CSRD for SMEs: The Complete 2025 Guide

Whether you’re a small and growing business, supplier, or subsidiary working with EU clients, 2025 is the year when sustainability reporting becomes impossible to ignore. Some organisations are directly in scope of the Corporate Sustainability Reporting Directive (CSRD), while others use the new Voluntary Standard for SMEs (VSME) to meet rising information requests.

Either path leads toward the same goal: structured, consistent sustainability data. For many SMEs, this is now a normal part of accessing finance, maintaining client relationships, and staying competitive in tenders.

This guide explains in plain language what CSRD means in practice, why SMEs are being asked for data, and how your business can take manageable first steps without expensive consultants.

1. What CSRD Is (In Simple Terms)

CSRD is the EU’s sustainability reporting law. It updates earlier non-financial reporting rules and requires companies to publish structured information about their environmental, social, and governance impacts. It also requires the use of European Sustainability Reporting Standards (ESRS).

The directive expands reporting to all large EU companies and most listed SMEs, except listed micro-undertakings. CSRD sets the expectations for what “good sustainability reporting” looks like: clear, comparable, and aligned with EU climate and social goals.

For businesses outside direct scope, CSRD still matters because clients, investors, and banks now rely on this data to assess risk and make decisions.

If you want a plain-language introduction, you can also review the overview in CSRD for Beginners.

2. Are SMEs Required to Report?

Most SMEs are not directly required to report under CSRD. Direct obligations apply mainly to:

• Large undertakings under the EU accounting definition (meeting two of: >€20m balance sheet, >€40m turnover, >250 employees).
• Listed SMEs, except listed micro-undertakings, which will apply proportionate standards with possible phase-in relief.

SMEs not listed on regulated markets remain outside CSRD scope, which the VSME Standard also states clearly.

But being out of scope does not mean “doing nothing.” Pressure is now coming from other directions.

3. Why SMEs Are Being Asked Anyway

Even when not legally obligated, SMEs increasingly receive sustainability data requests from:

Large clients reporting under CSRD

Large companies must disclose the impacts of their value chain, including suppliers. ESRS require them to collect Scope 3 emissions, workforce data, and information on environmental and social practices.

When suppliers cannot provide this data, clients struggle to complete mandatory reporting.

For a deeper look at value-chain expectations, see: How SMEs Can Handle Sustainability Data Requests from Large Clients

Banks and investors

Banks now integrate sustainability risks and indicators into financing decisions. Many use SME-level data to assess exposure to climate and social risks.

Procurement and public tenders

Public buyers increasingly require sustainability disclosures and performance indicators. Even simple metrics—energy use, waste volumes, workforce breakdowns—are becoming routine.

Subsidiaries within corporate groups

Subsidiaries often contribute data to group-wide sustainability reporting. CSRD introduces clearer responsibilities for parent companies and group consolidation, which requires structured data from smaller entities.

The result: SMEs are not “in scope,” but they are “in demand.”

4. CSRD vs VSME (Clear Comparison)

The VSME Standard (published by EFRAG in 2024) gives SMEs a voluntary, simplified pathway aligned with ESRS. It is designed so businesses can respond consistently to CSRD-driven data requests without taking on the full reporting burden.

CSRD vs VSME: At a Glance

If you want a deeper comparison, see: CSRD vs VSME: What’s the Difference and Why It Matters for SMEs

5. What Data SMEs Should Start Collecting

The VSME Basic Module gives a practical starting set of metrics across environment, social topics, and governance. Key disclosures include:

Environmental data

• Energy use (electricity, fuels) in MWh

• GHG emissions (Scope 1 and location-based Scope 2)

  • For methodology support, see: GHG Protocol for SMEs: Complete Methodology Guide

• Water withdrawal and consumption

• Waste generation: hazardous and non-hazardous

• Circular economy practices

• Sites near biodiversity-sensitive areas

Social data

• Workforce breakdown (gender, contract type, location)
• Health and safety indicators
• Training hours and remuneration structure

Governance data

• Any fines/convictions related to corruption or bribery
• Existing policies or practices related to sustainability

Narrative information

• Existing sustainability practices
• Future initiatives and targets
• Overall approach to transitioning to a more sustainable economy

For SMEs that want to go further, the Comprehensive Module adds datapoints often requested by banks and large clients.

For guidance on common data challenges, explore: Why Your CSRD Data Doesn’t Match Industry Benchmarks

6. How Much Work This Actually Is

For most SMEs, CSRD-style reporting is manageable when broken into smaller actions. What takes large enterprises months can often be addressed by SMEs in 20–40 hours spread across the year, depending on:

• Number of sites
• Maturity of existing data systems
• Complexity of operations
• Requests from major clients

A typical SME’s time investment:

Businesses using spreadsheets tend to manage reporting manually, while others move to dedicated tools after their first cycle. If you are exploring how to collect environmental data efficiently, this guide may help: Emission Factor Selection: How to Choose Data Sources

7. A Practical 3-Step Approach for Small Businesses

Small businesses often worry sustainability reporting will become overwhelming. A simple three-step model keeps progress achievable.

Step 1 — Map Your Requests

Identify what clients, banks, or parent companies are asking for.

Common requests:

• Energy use (kWh or MWh)
• Total emissions or emission factors
• Workforce indicators
• Waste volumes or recycling rates

Where pressure is coming from determines how much detail you actually need.

Step 2 — Build a Simple Annual Data File

Your business can track core data using a single spreadsheet or simple tool. Include:

• Monthly electricity and fuel invoices
• Water bills
• Waste contractor summaries
• Workforce headcount and contract types
• Notes on sustainability initiatives

This becomes your “single source of truth,” saving time each year.

For supply-chain-specific reporting guidance, see: CSRD Reporting for Niche & Craft Manufacturers: A Supplier’s Guide

Step 3 — Publish in VSME Format (Basic Module)

The Basic Module is proportionate and designed for SMEs. It includes:

• B1: Basis for preparation
• B2: Practices, policies, and initiatives
• B3–B11: Environmental, social, and governance metrics

This structure mirrors ESRS but keeps effort reasonable. It also ensures alignment with what large companies need for their own CSRD disclosures.

With a clear structure and consistent effort, CSRD becomes an advantage—not an obstacle.

Frequently Asked Questions

Do SMEs really need to prepare anything if they’re not in scope for CSRD?

While SMEs are not required to publish a CSRD report, most now receive structured data requests from CSRD-reporting clients. Preparing a light VSME-format file helps you respond quickly and avoids repeated ad-hoc requests. You can learn more about handling such requests in How SMEs Can Handle Sustainability Data Requests from Large Clients.

Is VSME enough to satisfy supplier questionnaires from large clients?

In many cases yes. VSME mirrors ESRS topics and includes the core environmental and social metrics large clients must collect. Some buyers may request additional datapoints, but VSME provides a solid foundation. For deeper comparison, see CSRD vs VSME: What’s the Difference and Why It Matters for SMEs.

How accurate do SME emissions and resource-use figures need to be?

CSRD requires accuracy from large companies, but SMEs providing supporting data are allowed to use estimates when direct measurement isn’t feasible. The key is consistency year-to-year and transparent methods. For methodologies, see: GHG Protocol for SMEs: Complete Methodology Guide.

What if we don’t have all the data yet?

Most SMEs begin with partial datasets. You can start by collecting utility invoices, workforce figures, and waste summaries. The VSME Standard allows proportionality and missing datapoints where information cannot be obtained. Over time, your dataset naturally becomes more complete.

Key Terms

• CSRD — Corporate Sustainability Reporting Directive: EU law requiring sustainability disclosures for large and listed companies.
• VSME Standard — Voluntary Standard for non-listed micro-, small-, and medium-sized companies developed by EFRAG; proportionate and aligned with ESRS.
• ESRS — European Sustainability Reporting Standards used under CSRD.
• Scope 1 emissions — Direct emissions from owned or controlled sources.
• Scope 2 emissions — Indirect emissions from purchased electricity, heating, cooling, or steam.
• Value chain — Suppliers, distributors, and other partners whose data affects a company’s sustainability impacts.

Conclusion & Next Steps

Small and growing businesses across Europe are navigating a new normal: clients, banks, and regulators all expect clearer sustainability information. CSRD sets the tone, and the VSME Standard offers a practical, proportionate way for SMEs to participate.

Start by mapping the requests you receive, gathering a few core metrics, and creating a simple annual data file. Each cycle becomes easier, and your business gains clarity, credibility, and access to opportunities that increasingly depend on sustainability readiness.

With a clear structure and consistent effort, CSRD becomes an advantage—not an obstacle.

If you’d like a next step, you might explore: CSRD for Beginners: A Plain-Language Guide for Small Businesses