CSRD applies to private companies — not just listed companies. The common misconception is that mandatory sustainability reporting is only for publicly traded entities. In fact, CSRD's Wave 2 scope covers large private companies that meet the size thresholds, regardless of whether their shares are listed on a stock exchange.
The Scope Test for Private Companies
CSRD Wave 2 applies to any large company that meets two of three criteria:
- 250 or more employees
- €40M or more net turnover
- €20M or more total assets (balance sheet)
The company does not need to be listed. A private equity-backed company, a family-owned business, an employee-owned firm, or a subsidiary of a larger group — all are in scope if they meet these thresholds.
Wave 2 timeline: First report covers financial year 2025, published in 2026.
Private Companies Currently In Scope
The following types of private companies are within CSRD's direct mandatory scope:
Large private equity-backed companies: Many PE-backed businesses in the €40M–€500M revenue range meet the Wave 2 thresholds. Private equity ownership does not exempt from CSRD.
Subsidiaries of large groups: Even if the parent is outside the EU or below CSRD thresholds, an EU subsidiary that meets the Wave 2 criteria is independently in scope.
Family-owned businesses: Large family businesses in manufacturing, retail, or services that have grown above the thresholds are in scope.
Cooperative and mutually owned enterprises: Ownership structure does not affect CSRD scope.
Professional service firms: Large law firms, accounting firms, and consultancies above the thresholds are in scope.
Private Companies with Reduced Obligations
The NFRD previously applied only to Public Interest Entities (PIEs — listed companies, banks, insurers). Under CSRD, Wave 2 private companies have the same reporting obligations as listed companies — with one potential difference:
The VSME simplified standard: Listed SMEs have access to a simplified ESRS standard (VSME). Wave 2 private companies must use the full ESRS set.
No listed company governance requirements: Private companies do not face the same governance disclosures as listed companies (e.g., no requirement to disclose executive remuneration in the same format as listed companies under ESRS S1 for privately held entities without public equity compensation disclosures).
Private Companies Out of Direct Scope
Private companies below the Wave 2 thresholds are not directly required to report under CSRD — with one exception: non-listed companies in Wave 3 are listed SMEs only. An unlisted SME is not in CSRD scope under any wave.
However, private companies below CSRD thresholds are still affected through value chain requirements. Large CSRD-reporting companies will request sustainability data from their significant suppliers — including private companies too small for direct CSRD scope.
Subsidiary Reporting: Group vs. Entity
Many large private companies are subsidiaries of larger groups. CSRD creates complexity for group reporting:
EU parent, EU subsidiary: The parent files a consolidated CSRD report covering the group. Subsidiaries are included in the group report and generally exempt from filing their own report if the parent's consolidated report covers them.
Non-EU parent, EU subsidiary: The EU subsidiary may be independently required to report — even if the parent is not a CSRD-reporting entity — if the subsidiary itself meets the Wave 2 thresholds.
Non-EU parent with large EU presence: Wave 4 of CSRD (from FY 2028) applies to non-EU companies with €150M+ EU turnover and a large EU subsidiary. The parent must then file a CSRD report covering EU operations, even if the parent is a private company headquartered outside the EU.
Practical Implications for Private Companies
Investor Due Diligence
Private equity and institutional investors in private companies are increasingly incorporating CSRD-quality sustainability data into their portfolio monitoring — both because of their own SFDR obligations and because they are managing exit valuation risk. Portfolio companies that build CSRD-quality reporting infrastructure early are more valuable at exit.
Strategic Acquirer Requirements
Strategic acquirers that are CSRD-reporting companies need to understand the sustainability profile of acquisition targets. Targets with established sustainability data and a clear CSRD compliance programme command a premium and face fewer due diligence complications.
Lender Requirements
Banks and alternative lenders subject to CSRD and the EU Taxonomy are increasingly requesting sustainability data from borrowers — particularly for ESG-linked lending products. Private companies seeking favourable lending terms should build sustainability reporting capability even before their mandatory CSRD deadline.
Enterprise Customer Requirements
Value chain reporting requirements from large customers will arrive before any regulatory deadline. If your largest customers are Wave 2 CSRD companies (reporting from 2026), they will request your sustainability data in 2025.
What Private Companies Should Do Now
If you are in Wave 2 scope (250+ employees and €40M+ turnover):
- Complete the double materiality assessment — this determines what you must report
- Implement data collection for material topics (energy, emissions, workforce)
- Engage an assurance provider — assurance is required for private companies too
- Plan for ESEF tagging of quantitative disclosures
If you are below CSRD thresholds but sell to large companies:
- Start measuring Scope 1 and 2 emissions
- Build basic sustainability policies
- Prepare to respond to value chain questionnaires from customers