The EU Corporate Sustainability Reporting Directive (CSRD) is transforming how businesses approach talent management by requiring structured reporting on more than 30 specific workforce metrics.
Starting in 2025, companies with EU operations must provide detailed disclosures about employee diversity, working conditions, fair wages, training, and other people-centric areas. For HR leaders, this represents both a significant compliance challenge and a strategic opportunity to elevate the importance of people data in corporate decision-making.
To help professionals navigate these urgent matters, experts at Deloitte and Velocity Global conducted a webinar discussing the impact of CSRD on the EU Workforce. The webinar provides an overview, history, and CSRD highlights, and offers critical considerations for managing EU talent, including who’s impacted and what it means to companies with global workforces.
As an extension of the webinar, this article explores the pressing topics of CSRD and its significance for HR teams managing global talent.
Why the CSRD matters for global employers
The CSRD represents a fundamental shift in how businesses measure and communicate their societal impact, with profound implications for talent management across borders. By mandating granular reporting on workforce metrics, the CSRD elevates human capital management to a strategic priority for global employers, regardless of their headquarters’ location.
Its requirements extend beyond traditional financial disclosures, compelling organizations to demonstrate how they foster equitable workplaces, protect human rights, and invest in employee development. For multinational companies expanding into Europe, compliance is about aligning with evolving global standards that increasingly influence talent attraction, investor confidence, and regulatory scrutiny.
Quick overview of CSRD
Enacted in 2023 and effective for fiscal years starting in January 2024, the CSRD replaces the Non-Financial Reporting Directive (NFRD) and expands sustainability reporting to over 50,000 EU and non-EU companies. Affected entities include:
- EU companies meeting two of three criteria: 250+ employees, €40 million-plus turnover, or €20 million-plus total assets.
- Non-EU companies generating €150 million-plus in EU revenue or operating large EU subsidiaries/branches.
Under the CSRD’s European Sustainability Reporting Standards (ESRS), companies must disclose data across 12 ESG categories, including ESRS S1 (Own Workforce) and ESRS S2 (Workers in the Value Chain). These standards require reporting on over 30 workforce metrics—from diversity ratios and wage gaps to training hours and health/safety incidents—backed by auditable data and contextual narratives.
Crucially, the directive employs a double materiality framework, demanding analysis of how a company’s operations impact society (impact materiality) and how sustainability risks affect its financial health (financial materiality).
Why it’s not just a finance issue
While the CSRD’s reporting obligations may appear finance-led, its workforce requirements directly engage HR, legal, and operations teams in cross-functional collaboration. Unlike traditional compliance mandates, the CSRD ties corporate reputation and market competitiveness to transparency in four critical areas:
- Workforce reporting and data transparency. HR teams must systematically collect and validate data on workforce composition, including contract types (full-time, part-time, gig workers), turnover rates, and collective bargaining coverage—historically siloed or inconsistently tracked metrics.
- Diversity, equity, and inclusion (DEI). The CSRD compels companies to quantify progress on DEI through metrics like the representation of underrepresented groups, accessibility accommodations for employees with disabilities, and inclusivity training participation. These disclosures are no longer optional “nice-to-haves” but auditable benchmarks that stakeholders—from investors to prospective hires—will use to assess corporate culture.
- Labor practices and human rights. Legal and operations teams must map risks like forced labor and unsafe working conditions across global value chains. ESRS S2 requires companies to disclose remediation processes for labor violations and demonstrate engagement with workers’ representatives—a task demanding close coordination between HR, compliance, and supply chain managers.
- Employment data. Training hours, skills development programs, and employee well-being initiatives directly feed into CSRD reporting under ESRS S1’s “Metrics and Targets” section. This shifts HR from an administrative function to a strategic partner, as workforce investment data becomes integral to sustainability narratives shared with investors.
For global employers, the CSRD’s interconnected requirements underscore that compliance cannot be achieved through financial disclosures alone. HR leaders are now pivotal in bridging data gaps, aligning talent strategies with ESG goals, and mitigating risks that could harm both workforce morale and corporate valuation.
Key CSRD workforce impacts discussed in the webinar
The CSRD’s workforce reporting requirements are reshaping how companies align talent management with broader sustainability goals. During the webinar, experts emphasized that compliance extends far beyond checkbox exercises—it demands strategic integration of human capital data into corporate decision-making.
Below are the most critical workforce impacts highlighted in the discussion, each requiring cross-functional collaboration between HR, legal, and operational teams.
Talent-related reporting requirements
Under ESRS S1 (“Own Workforce”), businesses must disclose over 30 metrics spanning diversity ratios, gender pay gaps, collective bargaining coverage, and health/safety incidents.
For example, companies must report the percentage of employees participating in career development programs, average training hours per worker, and turnover rates—data historically segregated within HR systems.
The directive also mandates transparency on working conditions, including flexible work arrangements and measures to prevent workplace harassment. As the webinar’s experts noted, these requirements force HR teams to standardize data collection across global offices while contextualizing metrics in narratives demonstrating progress.
Human rights due diligence across value chains
The CSRD’s ESRS S2 (“Workers in the Value Chain”) compels companies to audit labor practices among contractors, suppliers, and gig workers, as well as internally. This includes identifying risks like forced labor, child labor, or unsafe conditions in upstream partners’ operations and disclosing remediation efforts.
For instance, firms using temporary employees via agencies must classify these individuals as non-employees while ensuring their rights align with EU standards—a nuance clarified in recent WEC-Europe guidance. Legal teams are pivotal here, mapping compliance gaps and collaborating with HR to implement due diligence frameworks that satisfy the CSRD’s double materiality mandate.
Elevating social metrics in recruitment and retention
Transparency around DEI is no longer optional. Companies must disclose workforce demographics, including disability inclusion rates and accessibility accommodations, while linking these metrics to recruitment strategies.
For example, the CSRD requires reporting on whether all employees receive “adequate wages” relative to living costs—a metric that directly impacts employer branding and talent attraction in EU markets. HR leaders are now tasked with aligning talent acquisition policies with CSRD principles, such as prioritizing candidates who value sustainability or partnering with schools to build pipelines from underrepresented communities.
Heightened scrutiny for non-EU companies
Non-EU multinationals generating over €150 million in EU revenue or operating large subsidiaries must comply with the same standards as EU-based firms. This includes subsidiaries with 250-plus employees or over €40 million in turnover, which must report consolidated data on EU workforce metrics starting in 2025.
During the webinar, experts highlighted challenges for U.S. firms, such as reconciling EU pay equity rules with U.S. pay transparency laws and navigating fragmented data systems across regions. Failure to comply risks penalties and reputational damage as investors increasingly prioritize CSRD-aligned ESG disclosures.
By anchoring talent strategies to these CSRD imperatives, organizations can transform compliance into a competitive advantage—strengthening stakeholder trust while future-proofing their workforce against evolving regulatory demands.
What CSRD means for managing global talent
The CSRD’s workforce reporting mandates are redefining how organizations approach talent management across borders, transforming HR from an administrative function to a strategic driver of ESG-aligned business practices. Below are the critical implications for talent leaders navigating this new paradigm.
Strategic workforce planning
The directive’s ESRS S1 standards require companies to account for all employment types—full-time, part-time, contractors, and remote workers—in workforce data collection and reporting. This holistic approach forces HR teams to reconcile fragmented systems tracking gig workers in one platform and full-time employees in another, particularly for multinationals with flexible work models.
For example, companies must now disclose training hours and career development opportunities for contractors, not just permanent staff, ensuring equitable investment across the workforce. Such transparency compels HR to align talent pipelines with long-term sustainability objectives, such as upskilling programs that reduce turnover and support climate transition plans.
Data collection and reporting readiness
HR and compliance teams will need integrated tools to collect, verify, and audit over 30 workforce-related ESG metrics, from gender pay gaps to collective bargaining coverage. Typically, legacy HRIS systems cannot track granular data like “adequate wages” relative to local living costs or health and safety incidents among subcontractors.
As noted in the webinar’s analysis, cross-functional collaboration is essential—HR must partner with IT to implement centralized data lakes and with legal teams to validate metrics against evolving EU standards. Failure to streamline these processes risks audit penalties and undermines investor confidence in sustainability claims.
Cross-border compliance complexity
Managing EU talent now requires balancing local employment laws—such as Germany’s Works Council mandates—with CSRD’s EU-wide standards for human rights due diligence and DEI disclosures. Non-EU companies face added challenges: U.S. firms, for instance, must reconcile EU pay equity rules with varying U.S. state-level transparency laws while ensuring subsidiaries meet CSRD’s €150 million revenue threshold.
Legal teams must map risks like forced labor in global supply chains, while HR adapts recruitment policies to align with ESRS S2’s value chain worker protections. This dual compliance layer amplifies the need for localized expertise, particularly in high-risk sectors like manufacturing.
Reputation and talent brand
Transparency under the CSRD is becoming a competitive differentiator, with more Gen Z professionals prioritizing employers that disclose social impact metrics. Companies reporting robust DEI data—such as disability inclusion rates or gender representation in leadership—gain an edge in talent attraction, particularly in Europe’s tight labor markets.
Conversely, gaps in CSRD compliance can trigger reputational crises; investors increasingly penalize firms with opaque labor practices or unresolved human rights violations in their value chains. By embedding CSRD principles into employer branding, organizations signal accountability—a critical advantage for retaining top talent amid rising demand for ESG-aligned workplaces.
The CSRD’s interconnected requirements underscore that managing global talent is no longer siloed to HR—it’s a cross-functional imperative shaping corporate resilience, stakeholder trust, and long-term growth. As Velocity Global’s webinar emphasized, proactive adaptation to these standards will separate industry leaders from those struggling to keep pace with the EU’s sustainability revolution.
How Velocity Global helps companies navigate CSRD requirements
Navigating the CSRD’s complex workforce reporting mandates requires a blend of localized expertise and scalable compliance infrastructure. Velocity Global’s Employer of Record (EOR) solutions streamline adherence to EU-wide CSRD standards and country-specific labor laws, ensuring multinational companies meet obligations across all employment types—from full-time employees to contractors.
By managing payroll, benefits, and statutory requirements in over 185 countries, Velocity Global eliminates fragmented compliance systems that often lead to reporting gaps. For example, their platform automates adherence to the EU’s Pay Transparency Directive, a critical complement to CSRD, by standardizing wage data collection and ensuring equitable compensation practices across jurisdictions.
The company’s integrated platform centralizes workforce data transparency, enabling real-time tracking of CSRD-mandated metrics such as diversity ratios, training hours, and health and safety incidents. This capability directly addresses ESRS S1 requirements, which demand granular reporting on social protections, collective bargaining coverage, and gender pay gaps.
Velocity Global embeds audit-ready documentation into its workflows for risk mitigation, from contractor classification checks to due diligence on value chain labor practices (ESRS S2). This proactive approach helps companies avoid penalties for misreporting non-employee worker data or overlooking human rights risks in global supply chains.
Velocity Global’s solutions enable global workforce flexibility while maintaining ESG alignment. Whether scaling teams in Germany’s regulated labor market or hiring gig workers in Spain, the platform ensures that ethical employment practices—such as fair termination protocols and mandatory training—are baked into expansion strategies. In turn, companies can harmonize talent acquisition with CSRD’s emphasis on sustainable growth, effectively meeting EU standards without sacrificing agility.
Actionable next steps for employers
With the CSRD’s 2025 compliance deadlines approaching, employers must act decisively to align talent management practices with the directive’s rigorous standards. As emphasized in the webinar, proactive preparation is an opportunity to position organizations as leaders in ethical, data-driven workforce management. Below are critical steps to operationalize CSRD readiness.
- Audit current workforce reporting. Begin by mapping existing HR data collection processes against CSRD’s ESRS S1 and S2 requirements, focusing on gaps in metrics like employee well-being, contractor working conditions, and value chain labor practices. For instance, many companies lack systems to track “adequate wages” relative to local living costs or health and safety incidents among subcontractors—key CSRD mandates.
- Align HR with ESG strategy. Integrate HR leaders into sustainability planning to bridge gaps between talent strategies and ESG goals. This includes establishing KPIs for DEI progress, such as disability inclusion rates or gender representation in leadership, and embedding these into recruitment and retention programs.
- Evaluate global employment models. Non-EU companies with EU subsidiaries or €150 million-plus regional revenue must reassess employment structures. Velocity Global’s EOR solutions simplify compliance by centralizing payroll, benefits, and labor law adherence across borders, ensuring contractors and full-time employees are counted in CSRD disclosures (critical for avoiding misclassification penalties).
- Partner with compliance experts. Collaborate with global workforce providers to navigate the CSRD’s complexity. For example, Velocity Global’s platform automates data collection for metrics like collective bargaining coverage and training hours while ensuring alignment with complementary regulations like the EU Pay Transparency Directive.
- Conduct materiality assessments. Identify high-impact CSRD metrics through stakeholder engagement and value chain analysis. Focus on areas like forced labor risks in supply chains or pay equity gaps, which directly affect investor confidence and talent retention.
By taking these steps, organizations can transform CSRD compliance into a competitive advantage, fostering trust with stakeholders while future-proofing their global talent strategies.
The bigger picture: CSRD as a catalyst for responsible growth
The CSRD transcends regulatory obligation, serving as a strategic pivot toward values-driven decision-making. By mandating transparency on workforce diversity, fair wages, and value chain ethics, the directive empowers companies to align talent strategies with stakeholder expectations—transforming compliance into a competitive edge.
As CSRD reshapes talent expectations, companies must embed ethical employment practices into their global workforce models. Velocity Global enables this shift, ensuring compliance with EU standards while scaling teams across borders. In a world where talent strategies are judged by their societal footprint, CSRD readiness isn’t optional—it’s the blueprint for leading responsibly in the global talent landscape.
Disclaimer: This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.
© 2025 Velocity Global, LLC. All rights reserved.
