The CSRD and mid-sized firms: why ESG data reaches SMEs too
The CSRD obligates mainly large companies — yet through supply-chain requests, sustainability reporting has long since reached mid-sized firms.
What the CSRD is about
The Corporate Sustainability Reporting Directive (CSRD) significantly expands the obligation to report on sustainability. Reporting follows the European Sustainability Reporting Standards (ESRS) — binding requirements on the environment, social matters, and governance. The sustainability report becomes part of the management report and is subject to external assurance.
Who must report directly
The reporting obligation takes effect on a staggered basis and focuses on large companies and capital-market-oriented entities. With the 2025 Omnibus simplification, the thresholds were raised and the later application waves postponed. The exact scope depends on the respective national transposition law — which remains decisive for the assessment in an individual case.
The indirect lever: the supply chain
Even those not directly subject to reporting feel the CSRD: reporting large customers must provide material information about their value chain and request the necessary data from their suppliers. For mid-sized businesses, this means ESG questionnaires, emissions requests, and evidence — often as a condition for remaining in the supplier pool.
Understanding double materiality
The ESRS require a double materiality assessment: it considers, on the one hand, how sustainability topics affect the company's financial position, and on the other, what impact the company has on the environment and society. Only the result of this assessment determines which data points actually have to be reported — making it the starting point of any CSRD project.
The VSME standard for SMEs
A voluntary, much leaner standard has been developed for non-listed SMEs: the VSME (Voluntary Standard for SMEs). It bundles the ESG metrics typically requested into a manageable scope and serves as a common language toward large customers and banks. Once the relevant data is properly prepared, recurring requests can be answered efficiently.
Frequently asked questions
Is my mid-sized company directly subject to the CSRD?
Generally only if it is capital-market-oriented or meets the raised size criteria. Most SMEs are not directly subject to reporting. In practice, however, they are often drawn in through supply-chain requests from their reporting customers. The national transposition law is decisive for your own assessment.
How do I prepare for ESG requests from customers?
Start with the most frequently requested metrics: energy consumption and greenhouse gas emissions, information on employees and occupational safety, and basic governance information. The voluntary VSME standard offers a practical framework for this. A data basis once established can be reused for many customer requests.
What does the mandatory audit of the report mean?
The sustainability report must be externally assured — initially with limited assurance. The auditor assesses whether the information is plausible and prepared in line with the ESRS. This requires a traceable, verifiable data basis; rough estimates without derivation are not sufficient.