Is My Company Too Small for CSRD? Size Questions Answered

Introduction

One of the most common questions from business owners of small and growing businesses (SMEs) is simple: “Are we too small for the CSRD?” The good news is that many smaller companies in the EU are not directly required to report — but may still feel its effects through supply chain and financing requirements.

This guide explains who falls under the CSRD, what the size thresholds mean in practice, and how smaller companies can use the VSME (Voluntary Sustainability Reporting Standard) to stay aligned without taking on unnecessary complexity.

If you’re just starting to explore sustainability reporting, it’s also worth reading our guide on 20 common CSRD questions for first-time reporters.

1. Understanding CSRD Size Thresholds

The Corporate Sustainability Reporting Directive (EU 2022/2464) applies to companies that meet at least two of the following criteria:

If your company exceeds two of the “large” thresholds, you are directly in scope of the CSRD. If not, you fall outside the mandatory rules — though your clients or investors may still request sustainability information.

These thresholds are consistent with the Accounting Directive (2013/34/EU) and mirrored in the VSME Standard, which defines who can report voluntarily.

2. Which Companies Are Required to Report

The CSRD currently applies to:

1. Large EU companies meeting two of the three size criteria above.
2. Listed SMEs (on regulated EU markets) — starting from financial year 2026, with an option to delay until 2028.
3. Non-EU companies with a significant EU presence (over €150m turnover in the EU and at least one large or listed subsidiary).

Most small and non-listed SMEs are not legally required to report — but may still need to provide sustainability data to clients or lenders who are.

Check your company’s reporting deadlines →

3. How the VSME Standard Helps Smaller Companies

For SMEs not covered by CSRD, the VSME (Voluntary Sustainability Reporting Standard for SMEs), developed by EFRAG, offers a practical alternative. It allows small businesses to share proportionate, relevant sustainability information without the burden of full ESRS compliance.

The VSME framework:

• Uses two modules: Basic (for all SMEs) and Comprehensive (for those seeking more detail).
• Covers the same topics as CSRD — energy, workforce, governance — but in simplified form.
• Can be used to meet supply chain requests or support access to sustainable finance.

To learn which module fits your company, see our guide on VSME Basic vs Comprehensive Module.

4. What if My Company Isn’t Required — But Clients Ask Anyway?

Many smaller suppliers are now asked for CSRD-style data by larger customers who must report on Scope 3 emissions and value chain impacts. Even if you’re not legally required, being ready to share basic metrics (energy use, employee numbers, waste) can make you a more attractive business partner.

Using the VSME Basic Module helps you respond quickly to these client requests, without needing to prepare a full sustainability report.

5. Practical Examples

• Example 1 – Small IT firm: 35 employees, €7m turnover → Not required to report under CSRD, but can use VSME to respond to client requests.
• Example 2 – Listed retailer: 60 employees, listed on a regulated market → Must report under CSRD by FY2026 (or delay until 2028).
• Example 3 – Large manufacturer: 300 employees, €55m turnover → In scope of CSRD and must report from FY2025.
• Example 4 – Micro craft studio: 8 employees, €500k turnover → Exempt, but may share voluntary sustainability info using VSME templates.

Frequently Asked Questions

Are all SMEs covered by CSRD?

No. Only listed SMEs are directly covered. Non-listed SMEs fall outside the mandatory scope but are encouraged to use the VSME Standard voluntarily.

What if my company grows and crosses the threshold later?

If you exceed the size thresholds for two consecutive years, you’ll become subject to CSRD in the next reporting cycle. It’s wise to start collecting basic data early.

Do non-EU companies need to report?

Yes, if they generate more than €150 million turnover within the EU and have a large or listed EU subsidiary. They must prepare an EU sustainability report.

Should I start reporting voluntarily?

If your clients, investors, or banks ask for sustainability information, then yes — even basic reporting builds credibility. Using VSME templates is a simple way to start small and stay aligned with future CSRD requirements.

Can I report in my local language?

Yes. Reports can be in your local EU language, though some clients may request an English version for group consolidation or investor review.

Key Terms

• CSRD – Corporate Sustainability Reporting Directive (EU 2022/2464) requiring standardised ESG disclosure from large and listed companies.
• VSME – Voluntary sustainability reporting framework for non-listed SMEs (EFRAG, 2024).
• ESRS – European Sustainability Reporting Standards detailing the structure of CSRD reports.
• Scope 3 – Indirect emissions in a company’s value chain (suppliers, transport, waste, etc.).
• Thresholds – Size-based limits that determine whether a company falls under CSRD scope.

Conclusion

Your company may be too small for mandatory CSRD reporting, but not too small to benefit from structured sustainability practices. By using the VSME Standard, you can stay ahead of client expectations, simplify future compliance, and turn sustainability data into a business advantage.

If you’re unsure where to start, explore our 20 most common CSRD questions — a practical companion for any first-time reporter.

Not sure if CSRD applies to your company? Use our readiness assessment to find out:

This tool will help you determine whether your company is in scope and what steps you need to take.