Common CSRD Reporting Mistakes (and How to Avoid Them)
Introduction
For many small and growing businesses (SMEs) in Europe, the Corporate Sustainability Reporting Directive (CSRD) marks a major shift in how sustainability data must be collected, verified and shared. Yet as the first reporting deadlines approach, many companies find themselves tripping over avoidable errors — from inconsistent data collection to unclear materiality assessments.
The good news? Most of these mistakes stem from misunderstanding the CSRD requirements, not from lack of effort. With a clear structure, a proportionate approach and early preparation, SMEs can build reliable reporting systems without needing expensive consultants or complex software.
This guide outlines the most common CSRD reporting mistakes and provides simple, practical ways to prevent them.
1. Treating CSRD as a Finance-Only Exercise
One of the biggest pitfalls is placing responsibility for CSRD solely with the finance team. The Directive is built around the idea of sustainability information — covering environmental, social and governance (ESG) topics — that are as important as financial results.
How to avoid it
Create a small cross-functional team including operations, HR and procurement. This ensures data about energy use, workforce health and supply chain impacts is captured accurately and not filtered through a purely financial lens.
2. Starting Data Collection Too Late
Under the CSRD and the European Sustainability Reporting Standards (ESRS), companies must provide year-on-year comparable data. Waiting until the last quarter means gaps appear that can’t be filled retrospectively — especially for metrics like energy use, waste or employee turnover.
How to avoid it
Start tracking sustainability metrics as early as possible, even in a simple spreadsheet. For smaller companies not yet in scope, adopting the VSME Standard early can make future compliance far easier. It helps establish proportionate practices for data collection, disclosure and verification from day one.
3. Ignoring Double Materiality
CSRD reports must cover both financial materiality (how sustainability issues affect your business) and impact materiality (how your business affects people and the planet). Many first-time reports focus only on financial impacts — missing half the requirement.
How to avoid it
Conduct a structured double materiality assessment. Involve key internal stakeholders and, where possible, external ones like suppliers or local community representatives. Keep it simple but documented — the process itself matters as much as the outcome.
4. Copying Templates from Large Corporates
Many SMEs try to adapt templates from multinational companies. This often leads to bloated, irrelevant reports filled with metrics that don’t apply. CSRD allows proportionality — smaller companies are expected to report in line with their size and resources.
How to avoid it
Use SME-focused frameworks like the VSME Basic Module, which mirrors the ESRS topics but with simplified disclosures. Stick to what’s genuinely material and explain your reasoning clearly.
5. Overlooking Governance and Social Topics
Environmental data usually gets the most attention, but CSRD also requires reporting on governance (e.g. anti-corruption) and workforce matters. Omitting these weakens credibility and can lead to non-compliance.
How to avoid it
Include simple disclosures on workforce diversity, health and safety, training, and anti-corruption policies. Even short summaries supported by existing HR data are enough to demonstrate coverage of all ESRS topic areas.
6. Failing to Ensure Data Consistency and Audit Readiness
CSRD introduces limited assurance — meaning reported data must be verifiable. Many companies risk non-compliance because they cannot trace figures back to a clear source.
How to avoid it
Keep a simple “data log” recording where each figure comes from (e.g., energy invoices, payroll system, HR database). Update it regularly so the audit trail is clear and low-stress when external assurance begins.
Frequently Asked Questions
What is the most common CSRD mistake among SMEs?
The most frequent issue is poor data organisation — collecting figures too late or without consistent formats. This leads to errors and extra work during assurance. Start early and record your data sources clearly from the first day.
Do small businesses need to report under CSRD?
Not directly, unless they meet the thresholds for “large undertakings” under Directive (EU) 2022/2464. However, many SMEs still need to provide sustainability data to larger clients or banks, which makes adopting a light version of CSRD reporting practical.
How can SMEs make reporting easier?
Use proportionate frameworks like the VSME Standard, which breaks down sustainability topics into manageable sections (environment, workforce, governance). Starting with the Basic Module can cover most needs without hiring consultants.
What happens if we report incorrect data?
CSRD allows for corrections in later reports — mistakes are not penalised if you show a genuine effort to improve data quality. Focus on building reliable systems and document your assumptions transparently.
Key Terms
- CSRD – Corporate Sustainability Reporting Directive (EU) 2022/2464
- VSME – Voluntary Sustainability Reporting Standard for non-listed micro, small and medium-sized undertakings (EFRAG, 2024)
- ESRS – European Sustainability Reporting Standards
- Double Materiality – Assessment of both how sustainability issues affect the company and how the company affects people and the environment
- Limited Assurance – Independent verification of reported sustainability data
Conclusion
The CSRD may seem daunting, but for small and growing businesses, it’s an opportunity to strengthen internal management and prove resilience to customers and investors. Most reporting mistakes come from rushing or misunderstanding proportionality — both easy to fix with early planning and the right framework.
By building a simple, traceable system now, SMEs can avoid the stress of last-minute reporting and turn compliance into a genuine business advantage.