CSRD simplification for SMEs: act now instead of waiting

The Corporate Sustainability Reporting Directive (CSRD) poses enormous challenges for many companies. Small and medium-sized enterprises (SMEs) in particular are confronted with complex reporting obligations that can tie up considerable resources. Now there is a promising development: The EU Commission is actively working on simplifying reporting obligations.

As part of the so-called omnibus procedure, the EU Commission is aiming to reduce unnecessary bureaucratic hurdles. The focus here is particularly on reducing the burden on smaller companies without diluting the fundamental transparency objectives of the CSRD. A central component of this initiative is the development of a special, simplified reporting standard for SMEs (VSME = Voluntary SME Standard). These tailor-made standards are intended to take into account the special needs and capacities of smaller companies.

The EFRAG (European Financial Reporting Advisory Group), which is responsible for providing technical advice to the EU Commission, has already presented a concrete timetable for the development of these simplified standards:

• The drafts for the simplified standards will be prepared by July 2025.
• The public consultation phase will start in September 2025, during which stakeholders can provide feedback.
• The final proposal will then be submitted to the EU Commission in October 2025.

This roadmap shows that the EU is pursuing the issue with vigor and wants to offer solutions promptly.

Making preparations as an SME

The prospect of simplified requirements may sound tempting - but it should by no means be seen as an invitation to wait and see. There are several important reasons why SMEs should start looking at CSRD now.

According to current information, the new VSME standards are expected to be applicable on a voluntary basis. This means that companies can decide for themselves whether they want to use them. However, in order to make an informed decision, a basic understanding of the CSRD requirements is essential.

Large, reporting companies will also have to request sustainability data from their suppliers in the future in order to fulfill their own reporting obligations. For SMEs that are part of these supply chains, this means The external pressure to provide sustainability information will remain - regardless of their own direct reporting obligations.

In addition, the fundamental structure of the CSRD, in particular the principle of double materiality, is not affected by the simplifications. Companies must continue to record and assess both the impact of their business activities on the environment and society and the impact of sustainability aspects on their business model.

Companies that address the requirements of CSRD at an early stage will be in a position to make more targeted and efficient use of future scope. They will gain a strategic advantage over competitors who only react under time pressure.

Recommendation: What SMEs should do now

In order to be optimally prepared for future developments, we recommend the following steps:

1. First, clarify whether and to what extent your company is affected by the CSRD. Are you directly subject to the reporting obligation (currently or in the future)? Are you indirectly affected as a supplier to reporting companies? What specific requirements are placed on you?
2. Then carry out a thorough inventory of your existing sustainability data. What environmental, social and governance data do you already collect? Where are there significant data gaps with regard to CSRD requirements? How would you rate the quality and reliability of your existing data?
3. Consider how you can use the upcoming VSME standards for your company. What are the benefits of voluntary reporting for your business model? How can you use your sustainability performance as a differentiator? Which stakeholders might be particularly interested in your sustainability data?
4. Prepare your organization for future requirements. Define clear responsibilities for sustainability reporting, establish robust processes for data collection and validation and create awareness and skills throughout the company.
5. Start with manageable pilot projects. First record the most important sustainability aspects for your company, document existing measures and initiatives and gradually develop a more comprehensive reporting system.

The emerging simplification of CSRD for smaller companies is undoubtedly a positive development. However, they do not relieve SMEs of the need to address the issue of sustainability reporting.

If you act now, you can reduce the effort involved in reporting through early preparation, increase the transparency of your own sustainability performance, secure competitive advantages and position yourself as a responsible company, as well as master the pressure from the supply chain with confidence.

Instead of waiting and having to react later under time pressure, it is advisable to take a proactive approach to CSRD and set the course for future-proof sustainability reporting.

About Höppner Management & Consultant

Höppner Management & Consultant supports SMEs in precisely these steps - with sound specialist knowledge, a practical approach and a clear eye for the essentials. We monitor all developments relating to CSRD and the VSME standards for you and are on hand to advise you.

Our team of experts will support you in analyzing your individual impact, developing tailored processes for data collection, identifying essential Sustainability aspects and the integration of sustainability reporting into your corporate strategy.

Contact us for an initial consultation Consultation - Now is the right time to set the course.

Photo: Sebastien Bonneval / Unsplash