Water & Waste Requirements for Factories: CSRD Reporting Guide

Whether you’re a small manufacturer, supplier or subsidiary operating a production facility in Europe, water use and waste generation are central parts of daily operations. Some facilities now report directly under CSRD, while many others use the VSME Standard voluntarily to provide environmental data to customers. In both situations, water and waste metrics form a growing part of sustainability audits, customer questionnaires and supplier qualification processes.

CSRD strengthens transparency on water use, wastewater impacts and waste management. It requires large companies to disclose water-related risks, withdrawals, consumption, and discharges under ESRS E3, and waste under ESRS E5. The Directive also recognises that organisations depend on value-chain partners for relevant sustainability information, including resource use and pollution-related data needed for their reports .

SMEs, meanwhile, can use the VSME Basic Module to provide proportionate disclosures. VSME requires reporting on water consumption (B6), waste generation and circularity metrics (B7), and pollutants already reported to authorities (B4) . This makes VSME especially suitable for factories with surface treatment, machining, cleaning, cooling, or other water-dependent processes.

This guide provides practical methods, templates and factory-specific examples to help SMEs collect, track and report water and waste in a CSRD-aligned manner.

1. What CSRD Expects Regarding Water and Waste

Water expectations under CSRD

ESRS E3 covers water topics including:

• Water withdrawal
• Water consumption
• Water discharge and quality
• Water-related risks and management practices

Manufacturers contribute essential information when their customers evaluate process water intensity, risks of abstraction, and discharge-quality compliance. CSRD’s value-chain principle means large companies must consider upstream impacts, making supplier water data increasingly important.

Waste expectations under CSRD

ESRS E5 requires companies to disclose:

• Total waste generated
• Breakdown of hazardous and non-hazardous waste
• Waste diverted to recycling or preparation for reuse
• Waste disposal methods

For SMEs, the VSME Standard simplifies these expectations into clear, manageable datapoints: total waste by type, material flows for relevant sectors and reuse/recycling rates (B7) .

2. Water Metrics for Manufacturing: Consumption vs. Discharge

Manufacturing facilities often use water in more than one way — cooling, cleaning, rinsing, mixing, steam, boilers, coating, plating and sanitation. CSRD and VSME distinguish between different metrics.

Water withdrawal

Water taken from any source: mains supply, wells, boreholes or surface water. Data source: water bills, pump meters, tank delivery notes.

Water consumption

Water that does not return to the environment because it is used in products, evaporated, or embedded in sludge/waste. VSME requires reporting of water consumption (B6), and clarifies that it may reflect risks related to local water resources .

Water discharge

Water returned to the environment or sewer system after treatment. Facilities with surface treatment, machining coolants or chemical processes may require sampling or wastewater permits.

Manufacturing-specific examples

• Metal finishing plant:

  • Withdrawal: mains water for rinsing and baths
  • Consumption: evaporation from heated tanks
  • Discharge: treated wastewater sent to sewer

• Food manufacturing supplier:

  • Withdrawal: cleaning, sanitation, ingredient water
  • Consumption: water incorporated into product
  • Discharge: wastewater containing organic load

• Machining workshop:

  • Withdrawal: coolant makeup and sanitation
  • Consumption: evaporation from machines
  • Discharge: oily wastewater to licensed disposal

3. How to Measure Water Use and Wastewater Generation

1. Start with complete water data collection

Use a simple monthly table:

Data sources:

• Water bills
• Meter readings at process lines
• Cooling tower make-up logs
• Flow meters before treatment systems
• Contractor disposal receipts (for wastewater removed off-site)

2. Distinguish consumption from discharge

Formula for annual consumption:

Water consumption = Water withdrawal – Water discharge

If you do not measure discharge directly, use:

• Flow meter at outfall
• Permit-required sampling reports
• Contractor documentation for off-site disposal
• Process models (e.g., evaporation rates in heated baths)

3. Track wastewater characteristics

CSRD requires companies to consider the impact of discharges. For SMEs using VSME, this is only required when pollutants are already measured or reported to regulators (B4) .

Typical parameters:

• pH
• Temperature
• Suspended solids
• COD/BOD
• Oils / hydrocarbons
• Heavy metals (Cr, Ni, Zn, Cu) in plating lines
• Detergents or surfactants

Where sampling is required, store laboratory reports alongside your sustainability files.

4. Waste Tracking for Manufacturing SMEs

Manufacturing waste categories typically include:

Non-hazardous waste

• Packaging (wood, cardboard, plastics)
• Scrap metal from machining or fabrication
• General waste

Hazardous waste

• Oily rags and absorbents
• Wastewater treatment sludge
• Spent acids/alkalis from plating
• Solvents, paint sludge or adhesives
• Contaminated filters and PPE

What VSME requires

VSME B7 requires SMEs to disclose:

• Total waste generated (hazardous and non-hazardous)
• Waste diverted from disposal (reuse, recycling, recovery)
• Material flows for sectors with significant material dependency (e.g., plastics, metals, chemicals)

Waste tracking template

Sources of data:

• Waste transfer notes
• Collection weights
• Invoices
• Hazardous waste consignment records

Keeping these documents organised helps meet CSRD’s emphasis on relevant, reliable and verifiable information across the value chain .

5. Circular Economy Strategies for Industrial Sites

Circularity strategies reduce both resource intensity and waste costs, while supporting CSRD sustainability narratives.

Strategies suitable for SMEs

1. Closed-loop rinsing systems

Reduces water withdrawal and discharge volumes, especially in plating or coating lines.

2. Coolant recycling

Machining workshops can reduce coolant disposal by using filtration and microbiological treatment systems.

3. Heat recovery from compressors or ovens

Reduces energy and water used for heating or cleaning.

4. Waste segregation and on-site compaction

Improves recycling rates and lowers disposal fees.

5. Material substitution

Using low-toxicity or low-waste chemicals simplifies waste management and may reduce required wastewater treatment steps.

These initiatives can be disclosed under VSME B2 as environmental policies and improvement actions, helping customers assess your long-term performance .

6. Reporting Your Water & Waste Metrics (VSME & CSRD Alignment)

Under the VSME Standard

You will report:

• Water consumption (m³) – required datapoint (B6)
• Total waste generated, incl. hazardous waste (B7)
• Waste diverted to recycling/reuse (B7)
• Pollutants if already reported to authorities (B4)

Under CSRD (if in scope)

Facilities must disclose:

• Water withdrawal, consumption, discharge and quality
• Water-related risks
• Waste generation by type and disposal method
• Circularity strategies and reduction initiatives

Although SMEs are not required to report at the same level of granularity, supplying consistent, well-documented data supports customers preparing ESRS E3 and E5 disclosures.

For related guidance, the resource use & circular economy hub and the pollution topic hub offer additional detail on waste streams and discharge impacts.

Frequently Asked Questions

How often should factories track water and waste data?

Monthly tracking provides enough granularity for trend analysis and annual reporting. Many SMEs rely on monthly utility bills and contractor invoices. Tracking more frequently is useful for high-risk processes such as plating lines or solvent-intensive operations. The resource-use & circular economy hub has examples of practical tracking systems.

Do small factories need to report wastewater quality under CSRD?

Only if they already measure or report pollutants under national regulation or environmental management systems. VSME B4 requires this disclosure when pollutant data exists. If no measurement is required for your process, you can still describe how wastewater is handled or treated to provide context.

What is the easiest way to track hazardous waste for VSME?

Use a simple monthly table and keep all evidence (EWC codes, disposal certificates, weights) in a central folder. This supports VSME B7 disclosures and helps customers evaluate your waste management practices. The pollution hub explains how waste intersects with discharge and environmental risk.

How can factories reduce water consumption without major investments?

Closed-loop rinsing, flow restrictors, leak detection, optimised cleaning stages and coolant management often give SMEs noticeable reductions. These improvements can be included as environmental initiatives under VSME B2.

Key Terms

• Water withdrawal: Total water taken from supplied or natural sources.
• Water consumption: Water not returned because it is incorporated, evaporated or removed with waste.
• Discharge: Water released to sewer or environment, usually after treatment.
• Hazardous waste: Waste requiring controlled handling, as defined by EU waste codes.
• Circular economy: Strategies that reduce resource use through reuse, recycling or recovery.

Conclusion

Water and waste reporting does not need complex software or major investments. With a structured monthly log, clear definitions and consistent evidence files, manufacturing SMEs can provide accurate metrics under the VSME Standard and deliver the water and waste data increasingly required by CSRD-reporting customers. These same systems also help identify opportunities to cut resource use and improve operational efficiency.

With a clear structure and consistent effort, CSRD becomes an advantage — not an obstacle.