| Situation | What is supported | Planning use |
|---|---|---|
| Company reporting under the EU’s CSRD | Only material topics must be reported, based on a double materiality analysis | Complete the materiality analysis before collecting data, so effort goes only to topics that qualify |
| Company already following EU rules that also wants an international framework | GRI, SASB, TCFD or ISSB are used in addition to ESRS | Map one dataset to ESRS and the voluntary framework instead of building parallel reports |
| US corporation weighing SASB | SASB guidelines are not mandatory but are increasingly adopted by US corporations | Treat SASB as a voluntary, investor-driven choice and check legal duties separately |
| Small business | The VSME standard is voluntary and allows simplified, proportional reporting | Use VSME as a structured starting point if buyers, lenders or your own goals call for reporting |
The statements in this table draw on LawCode’s overview of ESG reporting in the EU and Plana’s guide to US ESG regulations.
Is ESG reporting mandatory? Sometimes. It depends on jurisdiction: companies within the EU’s CSRD must report, while frameworks such as GRI, TCFD, SASB and ISSB are used voluntarily alongside the rules, and small businesses can use the simplified VSME standard.
Smaller firms deciding where to start can read our guide on how to make a small business more sustainable before committing to a reporting programme.
What the answer means for your company
ESG reporting is mandatory only where a specific law places a duty on your company. It is not a universal obligation, and it is not a single global rulebook. The practical consequence is that the same company can face a legal duty in one market and only a voluntary choice in another. Your first task is to establish which of those two situations applies to each place you operate.
Three outcomes follow from that starting point. A company inside a mandatory regime needs a compliant report and a process that can repeat. A company outside any mandatory regime needs to decide whether voluntary reporting earns its cost. A company in between, such as a supplier whose customers are covered by a regime, needs to decide how much data to prepare before it is asked.
Companies inside the EU regime
The EU’s Corporate Sustainability Reporting Directive (CSRD) is the clearest mandatory case. Reports under it are built on a materiality analysis that follows the principle of double materiality, and only the topics that prove material must be reported, as LawCode’s analysis of EU ESG reporting explains. The implication is that compliance does not mean reporting on every environmental, social and governance topic. It means documenting why each topic is or is not material, then reporting fully on those that are.
Because the materiality analysis decides the content of the report, it is the step to do first and to document well. Data collection started before that analysis often covers topics that later fall away, and it can miss topics that turn out to matter.
Companies in the United States
In the United States, the supported picture on frameworks is clearer than a blanket answer. SASB guidelines are not mandatory, although Plana’s overview of US ESG regulations notes they are increasingly recognised and adopted by US corporations. A US company that uses SASB is therefore making a choice, usually in response to investor expectations, rather than meeting a legal minimum under that framework.
That distinction matters for planning. Using a voluntary framework does not settle whether a legal disclosure duty applies to your company, and the absence of a mandatory framework does not rule out other legal duties. Confirm current legal requirements with counsel and with the relevant regulator’s published rules, because obligations in this area change.
Companies elsewhere
Other jurisdictions have their own company, securities and sustainability laws, and many differ in who they cover and what they require. A company that operates across borders should check each market separately and avoid assuming that compliance in one carries over to another. A company that reports under EU rules can still need to look at whether duties arise in the other places where it trades.
What a small business should do
A small business is not automatically excluded from ESG expectations, but it has more room to choose how much to do. The VSME standard was developed specifically so that small and medium-sized enterprises can report in a simplified and proportional way, and its use is voluntary, according to LawCode. That makes it the most direct answer to the question of what to do if you are a small business.
Whether to adopt it is a judgement about benefits and effort. These situations favour reporting voluntarily:
- A customer or lender asks for data. A recognised simplified standard gives you a consistent format to answer with, rather than a different response for each request.
- You want to build the habit gradually. A proportional standard lets you start with the information you can already gather and extend it as your capacity grows.
- You plan to publicise sustainability results. Structured, documented figures give you something solid to stand behind, which pairs well with the claims discussed in What Is Green Marketing? The Practical Guide To Eco‑Friendly Brand Growth In 2026 – Greencrowding.
Waiting is reasonable when no regulator, customer or lender is asking and your resources are stretched. In that case, keep basic records of the environmental and workforce information you already collect, so a later switch to a standard such as VSME is easier.
Choosing among voluntary frameworks
Voluntary frameworks matter even where a law applies, because they are used in addition to the mandatory standards. According to LawCode, internationally recognised frameworks such as GRI, SASB, TCFD and ISSB are used alongside ESRS. A framework is therefore usually a complement to legal reporting, not a replacement for it.
The choice depends on who reads the report and what they need:
- GRI suits companies whose main audience is a broad group of stakeholders interested in environmental and social impacts.
- SASB suits companies reporting to investors who want sector-specific information linked to financial performance. In the US it is voluntary, as covered above.
- TCFD suits companies that need a structure for climate-related governance, strategy, risk management and metrics.
- ISSB suits companies that want investor-focused disclosures built on an international baseline, particularly where they operate in several markets.
These descriptions reflect each framework’s general purpose. Check each framework’s current guidance before committing, since frameworks are revised and consolidated over time. Most companies do better by choosing a primary framework and mapping to the others than by trying to satisfy all of them in full.
How double materiality shapes the report
Double materiality is the mechanism that determines the content of a CSRD report, and understanding it helps you plan the work. The materiality analysis sets the basis for the report, and only topics that come out as material must be reported, as LawCode describes. The analysis is therefore a gate: topics that pass it are reported fully, and topics that do not pass it are left out.
Two practical consequences follow. First, the analysis needs a record of how each conclusion was reached, because a decision not to report a topic must be defensible as well as a decision to report it. Second, the result should be revisited as the business changes, since a topic that was not material when the analysis was first done may become material later.
For companies that are not covered by the directive, the same discipline still pays off. Choosing the topics that matter to your business, instead of trying to disclose everything, keeps a voluntary report focused and affordable. Product-level decisions such as those in Sustainable Cosmetic Packaging: Practical Strategies To Cut Waste, Boost Brand Value, And Win Customers In 2026 – Greencrowding are the kind of choices whose results may later need to be captured in a consistent dataset.
Preparing a reporting process
A reporting process works best when it is built as a standing capability rather than a one-off project, because the legal position and the frameworks both move. These steps suit most companies, whether the duty is mandatory or voluntary:
- Establish which rules apply. List each market where you are incorporated, listed or operating, and confirm with counsel whether a mandatory regime covers you there.
- Run the materiality analysis. Identify and document the topics that matter to your business and stakeholders before you commit to data collection.
- Pick a primary framework. Choose the framework that best fits your readers, then map any others to it instead of maintaining separate datasets.
- Assign ownership. Name a senior sponsor and a data owner for each topic, so that numbers have a person behind them.
- Test on a small scope. Gather data for a single unit or topic first, and fix the definitions and controls before extending the exercise.
Quality of data is the common weak point. Agree definitions for each metric and document the method, so that figures are reproducible from one period to the next. Clear documentation also makes it easier to switch frameworks or to reuse the same data for a new request.
Frequently asked questions
Do companies outside the EU have to follow CSRD?
Whether the directive reaches a company outside the EU depends on the scope set out in the law itself. Review the current scope provisions, or ask counsel, before assuming you are in or out.
Is SASB reporting required in the United States?
No. SASB guidelines are not mandatory, although they are increasingly adopted by US corporations, so using them is a choice rather than a legal requirement.
Can I use GRI or TCFD instead of the EU standards?
Not as a substitute where the EU rules apply. Frameworks such as GRI, SASB, TCFD and ISSB are used in addition to ESRS, so they supplement the mandatory standards rather than replace them.
Do I have to report on every ESG topic?
No. Under CSRD, a materiality analysis based on double materiality decides which topics must be reported, and only the material ones are required.