How CSRD in EU impact Thailand SMEs
How CSRD Can Affect Thai SMEs
The short answer is: many Thai SMEs may not be affected directly, but they can still be affected through their customers and value chains.
Many SMEs in Thailand hear the term Corporate Sustainability Reporting Directive, or CSRD, and assume it only applies to large companies in Europe. That is only partly true.
In legal terms, most Thai SMEs are unlikely to fall directly within the scope of CSRD reporting requirements. However, the more practical issue is the indirect impact. SMEs may receive more sustainability-related requests from large customers, exporters, investors, banks, procurement teams, or business partners, especially if they are part of a value chain connected to the European market.
Following the 2026 EU simplification measures, the scope of CSRD has become more focused on larger companies, such as companies with more than 1,000 employees and annual net turnover above EUR 450 million (Council of the European Union, 2026). This makes it even less likely that most SMEs will be directly required to report under CSRD. But this does not mean SMEs are outside the conversation. Large companies that remain within scope still need to understand sustainability risks and impacts across their value chains.
Put simply: CSRD may not require Thai SMEs to prepare a sustainability report directly, but it can lead their customers to ask them for more ESG data.
From large-company reporting to supplier questions
The purpose of CSRD is to make sustainability disclosure more structured, covering environmental, social, and governance issues, commonly known as ESG (European Commission, n.d.). For large companies, reporting is not limited to what happens inside their own offices or factories. It may also include activities across the value chain, both upstream and downstream.
This approach is consistent with the GRI Standards, which describe the value chain as the full range of activities carried out by an organization and by upstream and downstream entities that help bring products or services to end users. The value chain also includes the supply chain (Global Reporting Initiative [GRI], 2024). In Thailand, the Stock Exchange of Thailand also encourages listed companies to disclose ESG information across their business value chains, not only within their own operations (Stock Exchange of Thailand [SET], n.d.).
As a result, larger companies may start asking suppliers questions such as: Where do your raw materials come from? How much electricity do you use? Do you measure greenhouse gas emissions? Do you have any risk of child labor or forced labor? How do you manage waste? Can you provide evidence to support your answers?
Key impacts on Thai SMEs
First, SMEs may receive more ESG data requests. This is especially relevant for SMEs that supply exporters, listed companies, multinational companies, or businesses with customers in Europe. The first requests may not be highly complex. They may cover basic information such as electricity use, water consumption, waste volume, fuel use, employee numbers, workplace incidents, and labor policies.
Second, ESG information may become part of supplier selection. Procurement teams have traditionally assessed suppliers based on price, quality, and delivery performance. Increasingly, another factor may be added: the ability to provide reliable and review-ready sustainability information. If two suppliers offer similar price and quality, the supplier with better ESG data may have an advantage.
Third, SMEs may need to answer multiple customer questionnaires. For many SMEs, the main burden is not producing a long sustainability report. It is answering repeated questions from different customers, each using a different format. To reduce this burden, the EU has supported the voluntary sustainability reporting standard for SMEs, known as VSME, which is designed to help SMEs respond more easily to sustainability data requests from large companies and financial institutions (European Commission, 2025a; European Commission, 2025b).
Fourth, sustainability information needs evidence, not just statements. It is no longer enough to say, “Our company cares about the environment.” Customers may expect supporting evidence such as electricity bills, water-use records, waste disposal documents, safety training records, or supplier assessment files. The GRI Standards emphasize that sustainability information should be gathered, recorded, compiled, and analyzed in a way that allows its quality to be reviewed (GRI, 2024).
Fifth, SMEs without data may be seen as higher-risk suppliers. This does not necessarily mean the business is doing anything wrong. The issue is that customers may not be able to assess the supplier properly. If a large company needs to report supply chain risks but a supplier cannot provide useful information, the company may prefer to work with suppliers that can respond more clearly.
ESG data Thai SMEs should start collecting
SMEs do not need to begin by preparing a full CSRD-style sustainability report. A more practical starting point is to build a small but structured ESG Data Pack.
| Data category | Examples of information to collect |
|---|---|
| Company profile | Company name, location, business type, products and services |
| Value chain | Key suppliers, raw material sources, main customers, distribution channels |
| Energy | Electricity consumption in kWh, fuel use, renewable energy if available |
| Water | Water consumption, water sources, wastewater, and treatment methods |
| Waste | Waste volume, waste type, disposal method, recycling method |
| Greenhouse gas emissions | Scope 1 and Scope 2 as a practical starting point |
| Labor | Number of employees, employment type, gender, age, training hours |
| Health and safety | Workplace incidents, lost-time injuries, PPE, safety training |
| Human rights | Labor policy, no child labor, no forced labor, grievance channels |
| Governance | Code of conduct, anti-corruption policy, supplier policy |
| Traceability | Lot number, batch number, supplier, production date, shipment record |
These indicators are broadly aligned with the SET sustainability reporting guidance on energy, water, waste, greenhouse gas emissions, labor, customers, communities, and supply chain management (SET, n.d.). SET also highlights sustainable supply chain management topics such as supply chain policies, supplier screening, and supplier codes of conduct, which are areas that SMEs may increasingly be asked about by larger customers (SET, n.d.).
Which SMEs should start first?
Thai SMEs that should pay close attention are those connected to exports or value chains serving European markets. This may include food, processed agriculture, rice, fruit, seafood, textiles, apparel, packaging, industrial components, electronics, automotive parts, and logistics.\n\nFor SMEs that serve only local markets, the impact of CSRD may not be immediate. However, ESG data requests may gradually spread through banks, large Thai companies, investors, procurement standards, and business partners. Starting with basic data now can reduce pressure later.
Conclusion
CSRD should not be seen as a distant European regulation with no relevance to Thai SMEs. In practice, its impact may appear through customer questions, procurement questionnaires, supplier assessments, and new expectations for being a reliable business partner.
The key question is not only: “Does our SME need to report under CSRD?”
The more practical question is: “When our customers ask for sustainability information, do we have data that is clear, reliable, and ready for review?”
For Thai SMEs, the right preparation does not start with a large sustainability report. It starts with building a practical ESG data system that is supported by evidence and connected to sales, procurement, production, and risk management.
SMEs that prepare early can become easier to work with, more transparent, and potentially less risky in the eyes of larger customers.
References
Council of the European Union. (2026, February 24). Council signs off simplification of sustainability reporting and due diligence requirements to boost EU competitiveness. https://www.consilium.europa.eu/en/press/press-releases/2026/02/24/council-signs-off-simplification-of-sustainability-reporting-and-due-diligence-requirements-to-boost-eu-competitiveness/
European Commission. (n.d.). Corporate sustainability reporting. Directorate-General for Financial Stability, Financial Services and Capital Markets Union. https://finance.ec.europa.eu/financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en
European Commission. (2025a, July 30). Commission presents voluntary sustainability reporting standard to ease burden on SMEs. https://finance.ec.europa.eu/publications/commission-presents-voluntary-sustainability-reporting-standard-ease-burden-smes_en
European Commission. (2025b, July 30). Questions and answers on the recommendation on a voluntary sustainability reporting standard for small and medium-sized companies. https://finance.ec.europa.eu/publications/questions-and-answers-recommendation-voluntary-sustainability-reporting-standard-small-and-medium_en
European Financial Reporting Advisory Group. (n.d.). SMEs and sustainability reporting. https://www.efrag.org/en/smes-and-sustainability-reporting
Global Reporting Initiative. (2024). Consolidated set of the GRI standards. GRI.
Stock Exchange of Thailand. (n.d.). Sustainability reporting guide for listed companies. SET.