CSRD Reporting Italy (Guide for SMEs)

Introduction

The Corporate Sustainability Reporting Directive (CSRD) is the European Union’s new law on sustainability reporting. While it mainly applies to large companies, small and medium-sized enterprises (SMEs) in Italy should not ignore it. Increasingly, customers, banks and investors will expect SMEs to provide environmental and social data.

To make this easier, the EU created the Voluntary Sustainability Reporting Standard for SMEs (VSME). This is a simplified, voluntary framework designed specifically for SMEs, helping them respond to requests for sustainability information without unnecessary complexity.

This guide explains what CSRD means for Italian SMEs, how to prepare, and where to start.

Why CSRD matters for Italian SMEs

Over 90% of businesses in Italy are SMEs. Even if CSRD does not directly apply to most of them, there are three strong reasons why it is already relevant:

1. Large customers will expect it – many Italian corporates, especially in fashion, agrifood, automotive and manufacturing, must comply with CSRD. They will ask their suppliers for sustainability data.
2. Access to finance – Italian banks increasingly use ESG criteria when assessing loans. Having VSME data ready can improve transparency and credibility.
3. Competitive advantage – sustainability is not just compliance. It helps reduce costs (energy, waste), meet customer expectations, and stand out in the market.

Example: A family-owned textile factory in Prato can show energy and water savings using its utility bills. A small winery in Piedmont can demonstrate responsible waste and workforce practices to reassure export buyers.

The VSME: a practical tool for SMEs

The Voluntary Sustainability Reporting Standard for SMEs (VSME), developed by EFRAG, offers a proportionate way for SMEs to report.

It comes in two levels:

• Basic Module – the minimum disclosures most SMEs are expected to provide, such as energy, emissions, workforce data, waste, and governance basics.
• Comprehensive Module – a more detailed version covering climate targets, risks, and human rights. Banks or large corporate clients may request this.

For most SMEs in Italy, starting with the Basic Module is the practical choice.

What Italian SMEs need to report (Basic Module)

Here is a checklist of the main disclosures under the Basic Module:

1. General information – legal form (e.g. Srl, Snc), ATECO sector code, turnover, number of employees, country of operations.
2. Energy and emissions – total annual energy use (from utility bills), Scope 1 emissions (fuel used in company vehicles or boilers), Scope 2 emissions (electricity and heating).
3. Pollution – only if the business is already legally required to declare pollutants.
4. Biodiversity – disclose if sites are in or near protected or sensitive natural areas.
5. Water – total water use, particularly in high water-stress areas.
6. Waste and circular economy – total waste generated, proportion recycled or reused, and use of circular practices.
7. Workforce – employee numbers by contract type and gender, turnover rate, training hours, gender pay gap (if applicable).
8. Health and safety – number of workplace accidents and fatalities.
9. Governance – any convictions or fines related to corruption or bribery.

Practical steps for Italian SMEs

• Start with existing records – utility bills, payroll data, and waste invoices often cover much of what is needed.
• Use a simple system – an Excel or Airtable sheet can be enough to collect figures once per year.
• Work through the Basic Module as a checklist – even if a topic is not relevant, mark it as “not applicable” rather than leaving it blank.
• Get support where needed – your accountant (commercialista) or industry association may help.
• Share results with stakeholders – let banks and clients know you are using VSME. This signals transparency and readiness.

What this means for your business

• You do not need to overcomplicate reporting. Start with the basics and expand later if clients or banks request more detail.
• Much of the data is already in your hands. Energy, water, and payroll records are often enough to get started.
• Adopting VSME early builds trust. It shows Italian SMEs are prepared for the sustainability expectations of tomorrow.

Key Terms

• Corporate Sustainability Reporting Directive (CSRD) — An EU law requiring large companies, and eventually some medium ones, to report on environmental and social impacts. SMEs are not directly in scope but may be asked for CSRD-style data.
• Voluntary Sustainability Reporting Standard for SMEs (VSME) — A simplified EU framework to help SMEs share sustainability data. Voluntary, but useful when banks or customers request information.
• Basic Module — The minimum reporting set in VSME, covering energy, emissions, waste, workforce and governance.
• Comprehensive Module — A more detailed version of VSME, including climate targets, risks and strategy. Often requested by banks or large clients.
• European Sustainability Reporting Standards (ESRS) — Detailed reporting rules for large companies under CSRD. VSME is the proportionate SME version.
• SME (Small and Medium-sized Enterprise) — A company with fewer than 250 employees, turnover under €50m, or balance sheet total under €25m.
• Scope 1 and Scope 2 emissions — Scope 1 are direct emissions from fuel or company vehicles; Scope 2 are indirect emissions from purchased energy such as electricity or heating.
• Turnover — Total income from normal business activities in one year.