CSRD Topics: The 12 ESRS Areas SMEs Need to Know

CSRD reporting is organised into 12 topic areas — called the European Sustainability Reporting Standards (ESRS). Two are cross-cutting (they apply to every report), five cover the environment, four cover social and workforce matters, and one covers governance.

Small and growing businesses (SMEs) do not need to report on every topic. Under CSRD, businesses only report on topics that are material — meaning either the business has a significant impact on the topic, or the topic has a significant effect on the business. This guide walks through the 12 topics in plain English so your business can see which ones to prioritise.

For the broader picture on who must report and when, see CSRD Deadlines by Country.

1. How the 12 CSRD Topics Are Organised

The 12 ESRS standards split into three groups:

Cross-cutting standards always apply. The 10 topical standards (E1–G1) only apply if your business determines they are material.

2. Cross-Cutting Standards: ESRS 1 and ESRS 2

ESRS 1 — General Requirements

ESRS 1 is the framework standard. It explains how to prepare a CSRD report — how to apply double materiality, how to define the reporting boundary, how to structure disclosures, and how to connect sustainability information with financial reporting. Your business does not “report on” ESRS 1 directly; you follow it.

ESRS 2 — General Disclosures

ESRS 2 is always required. It covers the baseline information every CSRD report must include:

• Governance — who oversees sustainability, how decisions are made
• Strategy — how sustainability fits into the business model
• Impact, risk and opportunity management — how the business identifies and handles sustainability issues
• Metrics and targets — the numbers the business tracks

Even if every E, S and G topic were found immaterial, your business would still produce an ESRS 2 disclosure.

3. Environmental Topics (E1–E5)

E1 — Climate Change

Covers greenhouse gas emissions (Scope 1, 2 and 3), energy consumption, climate-related risks, and transition plans. E1 is material for most businesses because nearly every organisation uses energy and produces emissions. For the Scope 1/Scope 2 distinction, see Location vs Market-Based Scope 2 Emissions. For financial services specifically, see Climate Risk Disclosure for Lenders.

E2 — Pollution

Covers pollution of air, water and soil, including microplastics and substances of concern. Often material for manufacturing, chemicals, and any business handling hazardous materials. Retailers and service businesses frequently find E2 not material.

E3 — Water and Marine Resources

Covers water consumption, water withdrawal, and impacts on marine ecosystems. Typically material for food production, beverage, agriculture, textiles, and businesses operating in water-stressed regions. Office-based service firms rarely find E3 material.

E4 — Biodiversity and Ecosystems

Covers impacts on species, habitats, and ecosystem services — including deforestation risk and land use change. Usually material for agriculture, forestry, construction, extractive industries, and large-scale property developers.

E5 — Resource Use and Circular Economy

Covers waste, material inputs, product design, and the transition from linear to circular business models. Often material for manufacturers, retailers, packaging-heavy businesses, and product companies.

4. Social Topics (S1–S4)

S1 — Own Workforce

Covers your employees: working conditions, pay, training, health and safety, diversity, and freedom of association. S1 is material for almost every business with employees. It includes disclosures on workforce composition, the gender pay gap, and training hours. For specific cases, see Do Freelancers Count in Workforce Disclosures? and Remote Workers and CSRD Workforce Metrics.

S2 — Workers in the Value Chain

Covers workers employed by suppliers, subcontractors, and other value-chain partners. Typically material where your business sources from complex or labour-intensive supply chains — garment manufacturing, agricultural products, electronics.

S3 — Affected Communities

Covers impacts on local communities where the business operates — Indigenous peoples, displaced populations, and communities affected by operations or supply chains. Often material for extractive industries, large construction projects, agriculture, and infrastructure.

S4 — Consumers and End-Users

Covers product safety, privacy, accessibility, and responsible marketing. Material for consumer products, healthcare, financial services, and digital platforms.

5. Governance Topics (G1)

G1 — Business Conduct

Covers corporate culture, anti-bribery and corruption, whistle-blower protection, political engagement, payment practices to suppliers, and animal welfare where relevant. Broadly applicable — most businesses find at least some G1 sub-topics material. For practical disclosure guidance, see Anti-Corruption Disclosures for SMEs.

6. Which Topics Apply to Your Business? (Double Materiality)

Double materiality is the heart of CSRD. It asks two questions about each topic:

1. Impact materiality — Does your business cause or contribute to significant effects on people or the environment?
2. Financial materiality — Does the topic create risks or opportunities that significantly affect your business’s financial position?

A topic is material if the answer to either question is yes. Many businesses discover that fewer than half of the 10 topical standards (E1–G1) are material — focusing effort and cost where it matters most.

For a practical walk-through, see Double Materiality Assessment for SMEs and How to Identify Material Sustainability Topics.

7. How CSRD Topics Map to VSME (Voluntary Path)

The Voluntary Sustainability Reporting Standard for SMEs (VSME) covers similar ground in a much simpler form. It is not a legal obligation — businesses use it to satisfy buyer, bank, and investor data requests without the full ESRS scope.

VSME Basic covers 11 disclosure areas (B1–B11); VSME Comprehensive adds 9 more (C1–C9) for businesses wanting to show more depth. For full detail, see VSME Basic vs Comprehensive Module.

8. How Small Businesses Can Approach the Topics

Your business does not need to tackle all 12 topics at once. A proportional approach works:

• Start with what you already track — energy bills (E1), workforce data (S1), waste volumes (E5). Most SMEs already have the raw data, just not in a reporting format.
• Let materiality guide the effort — if E4 biodiversity is not relevant to an accounting firm, do not build a biodiversity report. Document the “not material” conclusion briefly and move on.
• Use VSME if CSRD is not mandatory for your business — VSME gives a credible, reusable answer for supplier questionnaires and bank requests, without full ESRS depth.
• Build data collection once, use it many times — a single reusable sustainability dataset answers dozens of buyer questionnaires across years.

Avoid the trap of expensive enterprise software or large consultancy engagements for what is often a handful of metrics. Many small and growing businesses find a simple annual spreadsheet is enough for the first year.

Frequently Asked Questions

How many ESRS topics must a small business report on?

If your business is in CSRD scope, you always produce ESRS 2 (general disclosures). Beyond that, only topics identified as material through a double materiality assessment need full reporting. Many smaller businesses find three to five topics are material — not all ten.

What is the difference between ESRS 1 and ESRS 2?

ESRS 1 is the framework — the rules for how to prepare a CSRD report. ESRS 2 is the mandatory baseline content — the governance, strategy, risk, and metrics information every report must include. You do not report on ESRS 1; you follow it. You do report on ESRS 2.

Are all CSRD topics mandatory?

The two cross-cutting standards (ESRS 1 and ESRS 2) are mandatory. The 10 topical standards (E1–G1) are only mandatory where material. A business might legitimately find only four or five of the ten topical standards material and report on those.

How do CSRD topics relate to VSME?

VSME is a voluntary framework for non-listed SMEs. Its Basic Module covers many of the same topics as ESRS in a simpler form. A business reporting under VSME does not need a double materiality assessment — VSME uses a simpler “if-applicable” approach. The full mapping appears in Section 7 above.

Key Terms

• CSRD — Corporate Sustainability Reporting Directive (EU 2022/2464), the EU law requiring large and listed companies to publish sustainability information.
• ESRS — European Sustainability Reporting Standards, the technical rulebook businesses follow under CSRD.
• VSME — Voluntary Sustainability Reporting Standard for SMEs, a simpler EFRAG-developed standard for non-listed SMEs.
• Double materiality — The test under CSRD that a topic is material if it has a significant impact on people or the environment, or if it creates significant financial risk or opportunity.
• Cross-cutting standards — ESRS 1 and ESRS 2, which apply to every CSRD report regardless of business type.
• Topical standards — The 10 subject-specific standards (E1–E5, S1–S4, G1) that apply only when material.

Conclusion and Next Steps

The 12 CSRD topics look intimidating until you realise that most businesses only need to report on the handful that are material. Cross-cutting standards (ESRS 1 and ESRS 2) apply to every report. Among the 10 topical standards, most small and growing businesses find three to five genuinely relevant — and the data often already exists in energy bills, payroll records, and supplier invoices.

Start by listing what your business already tracks, identify which of the 10 topics match your actual impact and risk profile, and build a proportional report from there. With a clear structure and consistent effort, CSRD becomes an advantage — not an obstacle.