Stakeholder Engagement for CSRD Reporting: Best Practices
Introduction
Under the Corporate Sustainability Reporting Directive (CSRD), companies are expected to demonstrate how they identify, engage, and respond to their stakeholders — the people and organisations affected by or influencing their business. For large corporations, this often involves extensive consultation exercises. For small and growing businesses (SMEs), however, the process can be straightforward, practical, and proportionate.
This guide explains what stakeholder engagement means under the CSRD and the VSME Standard, and provides best practices for small and growing businesses (SMEs) to integrate it effectively into their sustainability reporting. The focus is on meaningful dialogue — not bureaucracy — that helps identify what matters most for your business and stakeholders.
Why Stakeholder Engagement Matters
Stakeholder engagement is central to the double materiality process. It helps determine which environmental, social, and governance (ESG) topics are most relevant to your business and informs your sustainability strategy. Under the CSRD, companies are expected to:
- Identify key stakeholder groups (employees, customers, suppliers, investors, communities, regulators).
- Understand their concerns, expectations, and insights.
- Explain how this feedback influences business decisions and reporting.
For small and growing businesses (SMEs), this engagement supports transparency, builds trust, and strengthens relationships with clients that may depend on your data for their own CSRD compliance.
Step-by-Step: How SMEs Can Engage Stakeholders
Step 1: Identify Your Key Stakeholders
Start by listing the groups that affect or are affected by your business. Typical examples include:
- Employees and contractors
- Customers and clients
- Suppliers and business partners
- Local communities
- Banks and investors
Prioritise those who have the greatest influence on your success or who may be most impacted by your operations.
Step 2: Choose Your Engagement Methods
Engagement can take many forms. For SMEs, simple methods are usually best:
- Surveys or short questionnaires (online or paper-based)
- Interviews or focus groups with employees or customers
- Informal discussions during team meetings or supplier visits
- Email requests for sustainability-related feedback
The goal is to gather insight, not to produce formal consultation reports. Documenting who was consulted, how, and what themes emerged is sufficient for VSME-aligned reporting.
Step 3: Collect and Organise Insights
Record the main sustainability concerns raised by your stakeholders — for example, energy use, workplace safety, fair pay, or local environmental impacts. Group similar themes and note which stakeholder groups emphasised each topic.
This input is a key foundation for your materiality assessment. It shows that your topic selection reflects real stakeholder priorities.
Learn how to identify material topics using stakeholder input →
Step 4: Link to Business Decisions
Show how engagement outcomes influence your sustainability approach. For example:
- If employees raise concerns about energy costs, you might prioritise energy efficiency measures.
- If clients request emissions data, you can start tracking Scope 1 and 2 energy use under the VSME Basic Module (B3).
Even brief internal notes showing these links demonstrate that your sustainability process is responsive and credible.
Step 5: Communicate Back
Close the loop by sharing key results internally or externally — for instance, in a short sustainability report summary, team meeting, or customer newsletter. Transparency builds confidence and demonstrates accountability.
See how SMEs integrate stakeholder feedback into double materiality assessments →
Practical Tips for SMEs
- Start small: Focus on your top three or four stakeholder groups.
- Keep records: Document who was engaged, what was discussed, and what actions followed.
- Integrate engagement into regular processes: Add sustainability topics to existing meetings or feedback channels.
- Be transparent: Even if you can’t meet every expectation, explaining your reasoning is valuable.
- Update annually: Review stakeholder priorities at least once a year or when your business changes significantly.
Frequently Asked Questions
How formal does stakeholder engagement need to be for SMEs?
Not very. A few well-documented conversations or short surveys are enough. The CSRD emphasises proportionality — focus on what’s meaningful, not complex.
Who should lead the engagement process?
Usually the owner, sustainability coordinator, or HR/operations manager. What matters is consistency and documentation, not job titles.
See how SMEs manage reporting roles efficiently →
Do I need to involve external consultants?
No. SMEs can conduct stakeholder engagement internally. External help may be useful for large supply chains or when specific expertise is needed, but it’s not required.
How often should stakeholder engagement be updated?
At least once per year. This ensures your sustainability topics and disclosures stay aligned with stakeholder expectations and business realities.
Learn how SMEs update their CSRD data and reports annually →
Key Terms
- Stakeholder: Any group affected by or able to influence your business.
- Engagement: The process of consulting or communicating with stakeholders.
- Double Materiality: Assessing both business impacts and financial risks.
- VSME Standard: Simplified sustainability framework for SMEs under CSRD.
- ESRS: European Sustainability Reporting Standards for large companies.
Conclusion
Stakeholder engagement doesn’t need to be complex or costly. For SMEs, it’s about listening, prioritising, and acting on the issues that matter most to your people and partners. By documenting your approach and showing how it influences your sustainability decisions, you’ll meet CSRD expectations and strengthen your business relationships.
Starting simple — with a few targeted discussions — is often the most effective way to build a meaningful, ongoing dialogue around sustainability.