CSRD

CSRD stands for Corporate Sustainability Reporting Directive. This European directive is part of the European Green Deal, and makes it compulsory for businesses to report on their sustainability status. Listed companies will be obliged to report on the 2024 financial year in 2025. This information is becoming increasingly important to clients, investors, regulators and other stakeholders.

The CSRD could affect your company directly and indirectly.

• Directly: If the above criteria mean that you are required to report under the CSRD, go to ‘CSRD for large and publicly listed companies’. Due to the Omnibus proposal, there are also companies that were initially subject to CSRD reporting but are now out of scope. These companies can opt to publish sustainability reports on a voluntary basis.
• Indirectly: If your company is not subject to CSRD reporting, you may still be affected by the CSRD indirectly. You may, for example, get data requests from companies that do have to file a report under the CSRD. Since they need to have a good understanding of their value chain, these companies may ask your company how your products are made and whether this is done responsibly. 

If you only sell or provide services to consumers or mainly do business with SMEs, the chances are slim that you will get such data requests. For now, you will probably not be required to collect any additional data.

Want to get your company prepared for possible data requests from companies that are subject to CSRD reporting? The European Commission has had a set of voluntary standards developed for SMEs: the VSME standards. Developed especially for SMEs, these standards offer a clear and accessible way to report on your ESG performance.

The VSME standards are simpler than those for companies that do have to report under the CSRD. With a view to protecting SMEs, the European Union has adopted the VSME standards as the maximum amount of data that an SME can be asked to provide. This prevents you as an entrepreneur from being flooded with wide-ranging and complex data requests. 

Non-financial information relating to sustainability is also known as ESG information. ESG refers to three main themes, which can be used to measure the impact of a company: Environmental (e.g. climate change), Social (e.g. working conditions) and Governance (e.g. management structure).

Companies need to submit the report through an online portal and it must have been audited by an external statutory auditor, such as your accountant.

The VSME standards are based on the ESG themes and are designed to support SMEs in their voluntary sustainability reporting. These standards are broadly applicable, regardless of what industry you operate in. Contrary to the CSRD, which requires companies to select reporting topics based on materiality, the VSME standards do not differentiate in terms of topics to include in the report. There are, however, two modules you can choose from.

• The basic module: this module sets the minimum level of voluntary reporting and can be used by any type of company.
• The comprehensive module: somewhat more comprehensive, this module is mostly used in production sectors, such as agriculture, food, construction and manufacturing. It offers scope to include additional topics in the report.

Wondering what approach your sector is taking to voluntary reporting? Many trade associations are currently working on sector-wide initiatives. Check in with your trade association to see whether they are working on a coordinated approach for the whole sector. 

Since VSME reporting is not mandatory, you do not have to officially file the report, like you would with a CSRD report. There are, however, various ways you can use your VSME report. For example, you can share it with clients and investors in response to their CSRD data requests. Other than that, you could publish it on your website to showcase your company’s sustainability credentials.