CSRD / DMA for Agriculture & Forestry

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What is CSRD / DMA?

The Corporate Sustainability Reporting Directive (CSRD) is a European Union regulation that requires companies to disclose detailed information about their environmental, social, and governance (ESG) impacts. At the core of CSRD lies the Double Materiality Assessment (DMA) — a methodology that evaluates both how sustainability issues affect a company's financial performance (financial materiality) and how the company's operations impact people and the environment (impact materiality). Together, CSRD and DMA establish a comprehensive framework for transparent, standardized sustainability reporting across the EU and beyond.

CSRD / DMA and the Agriculture & Forestry Industry

Agriculture and forestry sit at the intersection of nearly every major sustainability topic covered by CSRD. Few industries are as directly connected to land use, biodiversity, water consumption, greenhouse gas emissions, and labor conditions as farming, livestock production, timber harvesting, and forest management. The Double Materiality Assessment is particularly consequential here because the relationship between environmental impact and financial risk runs in both directions with unusual intensity.

Consider a large-scale grain producer operating across multiple EU member states. Climate change poses a direct financial threat through shifting rainfall patterns and increased drought frequency — that is financial materiality. At the same time, the company's use of synthetic fertilizers contributes to nitrous oxide emissions and waterway eutrophication — that is impact materiality. Under CSRD, both dimensions must be reported with quantified data, not vague commitments.

Forestry companies face similarly dual exposures. A timber operation must report on how deforestation regulations and carbon credit market fluctuations affect its revenue projections, while simultaneously disclosing the ecological consequences of its harvesting practices on soil carbon storage, watershed integrity, and habitat connectivity. Livestock operations must address methane emissions, animal welfare standards, and supply chain labor conditions — all material topics under the European Sustainability Reporting Standards (ESRS).

The regulation also reaches companies that may not consider themselves primary agricultural producers. Food processors sourcing raw materials from EU farms, agricultural equipment manufacturers, and forestry service providers all fall within scope if they meet the size thresholds: more than 250 employees, EUR 50 million in net turnover, or EUR 25 million in total assets. From 2026, even listed SMEs will be subject to simplified reporting requirements.

Key Requirements

Agriculture and forestry companies subject to CSRD must address several specific requirements that reflect the unique materiality profile of the sector:

• Double Materiality Assessment (DMA): Conduct a formal assessment identifying which sustainability topics are material from both financial and impact perspectives. For agriculture, this typically includes climate change mitigation and adaptation, water and marine resources, biodiversity and ecosystems, pollution, and resource use. The DMA must involve stakeholder engagement — including workers, local communities, and environmental groups.
• Climate disclosures under ESRS E1: Report Scope 1, 2, and 3 greenhouse gas emissions. For agriculture, Scope 1 includes methane from livestock and nitrous oxide from fertilized soils. Scope 3 covers emissions embedded in purchased feed, transportation, and downstream processing. Forestry companies must account for carbon sequestration and emissions from land-use change.
• Biodiversity and ecosystems under ESRS E4: Disclose impacts on habitats, species, and ecosystem services. This includes reporting on land-use change, pesticide and herbicide application volumes, soil health indicators, and any operations in or adjacent to protected areas or biodiversity-sensitive regions.
• Water use under ESRS E3: Report water withdrawal, consumption, and discharge by source, particularly in water-stressed regions. Irrigation-dependent operations must quantify water intensity per unit of output and describe water management practices.
• Workforce and value chain workers under ESRS S1 and S2: Disclose working conditions for both direct employees and seasonal or migrant workers — a critical topic in agriculture where labor exploitation risks are well-documented. This includes health and safety data, fair wage assessments, and freedom of association.
• Transition plans: Companies must present credible transition plans aligned with the Paris Agreement's 1.5-degree pathway, including intermediate targets, capital expenditure plans for decarbonization, and descriptions of how business models will adapt to a low-carbon economy.
• Value chain reporting: Disclose material sustainability information across the full value chain — from seed and feed suppliers to distributors and end consumers. This requires traceability systems and supplier engagement programs that many agricultural businesses have not yet built.
• Third-party assurance: All sustainability reports must be independently assured. Initially, limited assurance is required, with a transition to reasonable assurance expected by 2028.

Implementation Steps for Agriculture & Forestry Companies

1. Establish a cross-functional sustainability team. Appoint a project lead with board-level access and assemble a team that includes operations, finance, compliance, agronomy or forestry management, and human resources. CSRD reporting touches every part of the business — no single department can deliver it alone.
2. Conduct a gap analysis of current reporting capabilities. Map your existing data collection against ESRS disclosure requirements. Identify where you already have usable data (e.g., fertilizer purchase records, fuel consumption logs, employee headcount) and where critical gaps exist (e.g., Scope 3 emissions from purchased livestock feed, biodiversity impact metrics, seasonal worker safety records).
3. Perform the Double Materiality Assessment. Engage internal and external stakeholders to identify material topics. Use sector-specific guidance — the EFRAG has published implementation guidance for agriculture that maps common business activities to likely material ESRS topics. Prioritize topics where both financial risk and environmental or social impact are high, such as water scarcity for irrigated crop producers or deforestation risk for palm oil and soy supply chains.
4. Build or upgrade data infrastructure. Implement systems to collect, validate, and store sustainability data with audit-trail quality. For many agricultural companies, this means digitizing field-level data (soil tests, input application records, yield data) and integrating it with financial systems. Forestry operations should consider remote sensing and GIS tools for land-use monitoring. Select reporting software that supports ESRS taxonomy and XBRL digital tagging requirements.
5. Calculate your carbon footprint comprehensively. Use recognized methodologies (GHG Protocol, IPCC guidelines for agriculture) to quantify emissions across all three scopes. Pay particular attention to agricultural-specific emission sources: enteric fermentation, manure management, rice cultivation, field burning, and land-use change. Engage suppliers to obtain primary emissions data wherever possible rather than relying solely on industry averages.
6. Develop a credible transition plan. Set science-based targets for emission reductions and outline specific actions: precision agriculture adoption, cover cropping, reduced tillage, agroforestry integration, renewable energy for processing facilities, or shifts in livestock feed composition. Include timelines, investment requirements, and expected outcomes. Avoid vague pledges — auditors and investors will scrutinize the specifics.
7. Prepare your first CSRD-compliant report. Structure disclosures according to ESRS requirements, including both narrative descriptions and quantitative metrics. Include the DMA methodology, material topic analysis, policies, targets, actions, and performance metrics. Ensure the report is digitally tagged in XBRL format as required for filing with national registries.
8. Engage an independent assurance provider. Select an auditor with experience in sustainability assurance and, ideally, familiarity with agriculture and forestry sector specifics. Begin the assurance engagement early — auditors will need time to understand your data collection processes, test controls, and verify reported figures.
9. Establish continuous improvement cycles. CSRD is not a one-time exercise. Build annual review processes to update the DMA as business conditions change, refine data quality, expand Scope 3 coverage, and track progress against transition plan targets. Use reporting insights to drive operational improvements, not just compliance.

Frequently Asked Questions

When does CSRD apply to agriculture and forestry companies?

Large companies (over 250 employees or meeting two of three size criteria) already in scope of the Non-Financial Reporting Directive began reporting for fiscal year 2024. Other large companies report from fiscal year 2025, and listed SMEs from fiscal year 2026. Even if your company falls below the thresholds, you may still face indirect pressure from customers, lenders, or supply chain partners who need your data for their own CSRD disclosures.

How does the Double Materiality Assessment differ from a traditional risk assessment?

Traditional risk assessments focus on threats to the company — financial materiality. The DMA adds a second lens: the company's impact on the environment and society. For a forestry company, a traditional assessment might evaluate wildfire risk to timber assets. The DMA additionally requires evaluating how harvesting practices affect carbon storage, water cycles, and local biodiversity. Both perspectives must be documented and reported under CSRD, and stakeholders beyond shareholders — including affected communities and environmental organizations — must be consulted during the process.

What are the penalties for non-compliance?

Penalties are set by individual EU member states, but they can include fines, public statements of non-compliance, and orders to correct reports. More practically, non-compliance carries significant commercial consequences: institutional investors increasingly screen for CSRD compliance, banks may factor reporting quality into lending terms, and large buyers in the food supply chain are beginning to require CSRD-aligned data from their agricultural suppliers as a procurement condition.

Can smaller farms and forestry operations ignore CSRD?

Smaller operations below the size thresholds are not directly required to report under CSRD. However, they are increasingly affected through supply chain dynamics. A large food retailer subject to CSRD must report on its value chain impacts, which means requesting emissions, water use, and labor condition data from its agricultural suppliers — regardless of their size. Proactively building sustainability data capabilities positions smaller operations as preferred suppliers and may open access to sustainability-linked financing.

Summary

CSRD and the Double Materiality Assessment represent a fundamental shift in how agriculture and forestry companies must account for their environmental and social footprint. The regulation demands concrete data, credible transition plans, and independent verification — not aspirational statements. Companies that begin preparing now, investing in data infrastructure and stakeholder engagement, will not only achieve compliance but also strengthen their market position as supply chain transparency becomes the standard rather than the exception.

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