Does the CSRD Apply to SMEs? Out of Scope, Value-Chain Requests and the Voluntary Route

The CSRD is Directive (EU) 2022/2464 of 14 December 2022, and Directive (EU) 2026/470 of 24 February 2026, in force since 18 March 2026, replaced its size test. Both are directives: they bind the Member States, and a company follows the national law of its Member State. The regime as a whole is set out in the Corporate Sustainability Reporting Directive (CSRD) explained.

Two things remain for an SME: requests from reporting customers, which a cap limits, and the voluntary standard (VS, formerly VSME), a delegated regulation that applies directly.

The table shows where each type of undertaking stands as of 29 October 2026.

Why SMEs Have No Reporting Duty

Under Article 19a(1) of Directive 2013/34/EU as replaced by Article 2(4)(a) of Directive (EU) 2026/470, an undertaking reports only if, on its balance sheet date, it exceeds both a net turnover of EUR 450 million and an average of 1,000 employees during the financial year. The text of Directive (EU) 2026/470 uses "exceed", which means more than: exactly 1,000 employees or exactly EUR 450 million is not enough. The test decides financial years starting on or after 1 January 2027, with the first reports in 2028 (Article 5(2), first subparagraph, point (b) of Directive (EU) 2022/2464 as amended), and issuers face the same two values (Article 5(2), third subparagraph, as amended by Article 3(1)(b) of Directive (EU) 2026/470).

Why No SME Can Pass the Size Test

An SME by definition exceeds at most one of the three size limits of Article 3 of Directive 2013/34/EU, so either its net turnover is not above EUR 50 million or its average employees are not above 250. The CSRD asks for more than EUR 450 million and more than 1,000 employees together, so a medium-sized undertaking cannot reach the first value, and the size test in the CSRD scope test never selects an SME on its own figures.

A calculated illustration: an undertaking with 1,200 average employees, EUR 40 million net turnover and a EUR 20 million balance sheet total exceeds only the employee limit of the medium class. It is medium-sized, and it is outside the CSRD because its net turnover is not above EUR 450 million.

When a Small Parent Reports for Its Group

A small or medium-sized parent undertaking reports for its group when the group exceeds EUR 450 million net turnover and 1,000 employees on a consolidated basis, because Article 29a(1) as replaced by Article 2(5)(a) of Directive (EU) 2026/470 ignores the parent's own size.

Commission Notice C/2024/6792 of 13 November 2024, FAQ 4, already read non-listed SMEs as outside individual scope, with the exception of the parent of a group. The notice predates Directive (EU) 2026/470, so only that logic carries over, and the group test now uses the new values. The mechanics are in consolidated reporting by a small parent undertaking.

How the Accounting Directive Defines Micro, Small and Medium Undertakings

In EU accounting law an SME is a micro, small or medium-sized undertaking under Article 3(1) to (3) of Directive 2013/34/EU, one that does not exceed two of three limits on balance sheet total, net turnover and average employees, as raised by Delegated Directive (EU) 2023/2775 for financial years beginning on or after 1 January 2024. SME stands for small and medium-sized enterprises, and the micro class sits below the small class. The table lists the three classes, taken from Delegated Directive (EU) 2023/2775.

Not exceeding two of the three limits; Directive 2013/34/EU Article 3(1) to (3) as amended by Delegated Directive (EU) 2023/2775, financial years beginning on or after 1 January 2024. These are size classes, not the CSRD test.

Article 3(10) of Directive 2013/34/EU adds that where an undertaking "exceeds or ceases to exceed the limits of two of the three criteria set out in paragraphs 1 to 7, that fact shall affect the application of the derogations provided for in this Directive only if it occurs in two consecutive financial years". Commission Recommendation 2003/361/EC of 6 May 2003 (OJ L 124, 20.5.2003, p. 36) is a separate definition, which sets SMEs at fewer than 250 persons and an annual turnover not exceeding EUR 50 million and/or an annual balance sheet total not exceeding EUR 43 million.

Listed SMEs: From Wave 3 to Removal

Listed SMEs no longer fall under the CSRD: Directive (EU) 2026/470 deleted Article 19a(6) and (7) of Directive 2013/34/EU (Article 2(4)(c)) and Article 5(2)(c) of the CSRD (Article 3(1)(a)(iii)), and recitals 15 and 16 exclude SMEs listed on EU regulated markets.

Before Directive (EU) 2026/470, where transposed, the CSRD covered SMEs except micro undertakings that were public-interest entities, from financial years starting on or after 1 January 2026. They could omit reporting for financial years starting before 1 January 2028 by stating briefly why, and the first financial year moved to those starting on or after 1 January 2028. Wave 3 also covered small and non-complex institutions and captive insurers, which the same deletion removed.

A listed company reports only if it exceeds both values like any issuer, and no SME can do that. The removal is the subject of what Omnibus I removed for listed SMEs.

The Listed-SME Standard That Was Never Adopted

No sustainability reporting standard for listed SMEs (LSME) was ever adopted: Directive (EU) 2026/470 deleted Article 29c, the empowerment for it (Article 2(7)), and EFRAG's LSME project is concluded. The EFRAG project page records the end. The original Article 29b(4) tied value-chain requests to that standard, and Article 2(6)(c) with recital 21 of the Omnibus directive replaced it with a cap tied to the voluntary standards. No ESRS set for SMEs exists, and the VS is the only standard for undertakings up to 1,000 employees.

Value-Chain Requests and Voluntary Reporting

Being outside the CSRD does not stop requests from customers that report, but Article 19a(3) of Directive 2013/34/EU as amended by Directive (EU) 2026/470 imposes no obligation on any value-chain undertaking to provide sustainability information.

• Reporting customers: a supplier with not more than 1,000 average employees in the preceding financial year may decline information beyond the voluntary standards, and contrary contract clauses are not binding. See the value-chain cap for suppliers with up to 1,000 employees.
• Banks and insurers: requests for other purposes, such as lending, are outside the cap, as covered in the data banks ask borrowers for.
• Voluntary reporting: Article 2 of Delegated Regulation (EU) 2026/1560 lets undertakings not subject to Articles 19a and 29a report under the VS, intended for users with not more than 1,000 employees in the preceding financial year, in a Basic Module and a Comprehensive Module. See the voluntary standard for undertakings up to 1,000 employees.

Recommendation (EU) 2025/1710 of 30 July 2025 no longer produces legal effects since 24 September 2026 (recital 5 of Delegated Regulation (EU) 2026/1560). Its legal status is covered in Delegated Regulation (EU) 2026/1560 on the voluntary standard.

How an SME Answers Sustainability Data Requests

An SME answers customer and bank requests step by step, keeping its employee figure, its module choice and the article behind each step on file.

1. Check the average number of employees in the preceding financial year (Article 19a(3)); a customer may rely on the SME's self-declaration unless it is manifestly incorrect.
2. Check whether the undertaking is the parent of a group above both values (Article 29a(1)).
3. Choose Option A (Basic Module) or Option B (Basic and Comprehensive Module), each module in its entirety; see the Basic Module disclosures B1 to B11.
4. Publish the report in a separate section of the management report or in a separate document (Annex I, paragraph 20 of Delegated Regulation (EU) 2026/1560).
5. Expect a customer that asks for more to state which information exceeds the standard and to inform of the right to decline (Article 19a(3), point (c)).

If your group exceeds both values, the reporting steps are in our CSRD compliance plan.

What Still Depends on National Law

Directive (EU) 2026/470 binds the Member States, which must transpose Articles 1 to 3 by 19 March 2027, so the rules an SME meets in a given country follow that country's law. The delegated regulation of the VS applies directly, without transposition.

This page states no national position as of 29 October 2026. The dated status of each country is in the CSRD transposition tracker for national rules.

SME Questions

These questions recur about SMEs and the CSRD.

Do listed SMEs still have to report under the CSRD?

No: Directive (EU) 2026/470 deleted the listed-SME wave and the opt-out, so a listed company reports only if it exceeds both EUR 450 million net turnover and 1,000 average employees, which an SME cannot.

Do suppliers with up to 1,000 employees have to answer customer questionnaires?

No legal duty arises from the CSRD: Article 19a(3) imposes no obligation on value-chain undertakings, and a supplier with not more than 1,000 average employees in the preceding financial year may decline information beyond the voluntary standards. Contract terms asking for more are not binding.

Does the CSRD apply to micro undertakings?

No: a micro undertaking under Article 3(1) of Directive 2013/34/EU cannot exceed the size test, and even before Directive (EU) 2026/470 listed micro undertakings were excluded.

Does an SME have to use the voluntary standard?

No: the voluntary standard does not impose legal reporting obligations (Annex I of Delegated Regulation (EU) 2026/1560), and an SME may use it to report or to answer requests.