Lessons from the EU: What California Can Learn from CSRD

CSRD vs California SB 253 comparison table of ESG disclosure rules

Table Of Contents

The EU’s CSRD has been years in the making—and it’s now live. California’s SB 253 is newer, narrower, and focused primarily on emissions disclosure. But if California takes notes from Europe, there’s a good chance its approach will evolve in scope, depth, and detail. Here’s what that future might look like.

Why This Comparison Matters Now

The CSRD came into force in 2023, marking a new era of sustainability reporting in Europe. At the same time, California passed SB 253—requiring emissions disclosure from large companies operating in the state. Both frameworks are built for transparency and accountability. Both set the tone for future regulations elsewhere. And both are shaping how companies think about ESG reporting at scale.

If California decides to expand its mandate over the next few years, it may draw inspiration from how Europe has approached it—with broader metrics, more granular reporting, and a deeper integration with financial performance and risk.

Key Features of CSRD and SB 253

Let’s set the baseline.

FeatureCSRD (EU)SB 253 (California)
Applies toEU companies + non-EU with EU presenceCompanies with $1B+ revenue doing business in CA
Mandatory from2024 (phased by company size)2026
Primary focusESG performance across value chainScope 1, 2, and 3 emissions
Framework usedESRS (EFRAG), based on double materialityGHG Protocol, with third-party assurance
FormatXBRL-tagged digital filingsPublic report via website
Assurance requirementMandatory limited assurance, moving toward reasonableLimited assurance by 2026; reasonable by 2030

Both are serious steps toward more consistent, decision-useful sustainability data. But CSRD sets a broader precedent in terms of what’s reported—and how.

How CSRD Could Influence California

If there’s a template California regulators look toward as they iterate on SB 253, CSRD is it. Here’s why:

  • CSRD links sustainability to financial performance, requiring companies to explain how sustainability risks affect their strategy, business model, and cash flow.
  • It’s built for comparability, with standardized metrics and double materiality at its core.
  • It’s designed for a global stage, anticipating alignment with ISSB and GRI standards.

While SB 253 starts with emissions data, there’s room to expand toward more holistic ESG metrics in the future—especially for companies already operating in both jurisdictions.

Double Materiality: A Concept to Watch

CSRD’s double materiality framework asks two questions:

  1. How do environmental and social issues impact the business?
  2. How does the business impact people and planet?

This two-way lens has already shifted the conversation in European boardrooms—from reactive compliance to proactive strategy. California doesn’t mandate double materiality today, but it could follow suit by requiring disclosures that go beyond operational carbon footprints.

Industry-Specific Standards: Coming Soon to the US?

The European Sustainability Reporting Standards (ESRS) include sector-specific metrics—what’s material in banking looks very different from what matters in agriculture or tech.

California could move in this direction too. Especially as emissions data becomes more comparable across industries, regulators may look for disclosures that reflect the nuance of business models and operational realities.

Assurance, Data Depth, and Digital Tagging

CSRD starts with limited assurance and signals a move toward reasonable assurance in the years ahead. California mirrors that approach in SB 253—requiring limited assurance from 2026 and upgrading to reasonable assurance by 2030.

Where Europe pulls ahead for now is data accessibility. CSRD requires XBRL digital tagging for all disclosures. That means AI tools and analysts can parse it instantly. If California wants its emissions disclosures to inform capital markets, adopting a digital-first approach may not be far behind.

Timeline Alignment and Global Interoperability

Both frameworks kick in around the same time—2024–2026—but the way companies sequence and consolidate data will matter. Already, multinationals are aligning reporting calendars, consolidating assurance providers, and rationalizing ESG KPIs across jurisdictions.

As global standards converge, there’s a case for California disclosures to become more interoperable with international frameworks like ISSB’s IFRS S2 or CSRD’s ESRS. The foundations are there. It’s a matter of how far regulators choose to build on them.

SB 253 vs CSRD: At-a-Glance Comparison

CategorySB 253 (California)CSRD (EU)
ScopeGHG emissions (Scope 1, 2, 3)Broad ESG (environmental, social, governance)
ApplicabilityCompanies >$1B revenue operating in CAEU-based and global companies with EU presence
FrameworkGHG Protocol + independent assuranceESRS + double materiality
TimelineReporting starts 2026Reporting starts 2024 (phased)
AssuranceLimited (2026), reasonable (2030)Limited now, reasonable later
Digital TaggingNot yet requiredXBRL required

Final Thought: Where California Could Go Next

The next chapter in California’s climate transparency story is still being written. But if history is any guide, the state doesn’t stop at the first draft. It refines, expands, and leads.

CSRD shows what’s possible when sustainability reporting is treated not just as compliance, but as strategic infrastructure. California has the regulatory ambition, the corporate base, and the climate urgency to head in that direction. If it does, the outcome could be a globally significant ESG standard—one born in the U.S., and interoperable with the world.

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