How do I report employee headcount vs FTE in CSRD?

One of the first social metrics under the Corporate Sustainability Reporting Directive (CSRD) and the Voluntary Sustainability Reporting Standard for SMEs (VSME) is your workforce size. This may sound simple, but there are two different ways to count people: headcount and full-time equivalents (FTEs). Understanding the difference will help you report correctly and consistently.

Headcount vs. FTE — what’s the difference?

• Headcount is the total number of individual employees on your payroll, regardless of how many hours they work. Example: 3 full-time staff and 2 part-time staff = 5 employees in headcount.

• Full-Time Equivalent (FTE) converts part-time roles into the proportion of a full-time role. Example: If a full-time week is 40 hours, then someone working 20 hours per week counts as 0.5 FTE.

So, in the same example: 3 full-time staff (3.0 FTE) + 2 part-time staff (0.5 + 0.5 FTE) = 4.0 FTE.

Headcount shows how many people are employed, while FTE shows the total workload capacity. Both are correct — the choice depends on which gives a clearer picture of your business.

What CSRD and VSME require

Under the VSME Basic Module – Workforce: General Characteristics (B8), SMEs must disclose:

• The number of employees in headcount or FTE.
• Breakdowns by employment contract type (permanent vs temporary), gender, and country if the SME operates in more than one country.

In practice, this means you can choose whether to use headcount or FTE in your reporting, but you must be consistent. The guidance defines:

• FTE: calculated by dividing an employee’s actual hours by the standard full-time workweek.
• Headcount: the total number of people employed at a given time.

Large companies under CSRD often use both measures. Banks and corporate clients may prefer FTE, as it is more comparable across suppliers. SMEs, however, are free to use either measure under the VSME.

Which should SMEs use?

For most SMEs, headcount is easier — you can read it straight off payroll. However, FTE gives a fairer picture if your business relies heavily on part-time or seasonal staff. For guidance on part-time workers, see reporting part-time and seasonal workers. Many payroll or HR systems already calculate FTE for you, so you may not need to work it out manually.

Tip: Pick one method and stick with it year-on-year so your data stays comparable. If your bank or large client requests a specific method, align with their needs. Either way, you’re meeting the reporting requirement.

Example

A café employs:

• 2 full-time staff (40h/week)
• 3 part-time staff (20h/week each)

Headcount = 5 employees. FTE = 2.0 (full-time) + 1.5 (3 × 20/40) = 3.5 FTE.

If the café reports in FTE, it shows its workforce is equivalent to three-and-a-half full-time jobs, even though it pays five people. Both numbers are correct, just different perspectives.

How to prepare your disclosure

1. Check your payroll records for number of employees.
2. Decide whether to report in headcount or FTE.
3. Apply the same method every year.
4. Break down by contract type, gender, and country if applicable.
5. Add turnover rate if you have 50 or more employees.

Key Terms

• Corporate Sustainability Reporting Directive (CSRD) — An EU law that requires large companies — and eventually some medium-sized ones — to report on their environmental and social impacts. Smaller suppliers are not directly in scope but may be asked for CSRD-style data by banks or bigger clients.
• Voluntary Sustainability Reporting Standard for SMEs (VSME) — A simplified framework to help SMEs disclose sustainability information. Voluntary, but often requested by clients or banks.
• European Sustainability Reporting Standards (ESRS) — The detailed reporting rules for large companies under CSRD.
• Headcount — The number of individual employees, regardless of working hours.
• Full-Time Equivalent (FTE) — A measure of workforce capacity that converts part-time roles into fractions of a full-time role.