions across Scopes 1, 2 and 3
• Energy intensity (kWh per € revenue or per unit produced)
• Percentage of renewable energy used
• Reduction targets and transition plans

Pollution (ESRS E2)

• Emissions to air, water and soil
• Substances of concern and substitution plans
• Incident management and containment measures

Water and Marine Resources (ESRS E3)

• Total freshwater consumption (m³)
• Water stress in operating locations
• Effluent treatment and discharge quality

Circular Economy (ESRS E5)

• Raw materials consumed and recycled
• Waste generated and valorised (tonnes)
• Product design for circularity
• Percentage of recycled materials in products

Social and Governance Metrics

Beyond environmental data, manufacturers must also report on:

Workforce (ESRS S1)

• Health and safety metrics (accident rates, training hours)
• Workforce diversity and equal treatment
• Collective bargaining coverage
• Working conditions and employee wellbeing

Value Chain Workers (ESRS S2)

• Subcontractor and supplier conditions
• Due diligence in high-risk countries
• Supplier audits and assessments

Business Conduct (ESRS G1)

• Anti-corruption policies and training
• Whistleblowing channels
• Lobbying and political contributions

Implementation Timeline: UK vs EU

The original European timeline classified companies into waves: those already complying with NFRD (public companies with >500 employees) had to report in 2025 (FY2024 data), other large companies in 2026 (FY2025 data), listed SMEs in 2027 (FY2026 data), and non-European companies in 2029 (FY2028 data).

However, after the 2025 reforms ("stop-the-clock" and Omnibus), these dates were delayed by two years: large companies (non-NFRD) will report from FY2027 (report in 2028) and listed SMEs from FY2028 (report in 2029).

Summary Timeline for Spain/EU:

2025: First wave reports begin (NFRD companies with FY2024 data)

2027: Large companies not previously in NFRD start (FY2027 data, report in 2028)

2028: Listed SMEs begin (FY2028 data, report in 2029)

2029: Foreign companies with EU subsidiaries or significant sales start (FY2028 data, report in 2029)

The UK Position: Different Path, Same Direction

In the United Kingdom, CSRD as an EU directive does not apply. However, sustainability disclosure is gaining force through local regulations.

Since April 2022, large UK companies (all with >500 employees or £500M sales) must publicly disclose climate information according to TCFD (Task Force on Climate-related Financial Disclosures) taxonomy.

Additionally, the Government plans to adopt the IFRS Foundation standards (IFRS S1 general and IFRS S2 climate) as UK Sustainability Reporting Standards (UK SRS). These standards are expected to enter force from 2026 (for FY2025 reports).

Key Differences: EU (CSRD) vs UK

Base Regulation
Spain/EU (CSRD): CSRD Directive (EU) with mandatory ESRS standards.
United Kingdom: National laws such as the Companies Act and FCA, plus future "UK SRS" based on IFRS.

Mandatory Subjects
Spain/EU (CSRD): Large EU companies, listed companies including certain SMEs, EU parent subsidiaries, and non EU companies with more than €150M in EU sales.
United Kingdom: Large UK companies subject to TCFD since 2022 and, in the future, listed companies applying IFRS S1 and S2.

Materiality
Spain/EU (CSRD): Double materiality. Requires reporting both the impact on society and the environment and the financial impact on the business.
United Kingdom: Financial or investor focused approach, centred on sustainability risks and opportunities affecting the business, similar to ISSB.

Standards
Spain/EU (CSRD): Detailed and audited ESRS, European Sustainability Reporting Standards.
United Kingdom: IFRS S1 and S2 issued by ISSB, to be adopted as UK SRS under consultation, plus TCFD climate requirements.

Timelines
Spain/EU (CSRD): Phased implementation. Annual reports from 2025 covering FY24 for large companies, with a two year delay for others.
United Kingdom: Climate reporting obligation from FY22, ongoing. IFRS standards expected to become mandatory from 2026, tentative.

Audit
Spain/EU (CSRD): Mandatory external audit of the sustainability report.
United Kingdom: Not yet mandatory, pending SDR and UK SRS regulatory evolution.

Penalties
Spain/EU (CSRD): National fines, potentially up to a percentage of revenue, for CSRD non compliance.
United Kingdom: Fines under the Companies Act, not ESG specific, with FCA supervision.

The main takeaway: whether you're in the EU or UK, rigorous ESG reporting is becoming mandatory. The frameworks differ, but the direction is the same: more transparency, more verification, more accountability.

How to Build a CSRD Compliance System in Manufacturing

Creating a robust CSRD reporting system isn't just about writing a report once a year. It requires building an internal data and control system that can withstand audits and support operational decisions.

Step 1: Define Scope and Governance

Start by clarifying which entities, plants and operations fall within your reporting scope. For manufacturing groups, this typically includes all facilities, joint ventures and significant subsidiaries.

Establish a CSRD committee with representatives from Finance, Operations, Health & Safety, Purchasing, HR, Legal and IT. This cross-functional team ensures data flows from all relevant areas and aligns with business strategy.

Step 2: Conduct Double Materiality Assessment

The foundation of CSRD is double materiality. You need to determine which ESG topics are material to your business from two perspectives:

Impact materiality: How do your manufacturing activities affect the environment and people? Consider energy consumption, emissions, waste, water use, working conditions, local communities, etc.

Financial materiality: How do ESG risks and opportunities affect your business performance? Consider regulatory risks, resource scarcity, customer requirements, access to finance, reputation, etc.

For manufacturers, common material topics include climate change, pollution, circular economy, occupational health and safety, and supply chain responsibility.

Step 3: Map Data Sources and Establish Controls

Think of CSRD data like financial data – it needs clear definitions, traceable sources and robust controls.

Create a data dictionary that defines each KPI: what it measures, units, data sources, collection frequency and responsible person. For a manufacturing plant, typical data sources include:

• ERP systems (purchases, invoices, suppliers, cost centres)
• MES/SCADA (production data, equipment performance)
• Utility bills (energy, water)
• Waste management contractors (waste weights, treatment routes)
• HSE systems (incidents, training records)
• HR systems (workforce data, diversity metrics)

Implement controls similar to financial controls: reconciliations (bills vs meter readings), segregation of duties, approval workflows and evidence retention. Every data point should be traceable to a source document.

Step 4: Identify Key Metrics by Process Type

While exact indicators depend on your materiality assessment, certain metrics are almost always critical in manufacturing:

For Energy-Intensive Processes (automotive, chemicals, metallurgy):

• Scope 1, 2 and 3 emissions (tCO₂e)
• Energy intensity and efficiency measures
• Renewable energy percentage
• Emission reduction targets aligned with SBTI or similar

For Resource-Intensive Processes (textiles, food, paper):

• Water consumption and discharge
• Raw material inputs and recycled content
• Waste generation and valorisation rates
• Packaging and circular design metrics

For Chemical and Electronics Manufacturing:

• Substances of concern inventory
• Substitution programmes
• Hazardous waste management
• Product end-of-life management

All Manufacturers:

• Workplace accident rates and severity
• Employee training hours (especially safety)
• Supplier assessments and audits
• Governance and ethics programmes

Step 5: Set Realistic Targets and Transition Plans

CSRD requires you to set objectives with baseline year, scope, methodology and associated CAPEX/OPEX. Don't just pick arbitrary numbers – link objectives to operational improvements:

• Energy efficiency (motor upgrades, heat recovery, compressed air optimisation)
• Fuel switching and electrification
• Renewable energy procurement (PPAs, certificates of origin)
• Product redesign and material reduction
• Circularity and scrap return to process
• Logistics optimisation and packaging reduction

These aren't just "sustainability initiatives" – they're cost reduction and risk management programmes that happen to also reduce your environmental impact.

Additionally, aligning these initiatives with recognised sustainable finance frameworks allows manufacturers to demonstrate the economic value of sustainability actions. Integrating financial perspectives with ESG objectives ensures that green investments directly support competitiveness and long-term growth.

Technology Solutions for CSRD Compliance

The complexity of CSRD pushes manufacturers to adopt specialised ESG management platforms. Manual spreadsheets simply cannot deliver the traceability, accuracy and efficiency required.

Understanding the foundations of CSRD is key when selecting any digital reporting tool. A clear grasp of double materiality, disclosure requirements and assurance levels helps ensure the chosen solution fully supports regulatory expectations.

What to Look for in a CSRD Platform

A robust solution should provide:

Automated Data Collection: Direct integration with ERP, MES, utility providers and other data sources to eliminate manual data entry and reduce errors.

Traceability and Evidence Management: Every data point linked to source documents (invoices, meter readings, waste transfer notes) with version control and audit trails.

Multi-Framework Compatibility: Generate reports compliant with ESRS, CSRD, Taxonomy, SBTi, ISO standards and other frameworks from a single dataset.

Calculation Engines: Built-in methodologies for GHG emissions (all scopes), energy conversions, waste calculations and other complex metrics, with transparent factor sources.

Workflow and Approvals: Role-based access, data validation rules, approval workflows and monthly/quarterly closing procedures similar to financial reporting.

Digital Reporting: Export capabilities for XBRL and other digital formats required by regulators.

Leading Platform Options

Several technology solutions serve the manufacturing sector:

Dcycle stands out as a comprehensive ESG management platform that automates data collection, executes double materiality analysis and generates auditable XBRL reports according to ESRS. It centralises all ESG information in one place, compatible with CSRD, Taxonomy, SBTi, ISO and more. We are not auditors or consultants – we are a solution for companies that need to collect all their ESG information and distribute it automatically across different use cases.

SAP Sustainability Control Tower leverages corporate ERP data and third-party sources to manage ESG metrics at scale. Suitable for large enterprises already using SAP ecosystems.

Workiva offers cloud-based integrated financial-ESG reporting, with strong collaboration features and AI-assisted report preparation.

Plan A focuses on decarbonisation with automated Carbon Footprint calculation (Scope 1-3), materiality assessment and ESRS alignment.

The right platform depends on your size, complexity, existing systems and budget. But regardless of which you choose, implementing a purpose-built ESG platform is no longer optional – it's a prerequisite for efficient CSRD compliance.

Recommendations Before Implementing CSRD

Before you dive into CSRD implementation, consider these strategic recommendations:

Define Regulatory Scope and Critical KPIs

Be very clear about which regulatory frameworks you need to comply with (EINF, CSRD, SBTi, Taxonomy, ISOs, etc.) and which KPIs are truly critical for your business.

Not all manufacturers have the same obligations or objectives. A steel producer will prioritise different metrics than a food manufacturer or electronics assembler.

Clarity on scope prevents wasted effort on irrelevant data and ensures you invest resources where they matter most.

Determine Number of Users and Departments Involved

CSRD isn't a one-person job. It requires collaboration across Finance, Operations, Purchasing, HR, HSE and IT.

Identify who will collect, validate, approve and use the data. A good ESG platform should support multiple users with appropriate access controls and workflow management.

The more intuitive the system, the faster the adoption and the less time wasted on training and support.

Identify Necessary Integrations

Your relevant ESG data already exists in your business systems – it's scattered across ERP, MES, SCADA, billing systems, contractor portals and spreadsheets.

A proper CSRD solution should integrate directly with these sources, eliminating duplicate data entry and ensuring consistency.

The better your integrations, the more automated and accurate your reporting becomes.

Evaluate Total Cost of Ownership (TCO)

Look beyond the initial licence fee. Consider implementation time, integration costs, training, ongoing maintenance and potential consultancy support.

A solution that seems cheap may become expensive if it requires complex configurations or external services to function properly.

Invest in a cloud-based, modular, ready-to-use platform that can scale without hidden costs or technical dependencies.

Why Dcycle is the Best Solution for Manufacturing CSRD

When choosing an ESG management platform for CSRD compliance, what really matters isn't just functionality – it's the ability to deliver a comprehensive, flexible solution oriented to the real value of ESG data.

We are not auditors or consultants. We are a solution designed for companies that want to measure, manage and communicate their ESG impact simply and efficiently.

Our objective is clear: enable every organisation to collect all their ESG information and distribute it automatically to different use cases, without complications or manual processes.

We centralise environmental, social and governance data from any source – ERP, CRM, spreadsheets, internal systems – and convert it into standardised, traceable metrics ready for official reports. Companies can generate documentation compatible with EINF, CSRD, SBTi, European Taxonomy, ISOs or any other standard in minutes.

Why Manufacturing Companies Choose Us

Designed for Operational Reality: We understand that in manufacturing, sustainability data is operational data. Our platform integrates with the systems and processes you already use.

Automated and Simplified: Everything works in the cloud, with no complex installations or technical development needed. In a few clicks, teams can visualise performance, identify improvement areas and prepare audit-ready reports.

Complete Traceability: Every metric links back to source evidence – invoices, meter readings, production logs, waste transfer notes. This isn't just good practice, it's a requirement for external assurance.

Multi-Framework Support: Generate reports for CSRD, Taxonomy, SBTi, ISO and any other framework from a single dataset. No duplication, no inconsistencies.

Strategic, Not Just Compliance: We firmly believe sustainability should be a strategic lever for competitiveness, not an administrative burden. Our mission is clear: convert ESG data into smarter, more efficient and more profitable business decisions.

With Dcycle, manufacturing companies can control their information, reduce costs, automate processes and guarantee complete traceability of their ESG indicators.

In a market where measuring well is the difference between moving forward and falling behind, our proposition is simple: make sustainability work as a real engine for growth.

Frequently Asked Questions (FAQs)

What should I prioritise when implementing CSRD in manufacturing?

When implementing CSRD, prioritise three core elements: automation, traceability and adaptability.

Automation means collecting data directly from source systems (meters, ERP, production systems) without manual intervention. This reduces errors, saves time and ensures consistency.

Traceability means every number can be traced back to a source document with a clear calculation methodology. This is essential for audit and builds confidence in your data.

Adaptability means your system can accommodate different reporting frameworks (ESRS, Taxonomy, SBTi, ISOs) and evolve as regulations change, without requiring major reconfiguration.

Also ensure your solution is easy to implement, scalable and compatible with your existing systems. This avoids excessive costs and lets you start working quickly while maintaining data reliability from day one.

What are the main challenges for manufacturers under CSRD?

The main challenges are:

Data fragmentation: Sustainability data lives across multiple systems (energy bills, production logs, waste contractors, HR systems, purchasing records). Consolidating it requires careful integration.

Plant-level granularity: Corporate aggregates aren't enough. You need data by facility, process line and product category to support both reporting and operational improvements.

Supply chain complexity: Scope 3 emissions often represent 70-90% of total footprint for manufacturers. Collecting reliable supplier data is difficult, especially from smaller partners.

Resource constraints: Most manufacturers don't have dedicated sustainability teams. CSRD competes for attention with production, quality, delivery and cost objectives.

Audit readiness: Unlike previous sustainability reports, CSRD requires external assurance. Your data and processes must meet audit standards.

How does CSRD differ between EU and UK manufacturers?

EU manufacturers must comply with CSRD and ESRS, which require double materiality, detailed disclosures across environmental, social and governance topics, and external audit.

UK manufacturers follow TCFD for climate (already mandatory for large companies since 2022) and will likely adopt IFRS S1/S2 standards focused on financial materiality and investor decision-usefulness.

The practical difference: CSRD is more comprehensive (covering broader ESG topics) and more prescriptive (specific datapoints and methodologies), while UK standards focus more narrowly on climate and financial impact.

However, the direction is the same: more rigorous ESG disclosure, more verification, more accountability. UK manufacturers with EU customers, EU operations or EU-listed securities will likely need to comply with both frameworks.

Can small manufacturers benefit from CSRD compliance even if not required?

Absolutely. Even if you're below the mandatory thresholds, building a CSRD-aligned ESG system delivers concrete benefits:

Customer requirements: Large manufacturers increasingly require ESG data from suppliers. Having robust data positions you as a preferred partner.

Access to finance: Banks and investors offer better terms to companies with transparent ESG performance and credible improvement plans.

Operational efficiency: Measuring energy, materials, waste and water properly almost always reveals cost-saving opportunities.

Risk management: Understanding your environmental and social risks helps you prepare for regulatory changes, resource scarcity and market shifts.

Talent attraction: Skilled workers increasingly prefer employers with strong sustainability credentials.

The investment in ESG data infrastructure pays dividends whether or not compliance is mandatory.

How long does it take to implement a CSRD-ready system?

For a typical manufacturing company, a realistic timeline is:

90 days for minimum viable system: Scope definition, materiality assessment, top data sources connected, basic controls in place and first draft disclosures with identified gaps.

6-12 months for full implementation: All material datapoints automated, complete controls, evidence management, workflow approvals, audit-ready documentation and first complete CSRD report.

Ongoing improvement: ESG reporting is not a one-time project. Expect continuous refinement of data quality, expansion of Scope 3 coverage, deeper supply chain engagement and more sophisticated analytics.

The key is to start with a solid foundation – clear scope, cross-functional governance, robust data model and the right technology platform. Building on shaky foundations wastes time and creates problems later.

With the right approach and the right tools, CSRD compliance becomes a manageable process that strengthens your business rather than burdening it.

Common Pitfalls and How to Avoid Them

Many manufacturing companies stumble during CSRD implementation. Here are the most common mistakes and how to prevent them:

Mistake 1: Treating CSRD as a "Sustainability Project"

The problem: Companies assign CSRD to the sustainability or HSE team without involving Finance, IT or senior management.

Why it fails: CSRD is a reporting directive similar to financial reporting. It requires audit-grade data, internal controls and board-level governance.

Solution: Establish a cross-functional CSRD programme led by Finance or jointly by Finance and Operations, with clear accountability to senior leadership.

Mistake 2: Starting with Tools Before Defining Requirements

The problem: Companies rush to buy software before clarifying scope, responsibilities, data definitions or materiality assessment.

Why it fails: The tool becomes a data graveyard without clear processes. Garbage in, garbage out.

Solution: First complete your materiality assessment, map data sources, define KPIs and establish governance. Then select a tool that fits your requirements.

Mistake 3: Underestimating Scope 3 and Supply Chain Burden

The problem: Companies assume they can quickly collect detailed data from all suppliers.

Why it fails: Small suppliers don't have sophisticated data systems. Requesting too much too fast damages relationships without improving data quality.

Solution: Segment suppliers by criticality. Focus detailed data requests on your top 20% suppliers (by spend or impact). Use industry averages and estimates for the long tail, with a documented improvement plan.

The Omnibus reforms specifically aim to limit unreasonable data requests to smaller suppliers, so this segmented approach aligns with emerging regulatory guidance.

Mistake 4: Not Granular Enough for Plant-Level Data

The problem: Companies aggregate data at corporate level without plant-specific detail.

Why it fails: In manufacturing, the meaningful data lives at the plant level. Corporate aggregates hide the real drivers and make operational improvements impossible.

Solution: Build your data model at plant level from day one. Aggregate up to corporate for reporting, but maintain granular data for management and verification.

Mistake 5: Ignoring the Audit Requirement

The problem: Companies treat CSRD as a marketing exercise with approximate numbers and flexible methodologies.

Why it fails: CSRD requires external assurance (starting with limited assurance, progressing to reasonable assurance). Auditors will challenge your data sources, calculations and controls.

Solution: Design your CSRD system with audit in mind from the start. If you can't trace a number back to a source document with a clear calculation methodology, it's not audit-ready.