There are many right ways to do this
There is more than one right way or model for sustainability reporting by SMEs. Which ESG impacts you should report and how you report them depend on your company’s business operations and sector. The main thing is to identify your company’s material ESG themes and report on them transparently. To begin with, it’s enough to describe the risks identified and your company’s initial focus areas for managing them. Since many SMEs are already working hard on sustainability themes, it’s worth reporting on them openly.
Assess the material impacts
The Corporate Sustainability Reporting Directive (CSRD*) provides small as well as large companies with useful guidance on what and how to report. Double materiality – assessment of a company’s impacts on the world around it and the external risks and opportunities it encounters in relation to sustainability themes – lies at the heart of the CSRD. Because sustainability themes, such as climate change, are relevant to almost everyone, emissions calculations are fundamentally important to many companies. In addition, emissions reporting is often a requirement for inclusion in large companies’ supply chains.
Analyse network needs
SMEs often form part of an extensive supply or value chain. One way of identifying key sustainability themes is by listening carefully to larger partners which have already set their sustainability goals and reporting needs. Listen to your stakeholders to assess which themes are critically important to them, and about which ones your company will need to report. For example, a customer may need information about emissions or occupational safety in a certain format. Ultimately, each company must assess where its greatest financial risks lie: these are the themes it should publicly report on first. How likely is it that each risk will be realised, or how will it impact monetarily on the business? How acute is the risk – should the company start reporting on it now, or only with a longer-term perspective?
Find accurate data
Thorough and credible reporting must be backed by comparative data used to monitor operations and report externally on sustainability and corporate responsibility work. Sustainability reports by the biggest companies in your sector are good sources of tips on the kinds of data points you can use when reporting on key themes. The EU’s forthcoming Voluntary Sustainability Reporting Standard, VSME, which is consistent with the CSRD, will help you to select content and the main metrics for the report. Other, widely used sustainability frameworks include the Global Compact and Global Reporting Initiative (GRI standard). These are good sources of key themes and suitable metrics.
Be proactive
It’s worth being proactive and proposing a discussion with your partners on sustainability themes and the related data needs. This will signal your readiness to report on sustainability, which may become a requirement for continuing the partnership. Your partners may also be able to provide reporting assistance or tools of a kind unavailable to SMEs. Also keep your eyes open for competence-development training, and participate when you have the opportunity.
The most important thing is to get started
To begin with, SMEs don’t need to report as ambitiously as listed companies. The directive obliges large corporations to report on all themes they regard as key, but SMEs are slightly freer to prioritise and gradually develop their reporting. For example, you can decide to start on one or two development themes this year and add more next year. Even large companies prioritise: they do not start out by demanding an endless list of reported data from their suppliers. In principle, openness and reporting capabilities are positive attributes which sharpen up a business!
*From the 2026 financial year, listed SMEs will also be subject to the CSRD reporting obligation.
