CSRD for Family Businesses: Special Considerations

Family businesses are the backbone of Europe’s economy — but the new Corporate Sustainability Reporting Directive (CSRD) can feel like it was written for big corporations. Many family-owned SMEs worry that the process is too formal or bureaucratic for their close-knit, personal structures.

The reality is that CSRD compliance is fully achievable for family businesses, as long as reporting is approached in proportion to the company’s size and complexity. The EU’s Voluntary Sustainability Reporting Standard for SMEs (VSME) was created with exactly this kind of business in mind.

1. Understand Whether CSRD Applies to You

Most family businesses are not directly covered by the CSRD unless they meet at least one of these thresholds:

• 250+ employees
• €40 million annual turnover
• €20 million in total assets

However, many smaller family firms are being asked for sustainability data by customers, suppliers, or banks. That means even if you don’t need a full CSRD report, using the VSME Standard helps you provide the right data format when it’s requested — and show you’re serious about responsible business.

2. Simplify Governance and Roles

Family-owned companies often blend personal and professional decision-making, which can make governance reporting tricky. CSRD and ESRS require you to explain who oversees sustainability, even if that’s the owner, founder, or a family board.

Keep it simple:

• Identify who signs off on sustainability matters (often the managing director or family council).
• Describe how major decisions are made — e.g., quarterly family meetings or joint management reviews.
• Note if non-family managers are involved (helps show independence and professional oversight).

A short paragraph on governance clarity goes a long way toward satisfying ESRS G1 (Governance, risk management, and internal control).

3. Use the VSME Basic Module to Stay Proportionate

The VSME Basic Module is the simplest, most relevant framework for family-run SMEs. It includes just 11 core disclosures across environment, social, and governance (ESG) topics — enough to demonstrate responsibility without overburdening small teams.

Typical family-business disclosures might include:

• Energy and waste data (from utility bills)
• Workforce figures (from payroll)
• Basic governance and anti-corruption statements
• Training and community involvement

For most family firms, this can be completed in 20–30 hours per year, especially if you collect data continuously.

4. Document Informal Practices

Family businesses often have strong values and community ties — but little written documentation. CSRD asks for transparency, so it’s worth writing down the practices you already follow. Examples:

• “We prioritise hiring locally and supporting regional suppliers.”
• “Family ownership ensures long-term decision-making, not short-term profit.”
• “Sustainability discussions are part of monthly management meetings.”

These narratives count as valid disclosures and strengthen your company’s story.

5. Plan for Succession and Future Reporting

Sustainability and governance disclosures can help with succession planning — one of the most sensitive areas in family firms. Clear reporting frameworks make it easier for the next generation to understand policies, goals, and metrics.

Consider:

• Appointing a sustainability champion (family or non-family)
• Creating a sustainability file or digital folder for annual updates
• Gradually formalising policies as the business grows

Think of CSRD not as red tape, but as a structure for building resilience and legacy.

Frequently Asked Questions

Do small family businesses need to report under CSRD?

Not unless they exceed the large-company thresholds or are publicly listed. Most can use the VSME Standard voluntarily to meet supply-chain or bank information requests.

Who should “sign off” sustainability reports in a family firm?

The person with ultimate management responsibility — usually the managing director or board chair. In multi-generational businesses, the family council can co-sign or approve.

What if our governance is informal?

That’s fine. Describe how decisions are made and by whom. CSRD values transparency over formality — explain what actually happens, even if it’s a conversation at the kitchen table.

How much time should we expect to spend?

For small, single-site family firms, expect around 25 hours for your first report and 5–10 hours for updates in later years.

Key Terms

• CSRD: Corporate Sustainability Reporting Directive (EU 2022/2464)
• VSME: Voluntary Sustainability Reporting Standard for non-listed SMEs (EFRAG, 2024)
• ESRS: European Sustainability Reporting Standards (the detailed rules CSRD refers to)
• Governance: How the business makes decisions and ensures accountability
• Double Materiality: Reporting on both financial risks and environmental/social impacts

Conclusion: Make CSRD Serve Your Legacy

Family businesses have one big advantage when it comes to CSRD — values and long-term thinking are already built in. Reporting under CSRD or VSME simply gives structure to what you’re already doing.

Start small, use simple templates, and document your governance honestly. Over time, you’ll turn sustainability reporting into a natural part of your business story — one that strengthens both your reputation and your legacy.