Germany transposed the Corporate Sustainability Reporting Directive (CSRD) through the CSRD-Umsetzungsgesetz, which amended the Handelsgesetzbuch (HGB), Germany’s Commercial Code. Following the Omnibus I simplification directive (in force 18 March 2026), mandatory CSRD reporting applies only to undertakings with more than 1,000 employees and net turnover above €450 million. Those companies report for FY 2027, with first reports published in 2028; large public-interest entities already under the previous rules reported for FY 2024.
Companies below both thresholds, including the great majority of the Mittelstand, are not CSRD filers. They meet CSRD indirectly, through sustainability data requests from larger clients, banks, and public buyers. This guide covers both readerships: the thresholds, timeline, and supervision that apply if your company is in scope, and how suppliers and smaller businesses respond proportionately using the Voluntary Sustainability Reporting Standard for SMEs (VSME). It also explains how CSRD fits with the German Supply Chain Due Diligence Act (LkSG).
1. CSRD in Germany: current status and scope
What is CSRD?
CSRD (Directive (EU) 2022/2464) harmonises EU-wide sustainability reporting and introduces the European Sustainability Reporting Standards (ESRS). It covers environmental, social, and governance topics under the double materiality principle: a topic is reported if it is significant for the company’s impacts on people and the environment, or for the company itself, or both.
German transposition and the EU reforms
Germany transposed CSRD through the CSRD-Umsetzungsgesetz, amending the Handelsgesetzbuch (HGB). Two EU reforms then reshaped the regime and flow through to German law. The Stop-the-Clock Directive (April 2025) delayed the later reporting waves by two years without changing who reports. The Omnibus I simplification directive (in force 18 March 2026) then narrowed scope to undertakings with more than 1,000 employees and net turnover above €450 million, removed the listed-SME reporting track, and simplified the ESRS. See what the CSRD Omnibus changed for the full picture.
On 3 July 2026 the European Commission adopted the revised, simplified ESRS delegated act. Under it, only ESRS 2 stays mandatory for every reporter; the topical standards apply only where the double materiality assessment flags them. The revised ESRS apply to financial years starting 1 January 2027, with early adoption from FY 2026, and are in the Parliament and Council scrutiny period.
Who is directly or indirectly affected?
- Large public-interest entities already subject to the previous Non-Financial Reporting Directive reported first, for FY 2024. Those now below the new thresholds have an optional transitional exemption for FY 2025 and FY 2026, subject to Member State implementation.
- Other large undertakings meeting both new thresholds report for FY 2027, published in 2028.
- Companies below the thresholds, including listed SMEs and mid-sized firms of 250 to 1,000 employees, are not CSRD filers. Most feel indirect pressure instead, because clients, lenders, and investors need supplier data for their own reports.
Link to the German Supply Chain Due Diligence Act (LkSG)
The LkSG already obliges many German companies and their suppliers to assess human rights and environmental risks. CSRD focuses on disclosure, while LkSG focuses on due diligence. Aligning both frameworks lets Mittelstand firms reuse data, policies, and risk assessments instead of running parallel processes.
2. If you’re a supplier: why the Mittelstand should prepare now
- Client expectations: Automotive, engineering, and retail groups are already requesting supplier data on workforce metrics, value-chain emissions, and due diligence practices.
- Finance readiness: Banks, insurers, and investors integrate ESG data into risk models; providing structured information supports better access to financing.
- Competitive advantage: Early adopters can demonstrate reliability in tenders and long-term partnerships.
- Risk management: Understanding double materiality helps identify and mitigate operational and reputational risks before they escalate.
- A capped, predictable format: Under Omnibus I, VSME caps the data a CSRD reporter may demand from a value-chain partner with 1,000 or fewer employees, so one well-prepared VSME data set answers most requests.
3. Practical preparation steps for German SMEs
Step A – Map your value chain and workforce exposure
- Identify major customers and suppliers, especially those already reporting under CSRD or complying with LkSG.
- Pinpoint where workforce or supplier risks could arise (subcontractors, temporary labour, overseas sourcing).
- Engage procurement, HR, and operations teams to understand existing data flows and gaps.
Step B – Collect proportional sustainability data
Start with achievable, business-relevant data categories:
- Workforce: headcount, gender distribution, training hours, health and safety incidents.
- Supply chain: presence of supplier codes, audits, or whistleblowing channels.
- Environmental: energy consumption, fuel use, water consumption, waste volumes.
- Governance: anti-corruption policies, ethics training, board oversight.
Step C – Use the VSME standard as your structure
- Adopt the VSME Basic Module to organise disclosures on environment, workforce, and governance.
- Prepare a concise data pack or template that you can share with customers and lenders. Germany’s Deutscher Nachhaltigkeitskodex (DNK) offers a VSME module with a built-in plausibility check, and free VSME report tools generate a finished report at no cost.
- Plan to scale up towards the VSME Comprehensive Module if specific partners demand more detail.
- Note the standard’s future name: on 3 July 2026 the Commission adopted the delegated act turning VSME into the Voluntary Standard (VS), applying from financial years starting 1 January 2027. See what changes when VSME becomes the VS.
Step D – Align CSRD preparation with LkSG processes
- Review the data and due diligence workflows you already maintain for LkSG compliance.
- Ensure supplier questionnaires, risk assessments, and incident tracking feed into your CSRD-ready data set.
- Monitor federal guidance on CSRD and LkSG so you can update obligations swiftly.
Step E – Embed sustainability in daily operations
- Assign ownership for sustainability data (for example, finance or operations leads) and secure management buy-in.
- Integrate sustainability checkpoints into procurement and supplier onboarding.
- Communicate progress internally and externally; a one-page “Mittelstand sustainability snapshot” can reassure stakeholders.
- Schedule annual reviews to refine metrics, improve data quality, and capture new regulatory expectations.
4. Timeline snapshot for German firms
| Phase | Company type | Indicative first reporting | What to focus on now |
|---|---|---|---|
| Wave 1 | Large public-interest entities already under NFRD | FY 2024 reports published in 2025 | Maintain CSRD/ESRS compliance; check the optional FY 2025–FY 2026 transitional exemption if now below the new thresholds |
| Wave 2 | Undertakings with more than 1,000 employees and over €450m turnover | FY 2027 reports published in 2028 | Formalise data systems, double materiality assessments, and supplier data collection against the revised ESRS |
| Listed SMEs | Formerly a separate wave | No longer required (track removed by Omnibus I) | Report voluntarily with VSME if partners or investors ask for data |
| Mittelstand suppliers | Companies below the thresholds | When requested by clients or financiers | Build a VSME-aligned data pack and strengthen LkSG due diligence links |
Treat the narrowed scope as a preparation window rather than a reason to pause. Value-chain requests are already intensifying.
5. Frequently asked questions
Will my Mittelstand company need to publish a full CSRD report?
Only if it has more than 1,000 employees and net turnover above €450 million. Below both thresholds there is no CSRD filing obligation, but value-chain partners will still expect data. Preparing with the VSME Basic Module ensures you are ready when clients or lenders ask.
How does CSRD relate to the German Supply Chain Due Diligence Act (LkSG)?
CSRD requires transparent disclosure of sustainability information, whereas LkSG mandates due diligence on human rights and environmental risks. Aligning the two lets you reuse risk assessments, supplier questionnaires, and incident tracking for both obligations.
Can we start with a simpler reporting format?
Yes. Begin with a lightweight VSME Basic Module and expand as obligations grow. The key is to collect consistent data and establish governance now so scaling up is manageable.
What are the common obstacles for Mittelstand firms?
Challenges include limited internal resources, fragmented supplier data, and varying client questionnaires. Solutions involve assigning clear responsibility, prioritising high-impact metrics first, and using standardised templates to respond efficiently.
Which German law transposed CSRD?
Germany transposed CSRD through the CSRD-Umsetzungsgesetz, which amended the Handelsgesetzbuch (HGB), Germany’s Commercial Code. The EU-level Stop-the-Clock delay (April 2025) and the Omnibus I scope changes (March 2026) flow through to German law, so Wave 2 companies report for FY 2027 and the separate listed-SME track no longer exists.
Who supervises CSRD compliance in Germany?
The BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht) supervises listed-company sustainability disclosures as part of capital-markets oversight. The APAS (Abschlussprüferaufsichtsstelle) oversees statutory auditors providing assurance on sustainability reports.
Key terms
- CSRD – Corporate Sustainability Reporting Directive (EU 2022/2464) expanding sustainability disclosure obligations across the EU.
- VSME – Voluntary Sustainability Reporting Standard for SMEs, providing proportionate disclosure modules for smaller companies.
- ESRS – European Sustainability Reporting Standards underpinning CSRD reporting requirements.
- LkSG – German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz) focusing on human rights and environmental due diligence.
- Double materiality – Assessing both how sustainability topics affect the business and how the business affects people and the environment.
- Mittelstand – Germany’s mid-sized, often family-owned firms that form the backbone of supply chains and economic activity.
Conclusion and next steps
CSRD in Germany now splits cleanly into two readerships. Undertakings above the 1,000-employee and €450 million thresholds report for FY 2027 against the revised ESRS, with limited assurance and BaFin and APAS oversight. Everyone else, including most of the Mittelstand, meets CSRD through the data requests of larger clients rather than any filing obligation of their own.
If your company is in scope, formalise data systems and the double materiality assessment now, and engage your auditor early. If you are responding to requests, link CSRD-aligned data collection with LkSG due diligence and develop a VSME-based report you can share with clients and financiers. Either way, a clear structure and consistent data keep the work manageable.