CSRD and ESG reporting – does your company have to comply?

The CSRD directive introduces size thresholds above which a company must report on ESG. Cascading of obligations to suppliers, the implementation timetable and practical first steps.

Profais Team

Accounting firm in Łódź · KIBR member

2 April 2026 · updated 22 October 2026 · 6 min read

CSRD (the Corporate Sustainability Reporting Directive) is EU Directive 2022/2464, which changes the way companies report on sustainability. It replaces the earlier NFRD and significantly widens the scope of the obligations – both in the range of data and in the number of companies covered by reporting. Poland implemented CSRD by an amendment to the Accounting Act in 2024 (Journal of Laws 2024, item 1863).

Although formally CSRD applies only to large companies, in practice it cascades obligations down whole supply chains. Small B2B companies serving corporations must also prepare ESG data (on the environment, society and corporate governance) to keep a customer. This article shows who is subject to the obligation, what the reporting process looks like and how to prepare.

Size thresholds – who is covered

The EU postponed the CSRD timetable with Directive (EU) 2025/794 (the “stop-the-clock” directive): large undertakings not previously covered by reporting – by two years; listed SMEs – also by two years. The scope of the obligation is still being changed by the “Omnibus” package. Check the current position before you start preparing.

A large undertaking is a company that meets 2 of 3 criteria (for 2 consecutive years):

More than 250 employees (annual average headcount)
More than EUR 50 million of net revenue from sales
More than EUR 25 million of balance sheet total

What has to be reported – ESRS

Reporting follows the European Sustainability Reporting Standards (ESRS) – a set of standards developed by EFRAG and adopted by the European Commission in 2023. ESRS covers, among other things:

ESRS 2 (general requirements)
ESRS E1 (climate change – Scope 1, 2 and 3 emissions)
ESRS E2–E5 (pollution, water, biodiversity, circular economy)
ESRS S1–S4 (own workforce, workers in the value chain, communities, consumers)
ESRS G1 (corporate governance, business ethics)

The company first carries out a double materiality assessment – it analyses which topics are material from the perspective of the company’s impact on the environment/society AND the impact of ESG risks on the company. It reports only the material topics.

Cascading – a real problem for SMEs

Formally CSRD does not cover small companies, but ESRS E1 requires a large company to report Scope 3 emissions – that is, emissions in the value chain (suppliers and customers). To do this, the large company has to collect emissions data from its suppliers.

In practice, this means that small B2B companies serving large customers receive:

ESG questionnaires, starting at 2–3 times a year, different for each customer
A requirement for certificates (for example, the ISO 14001 environmental certificate) as a condition of keeping the contract
A requirement for their own reports – in some industries (automotive, FMCG)

VSME – a simplified option for SMEs

Since 2025 there has been the VSME standard (Voluntary Standard for SMEs), published by EFRAG. It is a simplified version of ESRS intended for small and medium-sized companies that want to report voluntarily. VSME has two modules:

Basic Module – mandatory when reporting, about 20 basic indicators (emissions, workforce, employees)
Comprehensive Module – voluntary, for companies serving customers who require deeper data

For a B2B company with 30 employees serving 5 corporations, VSME is often the cheapest route. One VSME report a year fits as an answer to the questionnaires of most customers.

Preparation timetable

The standard preparation process is:

Materiality analysis (double materiality) – 2–3 months
Collecting baseline data – 3–6 months (especially Scope 3 emissions)
Preparing the report – 2–3 months
External audit – mandatory, at least 1–2 months
Publication – together with the financial statements

In total 12–18 months from start to publication.

Practical first steps

For a company that is facing CSRD or a cascade from a customer for the first time:

| Step | Time | |------|------| | Materiality map – workshop | 1–2 days | | Calculating Scope 1 and 2 emissions | 2–4 weeks | | Estimating Scope 3 (simplified) | 1–2 months | | Choosing ESG software | 1 month | | First VSME report (for SMEs) | 2–3 months |

Summary

CSRD is not only an obligation – it is a lasting change in the way business reports on its activities. Companies that delay preparation start to lose corporate customers (because they do not supply Scope 3 data) and bank financing (because banks are also covered by CSRD and require ESG from borrowers). At Profais we help clients build an accounting system for ESG and VSME reporting – see our full bookkeeping service. See also the article on CBAM for importers – a related climate obligation.

Sources: ec.europa.eu/sustainability, efrag.org, EU Directive 2022/2464, the Accounting Act (2024 amendment).

FAQ

Frequently asked questions

When must my company start reporting under CSRD?

Large listed companies, previously covered by the NFRD, report from 2025 (for the year 2024). The EU postponed the CSRD timetable with Directive (EU) 2025/794 (the “stop-the-clock” directive): large undertakings not previously covered by reporting – by two years; listed SMEs – also by two years. The scope of the obligation is still being changed by the “Omnibus” package. Check the current position before you start preparing.

What is the 'cascading of ESG obligations'?

It is the practice in which large companies covered by CSRD require ESG data from their suppliers to complete their own reports (for example, Scope 3 emissions are the emissions of suppliers). Informally, this means that even a small B2B company that supplies a corporation must answer ESG questionnaires. Formally it is not covered by CSRD, but commercially it has to report, because otherwise it will lose the client.

What penalties are there for not producing a CSRD report?

Poland implemented CSRD by an amendment to the Accounting Act in 2024 (Journal of Laws 2024, item 1863). Apart from formal sanctions, the lack of a report can cut a company off from bank financing and from key customers.

Can a small company report under CSRD voluntarily?

Yes. Since 2025 there has been the VSME standard (Voluntary Standard for SMEs) developed by EFRAG, a simplified version of CSRD for micro, small and medium-sized companies. VSME has two modules: a basic one (mandatory for every reporting SME) and a supplementary one (voluntary). For B2B companies serving large customers, VSME is a way to give standard answers to ESG questionnaires – one report, once prepared, fits many customers.