CSRD vs GRI Reporting: What’s the Difference for SMEs?
As sustainability reporting becomes the norm across Europe, small and growing businesses (SMEs) face a growing question: Should we follow CSRD or GRI?
Both frameworks are designed to improve transparency and accountability, but they serve different purposes, are managed by different bodies, and use different principles.
This guide explains how the EU Corporate Sustainability Reporting Directive (CSRD) compares with the Global Reporting Initiative (GRI) — and how small and growing businesses (SMEs) can decide which approach best fits their size, sector, and clients.
1. The Basics: What Each Framework Is
| Aspect | CSRD / ESRS | GRI Standards |
|---|---|---|
| Full name | Corporate Sustainability Reporting Directive (EU 2022/2464) using European Sustainability Reporting Standards (ESRS) | Global Reporting Initiative (GRI) Sustainability Reporting Standards |
| Developed by | European Commission and EFRAG (EU law) | Independent global non-profit (GRI Secretariat, Amsterdam) |
| Applies to | EU-based companies above certain thresholds; large listed SMEs (mandatory); non-listed SMEs voluntarily via VSME | Any organisation worldwide, any size, on a voluntary basis |
| Purpose | Legal compliance and standardised disclosures for EU capital markets | Voluntary transparency and communication of sustainability performance |
| Focus areas | Environmental, social, and governance (ESG) under the double materiality principle | Broad sustainability impacts on the economy, environment, and people (impact materiality) |
| Output | Mandatory, standardised sustainability report (under CSRD or VSME for SMEs) | Voluntary sustainability or ESG report following GRI topics |
| Legal status | Binding EU law (for in-scope entities) | Non-binding, global best practice standard |
| Assurance | Limited assurance required (phased in by 2028) | Optional third-party verification |
2. Key Conceptual Difference: Materiality
The core difference between CSRD/ESRS and GRI lies in how they define what’s “important enough to report”.
| Concept | CSRD / ESRS | GRI |
|---|---|---|
| Materiality type | Double materiality – requires disclosure of both: • Impact materiality (how the company affects people and planet) and • Financial materiality (how sustainability issues affect the company’s performance and value) | Impact materiality only – focuses on the organisation’s impacts on the economy, environment, and society |
| Implication for SMEs | Must link sustainability topics to business risks and financial implications | Focus on social and environmental responsibility, not financial risk |
For small and growing businesses (SMEs), this means:
- GRI reports are simpler when you just want to describe impacts and commitments.
- CSRD/VSME reports add the financial and governance context needed by banks, investors, and corporate clients.
3. Reporting Structure and Content
Under CSRD / ESRS
Companies must report according to European Sustainability Reporting Standards (ESRS). Non-listed SMEs can apply the VSME Standard, which simplifies ESRS into two modules:
- Basic Module (B1–B11): Core data like energy, GHG emissions, workforce, and governance.
- Comprehensive Module (C1–C9): Additional disclosures on strategy, targets, value chain, and risks.
Example: “Our total Scope 1 & 2 emissions in 2024 were 14 tCO₂e, with a 10% reduction target for 2026.”
Under GRI
Organisations choose relevant GRI Standards from three series:
- Universal Standards (GRI 1–3) – foundations and general disclosures.
- Topic Standards (GRI 200–400) – specific topics like energy (302), water (303), emissions (305), diversity (405).
Example: “Our total GHG emissions were 14 tCO₂e, primarily from purchased electricity (GRI 305-1, 305-2).”
Key difference: CSRD dictates how to report and ensures comparability across the EU. GRI allows flexibility and depth but leaves structure to the organisation.
4. Who Needs Which (and When)
| Situation | Recommended Framework | Why |
|---|---|---|
| You’re a large or listed EU company | CSRD / ESRS | It’s mandatory under EU law |
| You’re a non-listed SME working with CSRD-reporting clients | VSME (CSRD-aligned) | Simplifies CSRD data sharing |
| You’re a micro business seeking to show responsibility | GRI (selected topics) | Low-cost, flexible and globally recognised |
| You’re an SME with international clients | GRI + VSME | GRI recognised globally; VSME aligns with EU expectations |
| You’re an SME applying for EU or bank finance | VSME or CSRD alignment | Banks prefer data compatible with ESRS formats |
In short:
- CSRD/VSME is the language of EU compliance and finance.
- GRI is the language of global sustainability communication.
5. Data Requirements Compared
| Area | CSRD / VSME | GRI |
|---|---|---|
| Energy & GHG | Mandatory disclosure of total energy use, Scope 1 & 2 emissions, and GHG intensity (VSME B3) | GRI 302 (energy) and 305 (emissions) – flexible by boundary |
| Water & Waste | VSME B6 & B7 require water use, waste by type, and recycling % | GRI 303 (water), 306 (waste) – broader but voluntary |
| Workforce & Diversity | VSME B8–B10 require staff composition, training hours, and gender pay ratios | GRI 401–406 cover similar HR topics |
| Governance | VSME B11 requires anti-corruption and business conduct disclosures | GRI 205 (anti-corruption) – similar but less prescriptive |
| Targets & Strategy | Optional in VSME Comprehensive (C1–C3) | GRI recommends qualitative discussion of goals |
| Financial linkages | Required under ESRS (double materiality) | Not required – focus is on impact only |
6. How They Work Together
Many companies — especially small and growing businesses (SMEs) supplying large corporates — use both:
- GRI for storytelling and global comparability, and
- VSME/CSRD for compliance and data-sharing with EU clients or financiers.
Example: Combined Approach
| Use case | Example |
|---|---|
| Public website | GRI-aligned sustainability narrative |
| Client ESG questionnaire | VSME Basic Module data (energy, waste, workforce) |
| Internal KPIs | Mix of GRI 305 (emissions) and VSME B3 metrics |
Tip: If you already report using GRI, you’re halfway to CSRD alignment — just ensure you add financial and governance context.
7. Strengths and Weaknesses for SMEs
| Aspect | CSRD / VSME | GRI |
|---|---|---|
| Strengths | Aligns with EU policy and finance; standardised metrics; recognised by CSRD clients | Global recognition; flexible; easy to start |
| Weaknesses | More prescriptive; may require additional data | Less consistent; doesn’t guarantee CSRD compliance |
| Cost & effort | Moderate (2–6 weeks for VSME Basic) | Low to moderate (depending on depth) |
| Best use | Client data requests, ESG-linked loans | CSR communications, international tenders |
8. Choosing the Right Approach
- Start with GRI if your firm wants to publish a light sustainability report or improve transparency for international clients.
- Move to VSME once you start receiving ESG questionnaires from EU-based clients or banks.
- Align both if you expect to grow or operate internationally — using GRI topics mapped to VSME disclosures.
Recommended path for small and growing businesses (SMEs):
GRI → VSME Basic → VSME Comprehensive (if requested by clients)
9. Example: Mapping GRI to VSME
| ESG Topic | GRI Standard | VSME Equivalent |
|---|---|---|
| Energy use | GRI 302 | B3 Energy and GHG |
| Emissions | GRI 305 | B3 Energy and GHG |
| Waste | GRI 306 | B7 Resource use and waste |
| Water | GRI 303 | B6 Water |
| Employment | GRI 401 | B8 Workforce characteristics |
| Training | GRI 404 | B10 Remuneration and training |
| Anti-corruption | GRI 205 | B11 Business conduct |
| Diversity | GRI 405 | B8 Workforce diversity |
This mapping shows that VSME aligns closely with GRI but adds structure and comparability for EU reporting.
10. Key Takeaways
- CSRD/ESRS (with VSME) – EU’s mandatory and structured framework focusing on double materiality.
- GRI – Global voluntary framework focusing on impact materiality.
- For small and growing businesses (SMEs), VSME Basic Module is the most practical entry point; GRI can complement it for communication or non-EU audiences.
- You don’t have to choose one forever — many SMEs use both in combination.
Key Terms
- CSRD – Corporate Sustainability Reporting Directive (EU 2022/2464)
- ESRS – European Sustainability Reporting Standards (developed by EFRAG)
- VSME – Voluntary Sustainability Reporting Standard for SMEs (EFRAG, 2024)
- GRI – Global Reporting Initiative, a global standard for sustainability reporting
- Materiality – Concept determining which sustainability topics are relevant to disclose
- Double Materiality – Under CSRD, covers both business impact and financial risk
- Scope 1–3 emissions – Direct, indirect, and value-chain greenhouse gas emissions