5 Reasons Your CSRD Report Might Be Rejected

You’ve spent weeks collecting data, calculating emissions, and crafting your first sustainability report — but a surprise awaits many small and mid-sized businesses (SMEs): CSRD reports can be rejected by auditors or regulators if they don’t meet certain quality or format requirements.

While the CSRD Directive (EU 2022/2464) doesn’t “grade” reports, it does require assurance — an independent check to ensure that your disclosures are accurate, consistent, and compliant with the European Sustainability Reporting Standards (ESRS).

Here are the five most common pitfalls and how to avoid them.

1. Missing or Inconsistent Data

Many first-time reporters underestimate how much detail is needed. Reports often fail assurance because:

• Key data (e.g., energy consumption, workforce metrics) is missing or incomplete
• Units of measurement are inconsistent across sections
• Year-on-year comparability isn’t shown

Fix: Keep a clear data register for every metric. If a figure isn’t available, explain why and how you plan to collect it next year. The ESRS allows estimated data, but never silent gaps.

2. Ignoring Double Materiality

Auditors frequently reject reports that don’t address both financial materiality (what affects your business) and impact materiality (what your business affects). Reporting only one side breaks the CSRD’s core logic.

Fix: Conduct a simple double materiality assessment, even if qualitative. Identify a handful of material topics where your business has the biggest impact — for example, energy use, workforce safety, or supplier ethics. Document your reasoning transparently.

3. Weak Governance Disclosures

SMEs often focus on environmental data and skip governance — yet CSRD requires transparency on how sustainability is managed and overseen. Reports without clear roles, responsibilities, and policies are likely to fail review.

Fix: Include a short section on who’s responsible for sustainability, how decisions are made, and what policies (e.g. anti-corruption, code of conduct) are in place. Even one page of clarity can make your report credible.

4. Non-Aligned or Non-Traceable Data Sources

Auditors need to trace each number back to a reliable source. Data copied from different systems, without evidence, undermines assurance.

Fix: Keep supporting evidence for each key metric — energy bills, payroll data, invoices. Use digital tools to log data sources and timestamps. For SMEs, this can be as simple as a shared folder or sustainability tracker that documents every entry.

5. Missing Assurance Preparation

Even though SMEs may only face limited assurance (a lighter audit), your report still needs to be ready for external verification. Reports are often rejected when:

• They lack internal review or sign-off
• No audit trail exists for data changes
• Disclosure formats don’t match ESRS structure

Fix: Use the official ESRS layout and ensure your final report includes version control, management approval, and consistent data tables. If using the VSME Standard, apply its Basic Module format — it’s already designed to align with ESRS requirements.

Frequently Asked Questions

Do SMEs really need assurance under CSRD?

Initially, only large companies will undergo mandatory assurance. However, SMEs reporting voluntarily or within supply chains will benefit from preparing their data as if assurance were required — it builds trust with banks and corporate clients.

What does “limited assurance” mean?

It’s a lighter, more flexible audit than full financial assurance. Auditors check whether your information is plausible and supported by evidence, not every calculation in detail. This is the standard starting level for CSRD reports.

Can I prepare my report without consultants?

Yes. Many SMEs now use VSME-aligned templates or reporting software to meet assurance requirements affordably. Consultants can help review or validate data, but day-to-day preparation can be done in-house with the right workflow.

How can I make my report “assurance-ready”?

Keep three things in place: (1) consistent data sources, (2) documented materiality logic, and (3) internal sign-off by management. These are the first things auditors will check.

Key Terms

• CSRD: Corporate Sustainability Reporting Directive (EU 2022/2464)
• ESRS: European Sustainability Reporting Standards, mandatory framework for sustainability disclosures
• VSME: Voluntary Sustainability Reporting Standard for SMEs (EFRAG, 2024)
• Double Materiality: CSRD principle requiring both financial and impact perspectives
• Limited Assurance: The initial level of external verification required for sustainability reports

Conclusion: Build for Trust, Not Just Compliance

A “rejected” CSRD report isn’t a failure — it’s a signal that investors and regulators expect consistency, traceability, and integrity. For small and growing businesses, getting these basics right early makes future reporting faster, easier, and more credible.

Think of assurance as quality control, not punishment. When your sustainability data can stand up to an independent check, you’ve already done most of the hard work.