Understanding CSRD vs NIS2: Key Differences in EU Compliance and Cybersecurity

CSRD and NIS2 are two key EU regulations affecting businesses. But what’s the difference? Understanding these frameworks is essential for organizations navigating the evolving landscape of compliance, sustainability, and cybersecurity in the European Union. Both directives aim to enhance corporate responsibility but do so from distinct perspectives—one focusing on sustainability and transparency, the other on operational resilience and cyber risk management.

• CSRD (Corporate Sustainability Reporting Directive):
  • Focus: Sustainability reports, including cybersecurity risks as part of broader ESG (Environmental, Social, Governance) disclosures.
  • Target group: Large/publicly listed companies (from 250 employees, €40 million revenue, or €20 million balance sheet total).
  • Requirements: Disclosure of security incidents, data protection in ESG reports, assessment of supply chain security. The directive also emphasizes transparency in how companies manage environmental and social risks, including digital threats, aligning with global trends in responsible business conduct (PwC).
• NIS2 (Network and Information Security Directive 2):
  • Focus: Cybersecurity and operational resilience, with a strong emphasis on protecting critical infrastructure and digital services.
  • Target group: Sector-specific companies (from 50 employees, €10 million revenue), e.g., energy, banking, healthcare, digital infrastructure, and more. This expansion means that many more organizations are now in scope compared to the original NIS Directive (ENISA).
  • Requirements: Technical measures (e.g., encryption, monitoring), mandatory incident reporting (within 24 hours), management responsibility, and regular risk assessments. NIS2 also introduces personal liability for executives in case of severe breaches.

Quick Comparison:

Both regulations overlap when it comes to considering cybersecurity risks. Companies should therefore develop integrated strategies to ensure efficient compliance. For example, a large energy provider may need to report on its cybersecurity posture under CSRD while also implementing technical controls and incident reporting mechanisms required by NIS2.

NIS2 – What Does the New EU Directive Mean for Your Cybersecurity Strategy?

The NIS2 Directive, which entered into force in January 2023, significantly raises the bar for cybersecurity across the EU. It broadens the scope to include more sectors and smaller organizations, introduces stricter incident reporting timelines, and holds top management personally accountable for compliance failures. According to the European Union Agency for Cybersecurity, NIS2 aims to create a high common level of cybersecurity across member states, reflecting the growing threat landscape and the increasing reliance on digital infrastructure (ENISA).

Objectives of CSRD and NIS2

CSRD and NIS2 complement each other when it comes to cybersecurity, but they have different focal points. While CSRD aims to integrate data protection and security aspects into sustainability reporting, NIS2 focuses on implementing clear technical and organizational security measures. This dual approach ensures that companies not only disclose their cyber risks but also actively manage and mitigate them.

Data Protection Requirements under CSRD

CSRD sets specific data protection requirements that must be considered in the context of ESG reporting:

Companies subject to CSRD must comprehensively document their data protection practices. This includes security strategies, risk management processes, and incident reports. The European Commission highlights that CSRD aims to bring sustainability reporting on par with financial reporting, making it more reliable and comparable (European Commission).

While CSRD integrates data protection into ESG reporting, NIS2 takes a more practical approach with clear security requirements.

NIS2 Security Standards

The NIS2 Directive imposes stricter security requirements than its predecessor and mandates binding technical and organizational measures:

• Technical requirements
  Companies are required to implement security solutions that ensure continuous monitoring and rapid response capabilities. This also includes systems for early detection of cyber threats, such as Security Information and Event Management (SIEM) and endpoint detection and response (EDR) tools (ENISA IoT Security Guidelines).
• Organizational measures
  Responsibility for cybersecurity lies with management, which must receive regular training. In the event of a security incident, it must be reported within 24 hours, followed by a detailed report within a month. Violations can result in severe penalties, including personal liability for executives.

These two approaches show how companies are required by CSRD and NIS2 to implement comprehensive security measures. While CSRD is more principle-based for reporting, NIS2 defines clear technical requirements and timelines.

Companies Affected by Both Laws

CSRD Size Requirements for Companies

The CSRD (Corporate Sustainability Reporting Directive) applies to companies that meet at least two of the following criteria:

Implementation is phased: from 2025 for companies already covered by the NFRD (Non-Financial Reporting Directive), from 2026 for large companies not previously included, and from 2027 for listed SMEs. The latter can defer until 2028. This staged rollout allows organizations time to adapt their reporting processes and systems.

Unlike CSRD’s quantitative criteria, the NIS2 Directive is based on industry-specific requirements.

NIS2 Sector Coverage

The NIS2 Directive defines its scope not by numbers, but by the relevance of specific industries. It expands the previous scope and applies to medium and large companies (from 50 employees and €10 million annual revenue) in so-called critical sectors. This includes not only traditional critical infrastructure like energy and transport, but also digital service providers, food production, and research institutions, reflecting the interconnected nature of modern supply chains (ENISA).

NIS2 distinguishes between:

Essential Entities:

• Energy supply
• Transport
• Banks and financial market infrastructures
• Healthcare
• Drinking water supply
• Digital infrastructure

Important Entities:

• Postal services
• Waste management
• Chemical industry
• Food production
• Manufacturing of critical products
• Digital service providers
• Research institutions

Large companies operating in regulated sectors must comply with both regulations. For example, an energy provider with over 250 employees falls under both CSRD and NIS2, requiring a harmonized approach to reporting, risk management, and technical controls.

Special Requirements for International Corporations

International companies face additional requirements: Non-EU companies generating over €150 million in revenue within the EU and with at least one EU branch must meet CSRD requirements from 2029 (for the 2028 financial year). The NIS2 Directive, on the other hand, applies to all companies providing essential services within the EU—regardless of where their headquarters are located. This extraterritorial reach is designed to ensure a level playing field and robust protection for the EU’s digital ecosystem (CSRwire).

Comparison of Security Requirements

Security Systems and Tools

CSRD focuses on disclosing cybersecurity measures in the sustainability report, while NIS2 mandates specific technical measures. This means that under CSRD, companies must be transparent about their cyber risk exposure and controls, whereas NIS2 requires them to implement and maintain concrete technical safeguards.

The table highlights the key differences. In addition, NIS2 requires further measures, such as:

• Modern network security solutions, including encryption
• Incident detection and response systems
• Regular vulnerability analyses and penetration tests
• Reliable backup and emergency plans

For example, the European Union Agency for Cybersecurity recommends regular penetration testing and the use of advanced threat intelligence to proactively identify and mitigate vulnerabilities (ENISA IoT Security Guidelines).

Besides technical requirements, management plays a crucial role. The differences in responsibility are outlined in the next section.

Management Requirements

While CSRD views cybersecurity as part of sustainability reporting, NIS2 assigns direct and binding responsibility to top management. Both approaches complement each other to strengthen cybersecurity in companies.

CSRD Requirements:

• Integration of cybersecurity into sustainability reporting
• Supervision by the board
• Annual review of governance processes

NIS2 Requirements:

• Mandatory management training
• Establishment of specific cybersecurity roles
• Regular review of security measures
• Personal liability of executives in case of violations

It’s especially important to note that violations of the NIS2 Directive can result in heavy fines—up to €10 million or 2% of global annual revenue. This is a significant increase from previous frameworks and is intended to drive real accountability at the executive level (Osborne Clarke).

Reporting Obligations and Fines

Incident Reporting Requirements

NIS2 and CSRD differ significantly in their reporting approaches and timelines. NIS2 uses a three-stage reporting system as follows:

In contrast, CSRD follows the requirements of the GDPR. The focus here is on annual sustainability reporting, especially transparent disclosure of cybersecurity risks and their management. Both regulations emphasize clear reporting and impose strict penalties for violations.

Consequences of Non-Compliance

NIS2 requires not only precise technical measures but also comprehensive reporting and documentation. Violations can have serious consequences, including:

• High fines
• Expanded audit powers for supervisory authorities
• Personal liability of management in case of serious breaches

A unique feature of NIS2 is the introduction of cross-border reporting obligations. Companies are required to specify the impact in all affected countries in their initial report. This means:

• Close cooperation with authorities in all affected countries
• Uniform classification of incidents across borders

The expanded requirements also entail an obligation for complete documentation. Under NIS2, companies must retain all relevant security incident records for at least five years, including:

• Data on attacks
• Documentation of remedial actions
• Root cause analyses
• Impact assessments

For companies, it will be crucial to develop integrated reporting systems that meet both the strict timelines of NIS2 and the reporting obligations of CSRD. Only then can they fully comply with both regulations. Industry experts recommend leveraging automation and digital platforms to streamline compliance and reduce manual workload (Deloitte).

Meeting Both Requirements

Combined Risk Analysis

To efficiently meet the requirements of CSRD and NIS2, an integrated approach to risk analysis is essential. Companies should design their assessment processes to cover both regulations simultaneously. A structured approach should include the following areas:

By introducing an integrated risk matrix, you lay the foundation for effective and unified monitoring. This approach not only streamlines compliance but also provides a holistic view of organizational risks, enabling better decision-making (Deloitte).

Shared Monitoring Systems

Implementing shared monitoring tools enables efficient control of both compliance areas. Key aspects include:

• Central data platform: A platform that combines sustainability and security data.
• Automated reporting: Combined reports that cover both CSRD and NIS2 requirements.
• Real-time monitoring: Seamless integration of sustainability and security data in real time.

Cost-Efficient Implementation

After aligning risk analysis and monitoring, implementing both regulations requires a cost-efficient approach. Key steps include:

• Resource optimization
  Strategies like net-zero reduce CO₂ emissions and IT costs. Optimized data center management brings:
  • Lower energy consumption
  • Higher security standards
  • Reduced operating costs
• Integrated training programs
  Employee training should address both regulations and cover topics such as sustainability, cybersecurity, and compliance.
• Technological synergies
  Using modern technologies supports the requirements of TNFD and ensures that digital transformation efforts align with both sustainability and security objectives.

In summary, the intersection of CSRD and NIS2 presents both challenges and opportunities. By adopting integrated strategies, leveraging technology, and fostering a culture of compliance, organizations can not only meet regulatory requirements but also strengthen their resilience and reputation in a rapidly evolving business environment.