Stakeholder Engagement for CSRD Reporting: Best Practices

Under the Corporate Sustainability Reporting Directive (CSRD), companies are expected to demonstrate how they identify, engage, and respond to stakeholders — the people and organisations affected by or influencing their business. For large corporations, this involves extensive consultation exercises. For small and growing businesses (SMEs), the process can be straightforward, practical, and proportionate.

This guide explains what stakeholder engagement means under CSRD and the VSME Standard, and provides best practices for integrating it into your sustainability reporting. The focus is on meaningful dialogue — not bureaucracy — that helps identify what matters most and informs your double materiality assessment.

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 should be included in your sustainability report.

Under CSRD, companies are expected to:

• Identify key stakeholder groups (employees, customers, suppliers, investors, communities, regulators)
• Understand their concerns, expectations, and insights
• Show how this feedback shapes sustainability decisions and disclosures

For SMEs, engagement also builds trust with clients that depend on your data for their own CSRD compliance. A documented engagement process demonstrates credibility — even in the absence of a formal third-party audit.

For a practical guide to using stakeholder input in your materiality process, see Identify Material Sustainability Topics for CSRD.

Step 1: Identify Your Key Stakeholders

Start by listing the groups that affect or are affected by your business. For most SMEs, the relevant groups are:

Prioritise the groups with the greatest influence on your success or the most exposure to your impacts. For most small businesses, employees, key clients, and one or two major suppliers cover the majority of what’s needed.

Step 2: Choose Proportionate Engagement Methods

Engagement does not need to be formal or expensive. The VSME Standard explicitly supports proportionate approaches for smaller organisations. Practical methods include:

For employees:

• Short anonymous survey (online or paper) covering sustainability priorities
• Team meeting agenda item on sustainability once per quarter
• Suggestion box or open-door policy for sustainability ideas

For clients:

• Brief discussion during regular account reviews
• Email asking which sustainability topics matter most when selecting suppliers
• Reviewing incoming data request questionnaires to understand expectations

For suppliers:

• Questionnaire sent alongside annual contract renewal
• Conversation during supplier visits or calls
• Simple self-assessment form aligned to VSME categories

For banks or investors:

• Review of financing application questions for sustainability criteria
• Annual meeting or call covering ESG performance

The goal is to gather insight, not produce formal consultation reports. Document who was consulted, when, how, and what themes emerged — that is sufficient for VSME-aligned reporting.

Step 3: Collect and Organise Feedback

After engagement, record the main sustainability concerns raised. Group similar themes and note which stakeholder groups emphasised each topic. For example:

• Employees: energy costs, commuting options, waste in the office
• Clients: GHG emissions, supplier code of conduct, data reliability
• Bank: total energy use, governance, risk management approach

This input feeds directly into your materiality assessment — the process of deciding which sustainability topics are significant enough to disclose. Topics raised consistently across multiple stakeholder groups carry more weight.

For a simplified guide to running a materiality assessment as an SME, see Double Materiality Assessment: SME Simplified Guide.

Step 4: Link Engagement to Business Decisions

Show how engagement outcomes influence your sustainability approach. Even brief internal notes that connect stakeholder feedback to decisions are valuable:

• If employees raise concerns about energy costs → prioritise energy efficiency measures and report on them under VSME B3
• If clients request emissions data → start tracking Scope 1 and Scope 2 energy use
• If a bank asks about governance → formalise your code of conduct and document how you review it

These links demonstrate that your sustainability process is responsive and credible — and they make your annual report more coherent.

Step 5: Communicate Back to Stakeholders

Close the loop by sharing key results internally or externally:

• Employees: a short summary of feedback themes and what actions are planned, shared at a team meeting or via email
• Clients: a one-page sustainability snapshot showing what data you collect and how you plan to improve
• Suppliers: a note explaining any new data sharing expectations for the coming year
• Banks: a brief summary of your sustainability position included in financing applications

Transparency builds confidence. Even if you cannot meet every expectation, explaining your reasoning and timeline is more valuable than silence.

What Good Documentation Looks Like

For CSRD and VSME reporting, you do not need a full stakeholder engagement report. A simple internal log covering the following is sufficient:

Keep this log updated annually and reference it in your VSME Basic Module disclosure under the governance section.

Frequently Asked Questions

How formal does stakeholder engagement need to be for SMEs?

Not very. A few well-documented conversations or short surveys are sufficient. CSRD and the VSME Standard emphasise proportionality — the process should be meaningful to your business, not complex for its own sake. What matters is that you can show who you consulted, what they said, and what you did about it.

Who should lead the stakeholder engagement process?

Usually the business owner, sustainability coordinator, or HR and operations manager, depending on your structure. Responsibility should sit with someone who can act on the findings — not just collect them. For guidance on managing the sustainability function in a small business, see CSRD for Sustainability Coordinators.

Do I need to involve external consultants?

No. SMEs can conduct stakeholder engagement entirely internally. External support may be useful for specific situations — such as mapping a complex supply chain or preparing for third-party assurance — but it is not a requirement for VSME-level reporting.

How often should stakeholder engagement be updated?

At minimum once per year, aligned with your reporting cycle. Major changes to your business — new markets, significant headcount changes, new large clients — should trigger an additional review to check whether your material topics remain accurate.

What if stakeholders raise topics I can’t act on?

Acknowledge them in your documentation and explain your reasoning. For example: “Employees raised concerns about business travel emissions. We have noted this as a topic to track from 2026 onwards as we build our data collection.” Transparency about what you are not yet doing is better than silence.

Key Terms

• Stakeholder: Any individual or group that affects or is affected by your business — including employees, clients, suppliers, investors, and communities.
• Double materiality: The CSRD principle of assessing both how sustainability issues affect your business financially, and how your business affects people and the environment.
• VSME Standard: Simplified sustainability reporting framework for non-listed SMEs, developed by EFRAG in 2024.
• Materiality assessment: The process of determining which sustainability topics are significant enough to report on, informed by stakeholder input and business context.
• ESRS: European Sustainability Reporting Standards — the detailed technical standards underpinning CSRD disclosures.

Conclusion

Stakeholder engagement does not need to be complex or costly. For small and growing businesses, it is about listening to the right people, prioritising what matters, and documenting your reasoning clearly.

Start with your employees and your largest clients — they are usually the most valuable sources of insight and the most likely to ask about your sustainability performance. Build a simple annual rhythm of consultation, documentation, and feedback.

With a clear structure and consistent effort, stakeholder engagement becomes a practical tool for improving your sustainability approach — not just a compliance box to tick.