CSRD Reporting Germany (Leitfaden für KMU)

Small and growing businesses (SMEs) in Germany are facing new expectations under the Corporate Sustainability Reporting Directive (CSRD). Even if you are part of the Mittelstand and not yet legally required to publish CSRD reports, larger clients, banks, and public buyers are already asking for sustainability data. This guide explains Germany’s transposition status, how CSRD links with the German Supply Chain Due Diligence Act (LkSG), and what practical steps you can take now using the Voluntary Sustainability Reporting Standard for SMEs (VSME).

1. CSRD in Germany: current status and scope

What is CSRD?

CSRD (Directive (EU) 2022/2464) expands EU-wide sustainability reporting obligations and introduces the European Sustainability Reporting Standards (ESRS). It covers environmental, social, and governance topics as part of the double materiality principle.

German transposition and delays

Germany missed the original July 2024 deadline to transpose CSRD but has published a draft CSRD Implementation Act (CSRD-UG-E) that mirrors the EU rules. The expected timeline aligns with the EU “Stop-the-Clock” delay, giving later waves (large non-listed companies and listed SMEs) roughly two extra years before mandatory filings. Even with the delay, preparation time is valuable because obligations for value-chain transparency continue to tighten.

Who is directly or indirectly affected?

• Large companies already subject to the previous Non-Financial Reporting Directive will transition first.
• Mittelstand firms that meet CSRD thresholds could enter scope in future phases.
• The majority of small and growing businesses (SMEs) will feel indirect pressure because clients, lenders, and investors need reliable data to meet their own reporting requirements.

Link to the German Supply Chain Due Diligence Act (LkSG)

The LkSG already obliges many German companies and their suppliers to assess human rights and environmental risks. CSRD focuses on disclosure, while LkSG focuses on due diligence. Aligning both frameworks lets Mittelstand firms reuse data, policies, and risk assessments instead of running parallel processes.

2. Why the Mittelstand should prepare now

• Client expectations: Automotive, engineering, and retail groups are already requesting supplier data on workforce metrics, value-chain emissions, and due diligence practices.
• Finance readiness: Banks, insurers, and investors integrate ESG data into risk models; providing structured information supports better access to financing.
• Competitive advantage: Early adopters can demonstrate reliability in tenders and long-term partnerships.
• Risk management: Understanding double materiality helps identify and mitigate operational and reputational risks before they escalate.
• Future compliance: Preparing systems now avoids a scramble if thresholds change or when your firm enters direct scope.

3. Practical preparation steps for German SMEs

Step A – Map your value chain and workforce exposure

• Identify major customers and suppliers, especially those already reporting under CSRD or complying with LkSG.
• Pinpoint where workforce or supplier risks could arise (subcontractors, temporary labour, overseas sourcing).
• Engage procurement, HR, and operations teams to understand existing data flows and gaps.

Step B – Collect proportional sustainability data

Start with achievable, business-relevant data categories:

• Workforce: headcount, gender distribution, training hours, health and safety incidents.
• Supply chain: presence of supplier codes, audits, or whistleblowing channels.
• Environmental: energy consumption, fuel use, water consumption, waste volumes.
• Governance: anti-corruption policies, ethics training, board oversight.

Step C – Use the VSME standard as your structure

• Adopt the VSME Basic Module to organise disclosures on environment, workforce, and governance.
• Prepare a concise data pack or template that you can share with customers and lenders.
• Plan to scale up towards the VSME Comprehensive Module if specific partners demand more detail.

Step D – Align CSRD preparation with LkSG processes

• Review the data and due diligence workflows you already maintain for LkSG compliance.
• Ensure supplier questionnaires, risk assessments, and incident tracking feed into your CSRD-ready data set.
• Monitor federal guidance on CSRD transposition so you can update obligations swiftly.

Step E – Embed sustainability in daily operations

• Assign ownership for sustainability data (for example, finance or operations leads) and secure management buy-in.
• Integrate sustainability checkpoints into procurement and supplier onboarding.
• Communicate progress internally and externally; a one-page “Mittelstand sustainability snapshot” can reassure stakeholders.
• Schedule annual reviews to refine metrics, improve data quality, and capture new regulatory expectations.

4. Timeline snapshot for German firms

Treat the current delay as a preparation window rather than a reason to pause. Value-chain requests are already intensifying.

5. Frequently asked questions

Will my Mittelstand company need to publish a full CSRD report?

If you do not meet CSRD thresholds yet, you may not publish immediately. However, value-chain partners will still expect data. Preparing with the VSME Basic Module ensures you are ready when clients or lenders ask.

How does CSRD relate to the German Supply Chain Due Diligence Act (LkSG)?

CSRD requires transparent disclosure of sustainability information, whereas LkSG mandates due diligence on human rights and environmental risks. Aligning the two lets you reuse risk assessments, supplier questionnaires, and incident tracking for both obligations.

Can we start with a simpler reporting format?

Yes. Begin with a lightweight VSME Basic Module and expand as obligations grow. The key is to collect consistent data and establish governance now so scaling up is manageable.

What are the common obstacles for Mittelstand firms?

Challenges include limited internal resources, fragmented supplier data, and varying client questionnaires. Solutions involve assigning clear responsibility, prioritising high-impact metrics first, and using standardised templates to respond efficiently.

Key terms

• CSRD – Corporate Sustainability Reporting Directive (EU 2022/2464) expanding sustainability disclosure obligations across the EU.
• VSME – Voluntary Sustainability Reporting Standard for SMEs, providing proportionate disclosure modules for smaller companies.
• ESRS – European Sustainability Reporting Standards underpinning CSRD reporting requirements.
• LkSG – German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz) focusing on human rights and environmental due diligence.
• Double materiality – Assessing both how sustainability topics affect the business and how the business affects people and the environment.
• Mittelstand – Germany’s mid-sized, often family-owned firms that form the backbone of supply chains and economic activity.

Conclusion and next steps

For German Mittelstand SMEs, CSRD preparation is a strategic investment rather than a box-ticking exercise. Use the current delay to refine your data collection, link CSRD disclosures with LkSG due diligence, and develop a VSME-based report you can share with clients and financiers. With a clear structure and consistent effort, CSRD becomes an advantage rather than an obstacle.