Most small and mid-sized businesses are about to face new sustainability reporting rules under the EU’s Corporate Sustainability Reporting Directive (CSRD).
This guide explains CSRD for SMEs, when it applies, and how to turn compliance into an advantage — not a cost center.
Learn how to start reporting in plain language, using tools built for real operators (rather than consultants).
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.
The CSRD is the EU’s new sustainability reporting framework. It replaced the old Non-Financial Reporting Directive (NFRD) and dramatically expanded who must report, what they must report, and how detailed that reporting must be.
Here’s the reality: the CSRD is coming for your business too, and it’s going to change how you operate, report, and compete.
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?
You might be thinking, “But we’re not a big corporation.” Here’s why that doesn’t matter:
The cascade effect is real. Even if your company doesn’t meet the direct CSRD reporting thresholds, 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 — and 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 for the fiscal year 2025 from 2026, with an option to opt out for two additional years.
Want to dive deeper into who’s affected and when?
Read the complete guide: What CSRD Means for SMEs →
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. This means mapping energy use, waste generation, water consumption, employee metrics, supply chains, and more.
Double materiality assessment. This includes identifying which sustainability topics significantly impact your business AND which ones your business substantially impacts.
Third-party assurance. An external auditor, similar to financial statements, is required to verify your sustainability report.
Digital tagging in XBRL format. This effectively makes the data machine-readable and comparable across companies.
Need help with materiality?
Get the step-by-step guide: How to Do a Materiality Assessment →
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 rates
- Win contracts that require demonstrated sustainability performance
Want to turn CSRD data into a competitive advantage?
Learn how: Turning CSRD Data Into Value →
Ready to Start?
Get the CSRD Essentials Toolkit — a step-by-step system to complete your first CSRD report in 30 days, without consultants or overwhelm.
Built for real operators. Designed to work in the background. Priced for SMEs.
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.
Frequently Asked Questions
Who needs to report under CSRD?
Large companies (250+ employees OR €50M+ revenue OR €25M+ assets) must report directly. Listed SMEs start in 2026 with a two-year opt-out option. However, even smaller suppliers will face indirect requirements from clients who need supply chain data.
When do SMEs have to start reporting?
The CSRD entered force in January 2023 with phased rollouts: large companies in 2024, listed SMEs in 2026. Indirect pressure on suppliers is already building as larger companies prepare their first reports.
What is double materiality?
Double materiality means assessing sustainability topics from two angles: how they impact your business (financial materiality) and how your business impacts society and environment (impact materiality). Both matter under CSRD.
Can SMEs do CSRD reporting without consultants?
Yes. While complex organizations may need external support, many SMEs can handle CSRD reporting with the right framework and tools. Starting with systematic data collection and clear materiality assessment makes it manageable.
Ready to build a CSRD-ready system without the overwhelm?
Check out the Ecosystems United CSRD Essentials Toolkit for a practical framework that makes compliance manageable for growing businesses.