The CSRD and NFRD are two EU directives that require companies to disclose non-financial information related to their environmental, social, and governance (ESG) performance. The key differences between the two directives relate to the scope and content of the disclosures required.

The Non-Financial Reporting Directive (NFRD): The NFRD was adopted in 2014 and required certain large companies in the EU to disclose non-financial information related to ESG issues in their annual management report. The directive applies to public-interest entities with over 500 employees, including listed companies, banks, and insurance companies. The disclosures required under the NFRD relate to environmental, social, team member, human rights, and anti-corruption matters. They must describe the company's policies, outcomes, risks, and key performance indicators.

The Corporate Sustainability Reporting Directive (CSRD): The CSRD is a proposed new directive that will replace the NFRD and extend the scope of sustainability reporting requirements. The European Commission proposed the CSRD in April 2021 and is currently undergoing the legislative process. The CSRD will apply to all companies in the EU, including those not listed on stock exchanges. The directive will require companies to report on broader sustainability topics, including climate change, biodiversity, and social issues. The CSRD will also introduce more specific and prescriptive reporting requirements, such as reporting in a digital, machine-readable format and using recognised reporting standards.

In summary, while the NFRD currently applies to certain large companies and requires disclosure of ESG information, the CSRD is a proposed new directive that will expand the scope and increase the specificity of sustainability reporting requirements for all large companies in the EU.