CSRD and sustainability reporting: what SMEs and mid-caps need to know
Key points
- •The CSRD replaces the NFRD with stronger requirements
- •Listed SMEs: obligation postponed to 2029 (possible exemption via Omnibus I)
- •Unlisted SMEs indirectly affected through the value chain
- •Mandatory double materiality assessment
- •Verification by the statutory auditor required
What is the CSRD?
The Corporate Sustainability Reporting Directive (CSRD), voted by the European Parliament on November 10, 2022 and formally adopted on December 14, 2022 (Directive 2022/2464), replaces the Non-Financial Reporting Directive (NFRD). It requires companies to publish detailed information on their environmental, social and governance (ESG) impact in accordance with harmonised European standards: the ESRS (European Sustainability Reporting Standards).
The aim is to standardise sustainability information and make it more reliable, so that investors, partners and stakeholders can assess companies' sustainability risks and performance.
Implementation timeline: who is concerned and when?
Entry into force is gradual and has been subject to significant postponements. Since January 1, 2024, large companies already subject to the NFRD (listed companies with more than 500 employees) have been publishing their first CSRD report on the 2024 financial year. The Stop-the-Clock directive (EU 2025/794), published in April 2025, postponed application to the other large companies (wave 2) by two years: they will have to publish their report on the 2027 financial year (instead of 2025 as initially planned). The Omnibus I regulation, currently being adopted, also plans to raise the threshold to 1,000 employees.
Listed SMEs on a regulated market, initially concerned from 2026, also benefit from the postponement: their obligation has been pushed back to 2029 (2028 financial year), and the Omnibus I regulation envisages exempting them entirely. Unlisted SMEs are not directly subject to the directive, but remain indirectly affected by information requests from their principals and banking partners.
The ESRS standards: what must be published?
The ESRS standards cover ten topics divided into three pillars. The environmental pillar includes climate change, pollution, water resources, biodiversity and the circular economy. The social pillar covers working conditions, equal treatment, human rights and affected communities. The governance pillar deals with business conduct, including corruption, whistleblower protection and tax practices.
Each company must carry out a double materiality assessment to identify the relevant topics: what impacts does the company have on its environment (impact materiality) and what ESG risks weigh on the company (financial materiality).
Penalties for non-compliance
Failure to comply with CSRD reporting obligations exposes the company and its executives to penalties. In France, the statutory auditor is required to verify the compliance of the sustainability report. Failure to publish, or the publication of incomplete information, can result in an injunction from the commercial court, fines and the personal liability of executives.
Beyond legal penalties, non-compliance with the CSRD carries a significant reputational risk and can jeopardise access to bank financing and public procurement, both increasingly conditional on ESG transparency.
How to prepare: the key steps
Preparing for the CSRD revolves around four steps. First, carry out an ESG maturity assessment to measure the gap between current practices and the ESRS requirements. Then, conduct the double materiality assessment, involving internal and external stakeholders.
The third step is to structure data collection by putting in place the indicators and reporting processes. Finally, draft the sustainability report in compliance with the ESRS standards and submit it to the statutory auditor for verification.
Our Corporate law team assists executives of SMEs and mid-caps in Lyon and the Auvergne-Rhône-Alpes region with CSRD compliance, in coordination with their accountants and statutory auditors.
Frequently asked questions
Is my unlisted SME subject to the CSRD?
Unlisted SMEs are not directly subject to the CSRD. However, they are indirectly affected by information requests from their large corporate clients, banks and principals, who are themselves subject to the directive. A simplified voluntary standard (VSME) is being developed to support them.
How much does CSRD compliance cost?
The cost varies according to the size of the company and its ESG maturity. For a mid-cap, the budget can range from EUR 50,000 to 200,000 in the first year (assessment, data collection, drafting of the report), then decrease in subsequent years once the processes are in place.
What is the difference between the CSRD and the DPEF?
The Déclaration de Performance Extra-Financière (DPEF, the French non-financial performance statement) was the French obligation stemming from the NFRD. The CSRD replaces it with more detailed requirements, harmonised standards (ESRS) and mandatory verification by an independent third party.
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