How to prepare for ESRS & CSRD

The European Sustainability Reporting Standards (ESRS) and the Corporate Sustainability Reporting Directive (CSRD) introduce comprehensive reporting requirements for companies, focusing on environmental, social, and governance (ESG) factors.

Starting in 2025, the CSRD mandates that companies report on their sustainability performance, including their entire value chain. This includes detailed disclosures on topics such as emissions, resource consumption, waste management, labor rights, diversity, and governance practices. The CSRD and ESRS represent a paradigm shift by moving beyond individual corporate performance and placing significant emphasis on the entire supply chain's sustainability practices. This approach calls for greater transparency, coordination, and continuous improvement in sustainability efforts.

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ESRS & CSRD: Consequences for SMEs

Supply Chain Transparency

SMEs are required to provide transparency not only for their own operations but also for their suppliers. The CSRD holds companies accountable for the ESG performance of their entire value chain. This includes disclosing CO2 emissions, resource use, and measures to ensure labor rights and human rights are upheld throughout the supply chain, even if SMEs themselves are not directly subject to the reporting obligations.

Data Management

One of the biggest challenges for SMEs is managing the vast amounts of data required for compliance. Gathering accurate, timely, and detailed information on environmental and social impacts, as well as ensuring that the data is reliable and transparent, can be resource-intensive. SMEs will need to invest in new systems for tracking, monitoring, and analysing sustainability metrics across their value chains, which can be complex and costly.

Collaboration + Coordination

As the CSRD requires reporting on the sustainability performance of the entire value chain, SMEs must work closely with their suppliers and larger companies to ensure they meet these obligations. This requires fostering strong relationships, sharing data, and ensuring consistent practices across different parts of the supply chain. Effective collaboration is key, as SMEs must align with larger companies’ reporting practices to avoid potential compliance risks.

Manage the Risks in YourSupply Chains

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