What the CSRD for SMEs Means in 2025 & 4 Steps to Get Started

The CSRD for SMEs is here. Learn how small and medium businesses can turn sustainability reporting from a compliance burden into a competitive advantage.

What Is the CSRD, Really?

If you’re running a small or medium-sized enterprise in Europe, you’ve probably heard whispers about the CSRD—the Corporate Sustainability Reporting Directive.

Here’s the reality: the CSRD is coming for your business too, and it’s going to change how you operate, report, and compete.

The CSRD is the EU’s new framework for sustainability reporting. It replaced the old Non-Financial Reporting Directive (NFRD) and dramatically expanded who needs to report, what they need to report, and how detailed that reporting must be.

In practical terms? The CSRD requires companies to disclose detailed information about their environmental and social impacts, governance structures, and how sustainability risks and opportunities affect their business model. Think carbon emissions, supply chain labor practices, biodiversity impacts, and much more.

The directive aims to make sustainability reporting as rigorous and standardized as financial reporting. The CSRD entered into force in January 2023, with phased implementation beginning in 2024.

Why Should SMEs Care About CSRD?

“But we’re not a big corporation,” you might be thinking. Here’s why that doesn’t matter:

The cascade effect is real. Even if your company doesn’t meet the direct thresholds for CSRD reporting, your larger clients almost certainly will. The CSRD will ultimately affect around 50,000 companies across the EU, and many of those companies will demand sustainability data from their suppliers—that’s you.

Access to capital depends on it. Banks and investors are increasingly using sustainability metrics to assess risk and determine lending terms.

Financial institutions are required to report on the sustainability of their portfolios, which means they need data from the companies they finance.

Competitive advantage awaits the prepared. While your competitors scramble to gather data retroactively, you could be ahead, using sustainability performance as a differentiator in RFPs and tenders.

The Direct Thresholds of CSRD for SMEs

You’ll need to comply directly with the CSRD if your company meets at least two of these three criteria:

• More than 250 employees
• More than €50 million in revenue
• More than €25 million in total assets

Listed SMEs have a transitional period and will need to start reporting from 2026 for the fiscal year 2025, with an option to opt out for two additional years.

What CSRD for SMEs Compliance Actually Looks Like

CSRD compliance isn’t about writing a glossy sustainability report once a year. It requires:

• Systematic data collection across your operations—energy use, waste generation, water consumption, employee metrics, supply chain mapping, and more.
• Double materiality assessment—identifying which sustainability topics significantly impact your business AND which ones your business significantly impacts.
• Third-party assurance—your sustainability report must be verified by an external auditor, similar to financial statements.
• Digital tagging in XBRL format—making the data machine-readable and comparable across companies.

The Real Cost of Waiting to Implement CSRD for SMEs

Here’s what postponing CSRD preparation actually costs:

Rushed implementation is expensive. Companies that start preparing now can integrate sustainability data collection into existing systems. Those who wait will face expensive consultant fees, emergency software purchases, and the opportunity cost of leadership time spent firefighting.

Lost opportunities compound. Public procurement increasingly favors companies with strong sustainability credentials. The EU’s Green Public Procurement criteria already influence contract awards worth hundreds of billions annually.

Supplier relationships are at risk. Your largest clients aren’t going to wait for you to get organized. They’ll either drop you from their supply chain or push compliance costs back onto you through pricing pressure.

Making CSRD for SMEs Work for Your Business

The companies that will thrive under CSRD aren’t treating it as a compliance checkbox. They’re using it as a strategic tool to:

• Identify operational inefficiencies (energy waste, material inefficiency, high turnover)
• Strengthen stakeholder relationships through transparency
• Access green financing at favorable ratesWin contracts that require demonstrated sustainability performance

Your Next Steps

To get started with CSRD reporting follow these four steps:

Step 1: Start with the basics

• Map your stakeholder landscape. Who will ask you for sustainability data?
• What do they need? Assess your current data.
• What are you already tracking? What gaps exist?

Step 2: Prioritize based on materiality. Not all sustainability topics matter equally for your business.

Step 3: Build systematic tracking. Sustainability data should flow as naturally as financial data.

Step 4: Create accountability structures. Assign ownership, set targets, track progress.

The CSRD isn’t going away. It’s not optional. And it’s not just for “big companies.” The question isn’t whether you’ll need to engage with sustainability reporting, it’s whether you’ll be reactive or strategic about it.

Ready to build a CSRD-ready system without the overwhelm?

Check out the Ecosystems United CSRD Toolkit—a practical Notion-based framework that makes compliance manageable for growing businesses.