Is My Company Too Small for CSRD? Size Questions Answered

Introduction

For almost every small and growing business (SME), the answer is yes: you are too small for the Corporate Sustainability Reporting Directive (CSRD). Since the Omnibus I directive took effect on 18 March 2026, CSRD applies only to companies with more than 1,000 employees and more than €450 million in net turnover. Roughly 90 per cent of the companies previously in scope dropped out.

Too small for CSRD does not mean untouched by it, though. The large companies that still report must cover their value chains, so their suppliers receive ESG questionnaires, and banks increasingly ask for sustainability data alongside loan applications. The good news: since 2026 there is also a legal limit on how much they can ask of you.

This guide explains the current size thresholds, what happens if a customer or bank asks you for data anyway, and how the voluntary VSME standard lets you answer once and reuse it. If you are new to the topic, our 20 common CSRD questions is a useful companion.

1. The CSRD Size Thresholds After Omnibus I

A company is in mandatory CSRD scope only if it meets both of these conditions:

Non-EU parent companies are covered only when they generate more than €450 million of turnover in the EU and have an EU subsidiary or branch generating more than €200 million.

What changed in 2026: before Omnibus I (Directive (EU) 2026/470), CSRD used a “two of three” test of 250 employees, €50 million turnover, and a €25 million balance sheet, and listed SMEs were due to be phased in. Omnibus I replaced that test with the single large-company threshold above and removed the listed-SME reporting track entirely. Older guides still showing the 250-employee test are out of date.

2. If Your Company Is in Scope

Companies above both thresholds report against the revised European Sustainability Reporting Standards (ESRS), apply double materiality to decide which topics to cover, and obtain limited assurance on the result. The revised standards apply to financial years starting on or after 1 January 2027, while the largest public-interest companies continue reporting under the current regime.

For the reporting schedule in each country, see our CSRD deadlines by country reference.

3. Too Small for CSRD Does Not Mean No ESG Requests

The companies that still report under CSRD must disclose information about their value chain: the emissions, working conditions, and business practices connected to their suppliers. They cannot complete those disclosures without input from smaller business partners, so the requests flow downhill.

In practice, an SME is most likely to receive:

• A customer questionnaire, in a spreadsheet or supplier portal, asking for energy use, emissions, workforce, and policy information
• A platform invitation, such as EcoVadis or CDP, sent on behalf of a large customer
• A bank or insurer request for sustainability data during financing conversations
• A tender or procurement form with ESG questions attached

None of these makes CSRD apply to you. They are commercial requests, not legal filing duties, but declining them can carry a commercial cost. Our guide on handling sustainability data requests from large clients covers how to respond well.

4. The Value-Chain Cap: Your Legal Protection

Omnibus I did more than shrink the scope. It wrote a value-chain cap into the directive: a CSRD-reporting company may not require more sustainability information from a business partner with fewer than 1,000 employees than the voluntary SME standard defines. On 3 July 2026 the European Commission adopted the delegated act that pins this ceiling to the standard’s Annex II, with an even lower cap for micro-enterprises of 10 or fewer employees. The cap applies fully to financial years starting 1 January 2027.

In plain terms: the VSME standard now defines what a reasonable request looks like, and you can point an over-reaching customer to it.

The cap has limits worth knowing. Information customarily exchanged in your sector, or required by other EU law, sits outside it. So do greenhouse gas reduction targets and climate-risk questions, which banks and large customers ask about often, and platform assessments such as EcoVadis continue as before. For the full picture, see what large customers can ask suppliers in 2026.

5. Answering Requests with the VSME Standard

The VSME standard (Voluntary Sustainability Reporting Standard for SMEs), developed by EFRAG, is the practical answer for companies outside CSRD scope. It is proportionate, it is voluntary, and thanks to the cap it now maps closely to what any CSRD-reporting customer is entitled to collect from you.

The standard has two parts:

• The Basic Module: eleven disclosures (B1 to B11) covering energy and emissions, pollution, water, waste, workforce, and business conduct
• The Comprehensive Module: further disclosures for companies whose customers or banks want more detail, including climate targets and risks

To work out which fits your business, see VSME Basic vs Comprehensive Module.

Collect your data once in VSME structure and you can reuse it for every questionnaire, bank form, and tender that follows. If you would rather not start from a blank page, a free VSME report tool walks you through every question in plain English and generates the finished report at no cost, and the answers you save stay reusable for the next request.

6. What If My Company Grows Past the Thresholds?

A company that exceeds both thresholds for two consecutive financial years becomes subject to CSRD from the following reporting cycle. For most SMEs that day is distant, and growing towards it with VSME data habits already in place makes the eventual transition far easier than starting cold.

Frequently Asked Questions

Are any SMEs required to report under CSRD?

No. Since Omnibus I took effect in March 2026, no SME reports under CSRD. The earlier plan to phase in listed SMEs was dropped entirely. SMEs may still choose to report voluntarily using the VSME standard, and many do so to answer customer and bank requests efficiently.

What if my company grows and crosses the thresholds later?

If you exceed more than 1,000 employees and more than €450 million turnover for two consecutive financial years, CSRD applies from the next reporting cycle. Starting to collect basic sustainability data early makes that transition manageable.

Do non-EU companies need to report?

Only large ones. A non-EU parent is covered when it generates more than €450 million of turnover in the EU and has an EU subsidiary or branch generating more than €200 million. A small EU subsidiary of a foreign group is not pulled into scope on its own.

Should I start reporting voluntarily?

If your customers, banks, or tenders ask for sustainability information, then yes, a VSME Basic report is usually the most efficient way to answer them all with one document. It builds credibility, and the value-chain cap means it covers the core of what any CSRD-reporting customer may ask of you.

Can I report in my local language?

Yes. A voluntary VSME report can be written in your local EU language, though some clients may request an English version for group consolidation or investor review.

Key Terms

• CSRD: the EU’s Corporate Sustainability Reporting Directive (2022/2464, amended by Omnibus I in 2026), which requires sustainability reporting from companies with more than 1,000 employees and more than €450 million turnover.
• Omnibus I: the 2026 directive (EU 2026/470) that narrowed CSRD’s scope and introduced the value-chain cap.
• Value-chain cap: the legal limit on how much sustainability information a CSRD reporter may require from business partners with fewer than 1,000 employees.
• VSME: EFRAG’s Voluntary Sustainability Reporting Standard for SMEs, with a Basic Module (B1 to B11) and a Comprehensive Module.
• ESRS: the European Sustainability Reporting Standards that in-scope companies report against.

Conclusion

Your company is almost certainly too small for mandatory CSRD reporting, and since 2026 that is settled law rather than a moving target. What remains is the commercial reality: customers, banks, and tenders will keep asking for sustainability data, and the value-chain cap now defines what a fair request looks like.

Answering with the VSME standard turns that recurring chore into a one-off exercise. Collect the data once, generate a report free of charge, and reuse the same answers for every request that follows.

Not sure where your company stands? Use our assessment to find out:

This tool will help you confirm whether CSRD applies to your company and what to do next if it does not.