The EU Corporate Sustainability Reporting Directive (CSRD) requires certain undertakings to report on sustainability matters. A draft Luxembourg law to implement CSRD (Lux CSRD) is currently pending in parliament. Such draft law was recently amended to reflect the Stop the Clock Directive that was published on April 16, 2025, which postponed the deadlines by when CSRD must be complied with. 

This Snippet discusses whether a Lux Fund and/or its LuxCos might be in scope of Lux CSRD once adopted. If so, they will need to include a sustainability report in their annual financial statements.

Scope of CSRD

An entity qualifying as an alternative investment fund (AIF) under the EU AIFM Directive is out of scope of Lux CSRD.

Since LuxCos are unlikely to issue listed securities and do not fall within the scope of the EU Non-Financial Reporting Directive (which applies to e.g. banks, insurance companies and large listed companies), the only criterion that is relevant to determine whether LuxCos may be in scope of Lux CRSD is the ‘large undertakings’ criterion. Under that criterion, undertakings meeting at least two of three thresholds (the Thresholds), namely balance sheet total of EUR 25M, net turnover of EUR 50M and 250 employees, on a stand-alone or consolidated basis are subject to Lux CSRD for financial years starting as from Jan 1, 2027, with publication of first reports in 2028. The Thresholds may be increased based on current EU proposals.

Are Lux Funds and LuxCos in scope of Lux CSRD?

For the following reasons, Lux Funds and LuxCos will typically be out of scope of Lux CSRD:

  1. Lux Funds qualifying as AIFs are out of scope based on their AIF status. It’s uncommon for a Lux Fund not to qualify as an AIF.
  2. LuxCos usually do not meet at least two of the Thresholds. First, on a stand-alone basis, LuxCos typically do not meet the employees and net turnover Threshold (financial income such as dividends or interest is not counted as ‘turnover’). Second, LuxCos that would meet at least two of the Thresholds on a consolidated basis but do not prepare consolidated accounts using the Luxembourg “hold-to-sell” consolidation exemption are out of scope of Lux CSRD. 

Hence, there is currently no need for USFM to lose sleep over CSRD when structuring through Luxembourg. However, each case requires an individual assessment, also taking into account that the CSRD legislative framework is still evolving.

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