Emissions data from SMEs for CSRD: Navigating Corporate Sustainability Reporting Directive requirements

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Contrary to popular belief, chasing emissions data from every SME in your supply chain isn't just difficult—it's often unnecessary for CSRD compliance.

Many companies are scrambling to collect emissions data from all suppliers, including small and medium-sized enterprises (SMEs), in preparation for the Corporate Sustainability Reporting Directive (CSRD).

While the CSRD requirements are already established, the proposed Omnibus Directive may still have changes on the definition of SMEs themselves.

But, even with these potential changes on the horizon, the fundamental principle remains: focusing on material emissions sources is the most effective approach to sustainability reporting.

In this article, we'll explore what CSRD actually requires regarding SME emissions data, why this information is often immaterial to your overall sustainability report, and how to achieve compliance without overwhelming your supply chain partners.

What the Corporate Sustainability Reporting Directive actually means for SMEs 

The Corporate Sustainability Reporting Directive has specific provisions that protect SMEs during the initial implementation period.

According to the official ESRS publication (paragraphs 132-135), SMEs have a 3-year grace period until 2027.

During this time, larger companies are not required to collect comprehensive emissions data from their SME suppliers.

The directive explicitly states:

"For the first 3 years of the undertaking's sustainability reporting under the ESRS, in the event that not all the necessary information regarding its upstream and downstream value chain is available, the undertaking shall explain the efforts made to obtain the necessary information about its upstream and downstream value chain, the reasons why not all of the necessary information could be obtained, and its plans to obtain the necessary information in the future."

This means that until 2027, companies can remain compliant by:

• Documenting their attempts to gather information
• Explaining why certain data couldn't be obtained
• Outlining future plans for data collection

The directive further clarifies that during this period, companies "may limit upstream and downstream value chain information to information available in-house, such as data already available to the undertaking and publicly available information."

The upcoming Omnibus Directive could extend these SME protections even further, potentially modifying the 2027 reporting requirement and SME.

The changes recognise the disproportionate burden that emissions reporting places on smaller businesses and their larger partners.

Regardless of how these specific regulatory details evolve, the strategic approach remains the same—focus on where emissions are material rather than spreading resources thinly across all suppliers.

Why most SME emissions are immaterial to your sustainability report 

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Large companies are large because they primarily sell to other large companies.

This means that SMEs typically represent a small fraction of a large company's supply chain emissions.

When conducting a materiality assessment for sustainability reporting, the data often shows a pattern: a small number of large suppliers account for the majority of supply chain emissions.

This follows the well-established 80/20 rule.

In emissions terms, about 80% of your supply chain emissions likely come from about 20% of your suppliers—and these are rarely SMEs.

For sustainability and procurement managers, this means focusing resources on collecting high-quality data from large suppliers will yield better results than chasing thousands of SMEs for information they may not even have the capability to provide.

👉 Check out our complete guide to CSRD.

How to collect emissions data from suppliers when it actually matters 

When SME emissions data is genuinely material to your reporting (which is uncommon but possible in certain industries), here are effective approaches:

1. Prioritise based on spend and sector.

Focus on suppliers from carbon-intensive sectors first, even if they're SMEs. A small manufacturing supplier might have higher emissions than a large software vendor.

2. Use industry averages where appropriate.

When specific data isn't available, utilise sector-based emission factors for initial estimates. These can be refined over time as more primary data becomes available.

3. Leverage technology.

Tools like Ditchcarbon can provide carbon intensity data for specific suppliers or activities without requiring the supplier to conduct their own carbon accounting.

4. Offer support, not demands.

Where SME data is truly important, consider providing resources and tools to help them measure and report emissions rather than simply demanding data they don't have.

CSRD acknowledges the challenges of obtaining value chain information, especially from SMEs.

The directive notes: "Obtaining value chain information could also be challenging in the case of SMEs and other upstream and/or downstream value chain entities that are not in the scope of the sustainability reporting required by Articles 19a and 29a of Directive 2013/34/EU."

Achieving CSRD compliance without overwhelming your supply chain 

Compliance with CSRD doesn't require perfect information from every supplier.

Instead, focus on these key strategies:

1. Document your methodology: Clearly explain how you're prioritising data collection efforts, particularly your focus on material suppliers.

2. Use hybrid approaches: Combine primary data from large suppliers with modelled data for smaller ones, being transparent about your approach.

3. Show improvement over time: CSRD recognises that data quality will improve gradually. Demonstrate year-over-year progress in your coverage and accuracy.

4. Focus on material impact: Rather than spreading resources thinly across all suppliers, concentrate on understanding and addressing your largest emission sources.

5. Stay informed on evolving guidance: The interpretation and implementation of CSRD will continue to develop, particularly regarding SME requirements.

👉 Check out our tips to create value out of procurement and move beyond business priorities.

Understanding these nuances helps you create more effective strategies that drive real climate impact while ensuring regulatory compliance.

By focusing on material emissions sources rather than exhaustive data collection, you can allocate resources to initiatives that actually reduce carbon footprints rather than just measuring them.

The most valuable way is to develop systems that identify which suppliers truly matter from an emissions perspective and focus your data collection and engagement efforts accordingly.

This targeted strategy not only satisfies CSRD requirements but delivers more meaningful sustainability outcomes—saving time, enabling faster development of ESG-focused products, driving climate-conscious decision-making, and facilitating effective carbon budgeting across your organisation.