The Impact of the CSRD Directive on Small and Medium-Sized Enterprises

The Corporate Sustainability Reporting Directive (CSRD) represents one of the most significant legislative instruments introduced by the European Union in recent years, as part of the transition toward a more sustainable, transparent, and responsible economy. Its objective is to strengthen corporate disclosure of environmental, social, and governance (ESG) information by companies operating within the EU. Although initially focused on large listed companies, the CSRD предусматриes a gradual extension to small and medium-sized enterprises (SMEs), creating both substantial challenges and important opportunities.

First, it is essential to understand what is changing. The CSRD replaces the previous Non-Financial Reporting Directive (NFRD), expanding its scope and requiring more detailed, comparable, and audited sustainability information. It aims to harmonize reporting with international standards, enabling investors and other stakeholders to assess a company’s sustainability performance with greater accuracy.

Although many SMEs do not currently fall directly within the mandatory scope of the CSRD (Corporate Sustainability Reporting Directive), they have strong reasons to incorporate it into their strategic agenda at an early stage.

• First, as part of broader value chains, SMEs will be indirectly required to provide sustainability data to larger customers or suppliers that are already obligated to disclose ESG information. Early adaptation strengthens their ability to maintain and expand business partnerships.

• Second, systematic monitoring of environmental and social indicators contributes to improved internal organization, cost reduction (for example through energy savings and better resource management), and enhanced corporate reputation.

• Furthermore, compliance with sustainability standards facilitates access to financing, as banks and investors increasingly integrate ESG criteria into their assessments.

• Finally, proactive adoption of CSRD principles functions as a strategic advantage, preparing SMEs for future regulatory developments and positioning them competitively in a market that is rapidly shifting toward more sustainable business models.

Even SMEs that are not directly subject to the CSRD may face indirect compliance pressure from the financial system and banks.

The role of banks is particularly significant. In recent years, financial institutions have systematically incorporated ESG criteria—drawing on CSRD guidance regarding sustainability—into credit risk assessments and financing approval processes. Within the European regulatory framework, and given financial institutions’ own obligations to manage and disclose sustainability risks, banks now request information from businesses regarding their environmental footprint, social practices, and corporate governance structures.

This means that even SMEs outside the Directive’s mandatory scope may experience indirect pressure to comply if they seek access to loans, preferential interest rates, or participation in financing programs. Companies with documented sustainability strategies are considered lower-risk over the long term, which can translate into better financing terms and increased investment attractiveness. Conversely, the absence of such data may hinder financing opportunities in the coming years.

It is true that for small and medium-sized enterprises, implementing CSRD requirements may involve significant changes. Administrative and bureaucratic burdens increase, as companies must collect and analyze data that they were not previously required to track systematically. Many SMEs currently lack the infrastructure, tools, or personnel needed to manage ESG information, which may initially lead to costs related to training, hiring specialized staff, or engaging external consultants.

CSRD, by promoting greater transparency and accountability, can also empower SMEs by offering meaningful opportunities to strengthen their competitiveness.

A balanced approach can be adopted to create a lighter, SME-adapted implementation framework. Despite existing obstacles, the CSRD presents significant opportunities for these businesses. Systematic recording and improvement of sustainability indicators can enhance competitiveness, particularly in international markets where customers and suppliers increasingly prioritize green and socially responsible practices. Moreover, this transparency can improve access to financing, as more investors incorporate ESG criteria into their decision-making.

Another positive development is that the CSRD drives the gradual establishment of standardized reporting frameworks across Europe, reducing the ambiguity created by previous national and international initiatives. As a result, SMEs expanding beyond national borders will face more unified requirements, simplifying multi-market operations.

Of course, successful adaptation to the CSRD requires careful planning and adequate support. This includes training for management and staff, development of measurement and monitoring systems, and an ESG strategy embedded at the core of business operations. Many EU countries have already begun offering guidance, tools, and funding programs to support SMEs in adopting CSRD requirements.

Overall, the CSRD marks a significant shift in Europe’s business landscape. Despite initial challenges, the transition toward greater transparency and accountability in corporate practices can strengthen small and medium-sized enterprises over the long term. The level of difficulty varies depending on company size, sector, and digital maturity, but the direction is clear: sustainability is no longer optional—it is a strategic necessity.