A C-level perspective on Industry 5.0
Balancing today and tomorrow in digital manufacturing
CSRD: What manufacturing SMEs need to know
Let's talk about the Corporate Sustainability Reporting Directive (CSRD). It might sound like a lot of legal jargon, but it’s actually super important for manufacturing SMEs.
CSRD is the EU’s big upgrade to sustainability reporting. It’s replacing the old Non-Financial Reporting Directive (NFRD) and making companies report on Environmental, Social, and Governance (ESG) factors. Starting in 2024, big companies will have to follow these rules, and it’s going to affect SMEs too. Why? Because your larger customers will need CSRD-compliant data from you, and banks will look at ESG criteria when assessing loans. So, even if you’re not directly in scope, you’ll feel the ripple effects.
Josef Szerekes
International Business Development Director
Why SMEs should care
Even if your SME isn’t directly targeted by CSRD, its ripple effects are already making waves. Larger customers need CSRD-compliant data from their suppliers. Banks and financial institutions are integrating ESG criteria into their assessments. Public and private buyers are asking for sustainability disclosures. If you sell to someone who needs to report under CSRD, you're part of their sustainability equation.
What will be expected?
CSRD demands transparency on various fronts:
- Emissions (Scope 1, 2, and 3)
- Environmental risks and transition plans
- Workforce, human rights, and governance practices
- Double materiality: the impact on the environment and how sustainability issues affect your business
Many SMEs struggle not because of bad practices, but due to limited data visibility.
Real-world examples
Consider a Tier-2 automotive supplier asked by an OEM to provide carbon footprints per part. Or a bank requiring ESG performance data before renewing a financing line. These scenarios are not futuristic—they're happening now.
VSME: A practical start for SMEs
Want to get a head start with CSRD demands? In that case the Voluntary Sustainability Management Evaluation (VSME) is a great way for SMEs to get started with sustainability efforts.
What is VSME?
Think of VSME as a self-assessment tool that helps you figure out where your sustainability efforts stand and where you can improve. It’s like a health check-up for your business’s sustainability practices.
Why start with VSME?
Starting with VSME is practical because it’s structured and scalable. It helps you evaluate your sustainability maturity across areas like energy use, materials, emissions, and governance. Plus, it’s a good way to prepare for future standards like ISO 53001, which will offer more structured guidance once it’s published.
Steps to take:
- Implement a VSME: Evaluate your sustainability efforts and identify areas for improvement.
- Build Basic Data Infrastructure: Use existing systems to capture sustainability data like energy per unit, recycled content, and waste per line.
- Pilot on One Product Line: Pick one product and trace its lifecycle emissions and material sources.
- Integrate Sustainability Metrics: Choose key performance indicators (KPIs) aligned with customer or investor priorities.
- Review and Align with CSRD Expectations: Compare your indicators with ESRS templates and identify areas for improvement.
Why it matters
Starting with VSME helps you build a solid foundation for sustainability. It’s a step-by-step approach that matches your business’s pace, making it easier to scale your sustainability efforts without overengineering. By beginning with VSME, you can systematically assess your current sustainability practices, pinpoint areas for improvement, and gradually implement changes. This methodical process not only ensures that your sustainability initiatives are tailored to your business but also prepares you for future regulations and standards, such as ISO 53001.
Ultimately, starting with VSME equips your business with the tools and insights needed to navigate the evolving landscape of sustainability. As the market and regulatory environments continue to shift towards greater accountability and transparency, being proactive with VSME positions your business competitively, allowing you to lead in sustainability and compliance.
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