CSRD Reporting

The EU Corporate Sustainability Reporting Directive (CSRD) brings sustainability reporting alongside traditional financial reporting as an integral part of companies’ annual reporting. This represents a significant change and sets the direction for the future of corporate reporting across companies of all sizes. It is therefore also important to understand what the CSRD means in practice for small and medium-sized enterprises (SMEs).

Companies within the scope of the CSRD report in accordance with the European Sustainability Reporting Standards (ESRS). The ESRS specify the sustainability information to be reported on environmental, social and governance matters. The standards were revised in 2026 as part of the EU’s regulatory simplification efforts. The revised ESRS apply to financial years beginning on or after 1 January 2027.

Who is subject to CSRD

The scope of the CSRD has been significantly reduced. As a general rule, the reporting obligation applies to companies with more than 1,000 employees and annual net turnover exceeding EUR 450 million. Consequently, the vast majority of Finnish companies and SMEs fall outside the scope of mandatory CSRD reporting.

Although SMEs are generally not subject to mandatory CSRD reporting, sustainability requirements from large companies may still extend through their value chains. Customers, financial institutions and other stakeholders may therefore require sustainability information from SMEs.

The EU’s new voluntary sustainability reporting standard harmonises the sustainability information requested from SMEs. In addition, the value chain cap, applicable to financial years beginning on or after 1 January 2027, limits the amount of information that a company subject to the CSRD may request for its own sustainability reporting purposes from companies in its value chain with no more than 1,000 employees.

How should a small or medium-sized enterprise proceed?

Companies outside the scope of mandatory CSRD reporting should focus on building a business-driven sustainability strategy rather than preparing a CSRD report. SMEs should concentrate on the sustainability topics that are most relevant to their core business and stakeholder expectations. These topics can be identified through a proportionate double materiality analysis and related stakeholder engagement.

A company can assess the current state of its sustainability work and identify development needs with a self-assessment formIt is Käkikuu’s practical tool, based on the EU’s voluntary sustainability reporting standard and on our extensive experience in developing sustainability work in small and medium-sized enterprises.

Read more about the changing reporting requirements and their impact on SME sustainability work on Käkikuu’s blog.

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