CSRD Reporting in the UK: What SMEs Need to Know

Although the United Kingdom is no longer part of the European Union, British small and medium-sized enterprises (SMEs) are increasingly being asked to provide sustainability information in line with European rules. The Corporate Sustainability Reporting Directive (CSRD) applies only within the EU, but its influence reaches beyond.

For UK SMEs that want to keep trading with European clients or securing loans from EU banks, the ability to share CSRD-style data is becoming less of an option and more of a business necessity. Learn more about CSRD deadlines for SMEs.

Why UK SMEs Are Affected

• Supplying EU clients – Large EU companies must comply with CSRD. To do so, they often ask suppliers — including those in the UK — for sustainability data.
• Dealing with EU banks and investors – Access to finance increasingly depends on providing standardised environmental, social, and governance (ESG) information.
• Staying competitive – Being able to demonstrate sustainability credentials can strengthen tenders, contracts, and client relationships.

The VSME Standard: A Practical Option

The Voluntary Sustainability Reporting Standard for SMEs (VSME) was created by the EU to help smaller businesses provide the information that banks and larger clients need. It is not mandatory, but it offers a clear and recognised framework.

It comes in two parts:

• Basic Module – A minimum set of disclosures on energy use, greenhouse gas emissions, waste, workforce data, and governance (e.g. anti-bribery measures).
• Comprehensive Module – A more detailed set of disclosures, including climate targets, human rights policies, and diversity data. This may be requested by banks or major clients.

For UK SMEs, adopting the VSME can be a straightforward way to meet EU expectations without being overwhelmed by the full CSRD rules.

What UK SMEs Might Need to Report

Examples of information often requested:

• Energy and emissions – Electricity use from bills, fuel consumption, calculated CO₂ emissions.
• Waste and recycling – Annual waste generated and percentage recycled.
• Workforce data – Number of employees, health and safety incidents, gender pay gap (if applicable).
• Policies and practices – Anti-corruption measures, sustainability initiatives, training schemes.

Most of these datapoints already exist in records such as utility bills, payroll, and HR reports. Structuring them in line with VSME simply makes the data more usable for EU stakeholders.

How to Get Started

1. Ask your clients – Clarify whether they expect VSME-style reporting.
2. Begin with the Basic Module – Provides a manageable entry point.
3. Use what you already track – Build from existing invoices, bills, and staff data.
4. Plan for annual updates – Banks and clients usually expect yearly figures.
5. Show progress – Even small improvements, such as switching to renewable energy, are worth reporting.

Bottom Line

CSRD reporting is not a legal requirement for UK SMEs, but it is fast becoming a commercial reality. By using the VSME as a guide, British businesses can respond to client and bank requests, protect their EU market access, and demonstrate a clear commitment to sustainability.

Frequently Asked Questions (FAQ)

Do UK SMEs need to comply with CSRD? No. The CSRD is an EU law and does not apply directly in the UK. However, many UK SMEs are asked to provide CSRD-style data by their EU clients or banks.

What if I only sell in the UK? If your business has no EU customers, lenders, or investors, you are unlikely to be asked for CSRD data. But having sustainability information ready can still strengthen your brand and prepare you for future opportunities.

What is the easiest way for a UK SME to start? Begin with the VSME Basic Module. It focuses on simple datapoints such as energy use, workforce size, and waste, which most SMEs already track in some form.

Will my EU clients accept VSME reports? In many cases, yes. The VSME was designed to give SMEs a proportionate way to provide the information larger companies need for their own CSRD compliance.

Is this going to be expensive? Not necessarily. Most of the required information can be taken from existing records such as utility bills and payroll data. Some SMEs choose to use consultants or software tools, but many start with simple spreadsheets.

Key Terms

• Corporate Sustainability Reporting Directive (CSRD) — An EU law requiring large companies to report on environmental and social impacts. UK firms are not directly covered but may still be asked for CSRD-style data.
• Voluntary Sustainability Reporting Standard for SMEs (VSME) — A simplified EU framework that helps SMEs report sustainability information in a proportionate way.
• Basic Module — The minimum VSME reporting set, covering energy, emissions, waste, workforce, and governance.
• Comprehensive Module — An extended VSME reporting set, sometimes requested by banks or large customers.
• European Sustainability Reporting Standards (ESRS) — The detailed reporting rules under CSRD, mandatory for large EU companies.
• SME (Small and Medium-sized Enterprise) — A business with fewer than 250 employees, turnover under €50 million, or balance sheet total under €25 million.