CSRD vs SOX vs ESG: What's the Difference?
If you're drowning in compliance acronyms, you're not alone. Let's break down three major frameworks that might apply to your business: CSRD, SOX, and ESG.
The Quick Summary
In one sentence each:
- CSRD: Europe's new law requiring detailed sustainability reporting from companies
- SOX: US law ensuring accurate financial reporting and internal controls
- ESG: Voluntary framework for measuring environmental, social, and governance performance
CSRD (Corporate Sustainability Reporting Directive)
What It Is
CSRD is the EU's comprehensive sustainability reporting law that kicked in January 2024. It's like a health checkup for your company's impact on the planet and society.
Who It Affects
- Large EU companies (250+ employees)
- EU subsidiaries of non-EU parent companies
- Non-EU companies with significant EU revenue (€150M+)
What You Report
- Environmental impact (emissions, energy use, biodiversity)
- Social factors (employee welfare, human rights, diversity)
- Governance (anti-corruption, board diversity, risk management)
SOX (Sarbanes-Oxley Act)
What It Is
SOX is a US law passed in 2002 after major accounting scandals. It's the financial world's trust-but-verify system.
Who It Affects
- All US public companies
- Foreign companies listed on US exchanges
- Accounting firms auditing these companies
Key Requirements
- CEO/CFO certifications of financial statements
- Internal control assessments
- Auditor independence confirmations
ESG (Environmental, Social, Governance)
What It Is
ESG isn't a law - it's a framework investors use to evaluate company sustainability. Think of it as your company's report card for being a good corporate citizen.
Who It Affects
- Any company seeking investment
- Companies wanting to demonstrate social responsibility
- Organizations responding to stakeholder pressure
The Bottom Line
While these frameworks differ in scope and requirements, they share a common thread: transparency and accountability. Start with ESG reporting even if not required - it's good practice and prepares you for future regulations.
Need help navigating compliance requirements? Sign up for early access to ClearComply's AI assistant (launching soon) that will help you understand which frameworks apply to your business.