What is CSRD Reporting? A Complete Guide

The Corporate Sustainability Reporting Directive (CSRD) is the EU law that sets out how companies report on their environmental, social, and governance (ESG) impacts. It standardises sustainability reporting across the EU so that the information companies publish is comparable and reliable.

CSRD touches two very different groups of readers. The first is companies that are directly in scope and have to file a report under the European Sustainability Reporting Standards (ESRS). The second is everyone else in their value chain, including smaller suppliers who are asked for ESG data so an in-scope client or bank can complete its own report.

This guide explains what CSRD reporting is, who has to report, and what a report contains. It then splits into two paths, so you can follow the one that matches your situation: being in scope of CSRD, or answering an ESG request from a larger partner.

What is CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is an EU law requiring companies to report on how their operations affect the environment, society, and governance. In-scope companies report against the European Sustainability Reporting Standards (ESRS), a single, detailed rulebook adopted across the EU.

In simple terms, CSRD reporting is about transparency. It gives investors, lenders, customers, and the public a consistent view of how a business manages its environmental and social impacts.

The CSRD aims to:

• Standardise sustainability reporting across the EU for comparable, reliable information.
• Encourage sustainable business practices by making impacts and risks visible.
• Provide transparency for investors, clients, and banks who use the data in their own decisions.

Who has to report under CSRD?

Following the Omnibus I simplification directive (in force from 18 March 2026), CSRD applies to large companies in the EU that meet both of these thresholds:

• More than 1,000 employees, and
• Net turnover above €450 million.

These companies report according to the European Sustainability Reporting Standards (ESRS). The earlier “two of three” test (250 employees, €50 million turnover, €25 million balance sheet) no longer determines CSRD scope, and mid-sized companies of 250 to 1,000 employees are no longer required to report. The separate track for listed SMEs was also removed, so no SME is a mandatory CSRD filer.

Large non-EU groups can also be caught. A non-EU parent comes into scope where it generates more than €450 million of net turnover in the EU and has either an EU subsidiary that is a large company or an EU branch above €200 million in turnover. Reporting for these undertakings is expected to begin around 2029.

What a CSRD report contains

A CSRD report covers environmental, social, and governance topics, structured around the ESRS.

There are 12 ESRS standards in total: two cross-cutting standards and ten topical ones. Only ESRS 2 (General Disclosures) is always mandatory and must be reported by every in-scope company. The topical standards (covering climate, pollution, water, biodiversity, the circular economy, own workforce, value-chain workers, affected communities, consumers, and business conduct) are reported only where they are material, as determined by the company’s assessment.

That assessment is the principle of double materiality. A company looks at a topic from two directions: its impact on people and the environment (impact materiality), and the financial risks and opportunities the topic creates for the business (financial materiality). A topic is material, and therefore reportable, if it is significant from either angle.

In practice, the disclosures span three areas:

• Environmental. Energy use, greenhouse gas emissions across Scope 1 (direct), Scope 2 (purchased energy), and Scope 3 (value chain), pollution, water, biodiversity, and resource and waste flows. See our step-by-step guide to reporting Scope 1 and 2 emissions and how to report electricity use from utility bills.
• Social. Workforce data, working conditions, health and safety, and the treatment of value-chain workers, communities, and consumers.
• Governance. Business conduct, board structure, ethics and anti-corruption policies, and how sustainability informs strategy.

Finally, a CSRD report must be independently checked. In-scope companies obtain limited assurance over their sustainability statement from an auditor or approved assurance provider, which raises the bar for how data is gathered and documented.

Two paths: are you in scope, or answering a request?

How you engage with CSRD depends on which group you fall into. Use the path that matches your company.

If your company is in scope of CSRD

If your company is over both thresholds, CSRD is a direct legal obligation and the work runs on an annual cycle:

1. Run a double materiality assessment. Identify which topics are material from an impact and a financial perspective. This sets which topical ESRS you report and which you can omit, so it is the foundation of the whole report.
2. Report under the ESRS. Always complete ESRS 2 (General Disclosures), then add the topical standards your assessment flagged as material. Plan early for Scope 3 and other value-chain data, which often depends on information from suppliers.
3. Obtain limited assurance. Build your data so it can withstand an auditor’s review, with clear sources, methods, and assumptions documented as you go.
4. Mind the timeline. Confirm which reporting wave you fall into (see below) and work back from your first filing date.

Because much of the effort sits in data quality and value-chain collection, many in-scope teams weigh up manual versus software approaches for CSRD reporting early on.

If you’re a supplier asked for ESG data

If your business is not in scope, you have no obligation to file under CSRD. What does happen is that larger clients, banks, or investors ask you for ESG information so they can complete their own reports. Since 2026 there is also a legal ceiling on those requests: the value-chain cap means a CSRD reporter may not demand more from a partner with fewer than 1,000 employees than the voluntary SME standard defines (see what large customers can ask suppliers).

The Voluntary Sustainability Reporting Standard for SMEs (VSME), a voluntary EFRAG standard that is not part of CSRD, gives you a proportionate way to respond. VSME has two modules:

• Basic Module (B1–B11) covers essential topics such as energy use, emissions, waste, workforce data, and governance. Most SMEs start here.
• Comprehensive Module (C1–C9) is a more detailed version including strategy, targets, and transition plans. Banks or large clients may request this.

Not sure which to choose? Read our comparison of VSME Basic vs Comprehensive modules to decide which is right for your business.

Responding via VSME is straightforward if you take it in steps:

1. Define your scope. Focus on your core operations and primary suppliers. Starting small keeps the work manageable.
2. Collect basic data. Pull together energy and fuel consumption, waste and recycling records, and employee demographics. Document assumptions and sources; rough estimates are acceptable at first.
3. Select a module. Begin with the Basic Module and move to the Comprehensive Module when a client or bank requests it. Our CSRD requirements checklist helps you track what data you need.
4. Assign responsibility. Designate someone in finance, HR, or operations to own the data. Clear ownership improves accuracy and consistency.
5. Prepare the response. Include a short overview of the business, the relevant ESG metrics, and any policies, plans, and targets. Simple tables and charts make the data easy to read.
6. Review and update. Schedule annual reviews to refine metrics and track progress, so each new request is easier than the last.

Common challenges, and how to handle them:

• Data availability. Collect measurable data first and estimate the rest, then improve accuracy over time.
• Complexity of standards. Focus on key metrics; the VSME framework is designed to keep this proportionate.
• Resource constraints. Integrate reporting into existing workflows; spreadsheets or simple tools reduce the effort.

Helpful resources include VSME guidance documents and templates, free EU and government portals, and industry networks that share best practice. If you receive the same ESG questions from several customers, an ESG answer bank lets a small business store its responses once and reuse them across requests, rather than starting from scratch each time, and its free VSME report tool generates the finished report at no cost.

When do companies report?

CSRD reporting is phased into waves:

• Wave 1. The largest companies already in scope continue to report, with disclosures covering financial year 2024 onward.
• Wave 2. The remaining large companies caught by the new thresholds report from financial year 2027, with their first reports published in 2028.
• Wave 3. The earlier wave that would have brought listed SMEs into scope has been eliminated.

The standards themselves are settled: on 3 July 2026 the European Commission adopted the delegated acts containing the revised ESRS and the voluntary standard for out-of-scope companies, both applying to financial years starting 1 January 2027 (with early adoption possible from 2026).

Exact dates depend on national transposition. For a country-by-country view, see our CSRD deadlines by country.

Benefits

The advantages of CSRD reporting look different depending on which side of the value chain you sit on.

For in-scope companies, a CSRD report produces comparable, assured sustainability data that investors and lenders increasingly expect. It builds trust with capital markets, surfaces risks and efficiencies that might otherwise stay hidden, and puts sustainability information on the same footing as financial reporting.

For suppliers answering ESG requests, a clear VSME response keeps you eligible for contracts and finance. It strengthens client and bank confidence, sets you apart from competitors who cannot yet provide the data, and the act of tracking resources often highlights cost-saving opportunities along the way.

Frequently Asked Questions

What is the difference between CSRD and VSME?

CSRD is the EU law that mandates sustainability reporting for large companies, while VSME is a voluntary framework designed specifically for SMEs to report sustainability information in a simpler way. Most SMEs use the VSME Basic or Comprehensive modules to provide CSRD-style data to clients or banks, even though they’re not legally required to comply with CSRD directly.

Do SMEs have to comply with CSRD reporting?

Most SMEs are not legally required to comply with CSRD — only large companies meeting specific size thresholds must report. However, many SMEs are increasingly asked for CSRD-style sustainability information by larger clients, banks, or investors who need this data for their own reporting. Preparing voluntary reports using the VSME framework is becoming a competitive advantage.

How much does CSRD-related reporting cost an SME?

The cost varies widely depending on whether you handle reporting manually or use software tools. Starting with the VSME Basic Module using spreadsheets and existing data sources (like utility bills and HR records) can be done with minimal cost — mainly internal staff time. As data collection becomes more complex or if you move to the Comprehensive Module, consider whether manual or software approaches are more cost-effective for your business.

What’s the first step for an SME responding to CSRD requests?

Start by collecting basic environmental data you already have access to, such as monthly electricity bills, fuel receipts, and waste collection records. Then gather simple workforce information from HR, like employee counts, gender balance, and basic training records. Focus on the VSME Basic Module metrics first — you don’t need perfect data to begin, and you can improve accuracy over time as reporting becomes routine.

Key Terms

Corporate Sustainability Reporting Directive (CSRD) — An EU law requiring large companies (more than 1,000 employees and net turnover above €450 million) to report on environmental and social impacts. SMEs are not in scope but may be asked for ESG data by banks or clients.

Voluntary Sustainability Reporting Standard for SMEs (VSME) — A simplified framework for SMEs to share sustainability information voluntarily.

Basic Module — Minimum sustainability disclosures under VSME, including energy, emissions, waste, workforce data, and governance.

Comprehensive Module — Extended VSME version with strategy, transition plans, and targets.

European Sustainability Reporting Standards (ESRS) — Detailed rules for large companies under CSRD.

SME (Small and Medium-sized Enterprise) — Business with fewer than 250 employees, turnover under €50 million, or balance sheet under €25 million.

Scope 1 and Scope 2 emissions — Direct emissions from company-controlled sources (Scope 1) and indirect emissions from purchased energy (Scope 2).

Turnover — Total income from normal business activities over one year.

Use our readiness assessment to check whether CSRD applies to your company and what to do next:

This tool will help you identify whether CSRD applies to your company and what steps to take from there.