Materiality assessment for SMEs: obligation, benefits and 5 practical steps
Do SMEs still need a materiality assessment after the Omnibus? Who needs one, why banks and customers ask for it and how to do it in 1–2 days.
- Since the Omnibus, only companies with more than 1,000 employees and more than €450m net turnover are subject to the CSRD from financial year 2027. The vast majority of SMEs therefore do not have to carry out a materiality assessment under the ESRS.
- The questions keep coming anyway: from banks, large customers, insurers and via platforms such as EcoVadis. If you know your material topics, you answer these requests faster and more credibly.
- For the voluntary VS (Voluntary Standard, formerly VSME), in force since 24 September 2026, the double materiality assessment is recommended but not mandatory.
- A pragmatic materiality assessment for SMEs takes five steps and one to two working days, without a large stakeholder survey.
- The revised ESRS make it easier: a top-down approach is allowed, the topic list is only illustrative, and there is an information filter.
Many mid-sized companies started their materiality assessment in 2024 and 2025 because the CSRD was about to apply to them. With the Omnibus, that obligation has fallen away for most of them. The question of which sustainability topics really matter for your company has not gone away, though. It now simply comes from a different direction: from your bank, your key customer, your insurer.
In this article we explain whether an SME needs a materiality assessment, where it pays off in practice and how to carry it out with manageable effort. If you already know the method and are looking for a slimmed-down version, also read our article on the materiality assessment light.
Does an SME have to carry out a materiality assessment?
Short answer: as a rule, no. A mandatory double materiality assessment under the ESRS is tied to the CSRD reporting obligation. The Omnibus Directive has been in force since 18 March 2026. From financial year 2027, only companies that exceed both thresholds are required to report.
| Company | CSRD obligation from FY 2027 | Materiality assessment |
|---|---|---|
| More than 1,000 employees and more than €450m net turnover | Yes | Mandatory under the ESRS (revised ESRS, Delegated Regulation (EU) 2026/1563) |
| Large company below one of the two thresholds | No | Voluntary, e.g. for a report under the VS |
| SME, including listed SMEs | No | Voluntary, recommended in the VS |
| Supplier to a CSRD-obligated company | No | Voluntary; from FY 2027, customers may not request more from partners with up to 1,000 employees than the VS provides for |
The VS (Voluntary Standard) has been in force since 24 September 2026 as Delegated Regulation (EU) 2026/1560 and is open to all companies outside the scope of the CSRD. A double materiality assessment is not required there, but explicitly recommended. Why it still pays off in the VS context is explained in detail in Double materiality in the VSME: strategic instead of mandatory.
Why a materiality assessment still pays off for SMEs
The obligation is gone, the questions remain. For mid-sized companies, there are four typical occasions where a solid materiality assessment saves time and opens doors:
- Bank meetings and financing: Banks have to take ESG risks into account in their loan portfolios and therefore ask about climate and sustainability topics. If you can name your material risks and measures, you go into the meeting better prepared.
- Large customers and the supply chain: CSRD-obligated customers need data from their value chain. Since the Omnibus, these requests are capped at the VS. The materiality assessment shows you which topics you should be able to back up anyway.
- EcoVadis and customer questionnaires: Ratings and supplier questionnaires ask about policies, targets and measures. With clearly prioritised topics, you answer them consistently instead of starting from scratch each time.
- Strategy and risk management: The assessment shows where climate, energy, skilled labour or supply chains become business risks and where opportunities lie. That makes it the foundation for a sustainability strategy.
The key difference from a mandatory assessment: you decide the scope yourself. Nobody audits your methodology, and you do not have to fill in an ESRS data point table. That is your chance to keep the effort deliberately small while still producing a robust result.
Materiality assessment for SMEs in 5 steps
The following approach is tailored to companies with limited resources. It follows the logic of the ESRS but leaves out everything that is only needed for the audit of a mandatory report. Plan one to two working days, spread over two to four weeks. A detailed step-by-step guide with an example can be found in How to create a materiality assessment in 4 steps.
Step 1: Capture the context on one page
Briefly describe your business model, main products, sites, suppliers and customer groups. Also note who is currently asking about sustainability (bank, customer, rating). This sets the frame for all further steps and helps you explain the results later.
Step 2: Pre-select topics top-down
Do not start with a hundred sub-topics. The revised ESRS explicitly allow a top-down approach, and the topic list in AR 16 is now only illustrative. For an SME this means: go through the ten ESRS topics (climate, pollution, water, biodiversity, resources, own workforce, workers in the value chain, affected communities, consumers, business conduct) and drop whatever obviously does not matter for your business. Usually six to ten topics remain.
Step 3: A few targeted stakeholder conversations
You do not need a large online survey. Three to six short conversations are often enough: a key customer, a supplier, two or three employees from different departments, perhaps your bank. Ask openly which sustainability topics they see and expect at your company. Note the answers in bullet points.
Step 4: Score with a simple scale
Rate each topic from two perspectives:
- Impact materiality: How strongly does your company affect the environment and people? The ESRS use scale, scope and irremediability for this, plus likelihood for potential impacts.
- Financial materiality: How strongly does the topic affect your business, for example through costs, revenue or financing? Rated by magnitude and likelihood.
For an SME, a scale from 1 to 5 is enough. More important than fine-grained numbers is that you justify every rating in one sentence. These justifications are exactly what helps you later in the bank meeting or the EcoVadis questionnaire. If you want to go deeper, work with specific impacts, risks and opportunities; we explain how in our article on IROs.
Step 5: Record the result and put it to use
Set a threshold above which a topic counts as material and present the result in a materiality matrix. Document on two to three pages how you proceeded, which topics are material and why. Then define one or two next steps per material topic. That turns the assessment into a working document rather than a folder on the shelf.
Our Excel template guides you through all five steps: context, topic selection, scoring of both perspectives and an automatically generated materiality matrix. Already updated for the revised ESRS.
Typical mistakes in mid-sized companies
- Starting too big: Rating every sub-topic and sub-sub-topic gets you lost in detail. Start top-down and only go deeper where it really matters.
- Inside view only: An assessment without a single conversation with customers or employees remains open to challenge. A few conversations are enough, but none is too few.
- Ratings without reasons: Numbers in a matrix convince nobody if no one remembers how they came about.
- Assessment without consequences: If the material topics do not lead to targets or measures, the effort was wasted.
- Once and never again: Review the assessment briefly every year and update it when your business model, sites or customer requirements change significantly.
Effort and cost: which route suits you?
What a materiality assessment costs depends mainly on how much you do yourself. For SMEs, we see four typical routes:
| Route | For whom | Internal effort | Price |
|---|---|---|---|
| Excel template | You want to get started yourself and have some experience with ESG topics | approx. 1–2 days | €499 |
| Online course (3h) | You want to understand the method first and then do it yourself | course plus implementation | €999 |
| Workshop (4h) | You want to work through the assessment as a team with expert guidance | half a day as a team plus follow-up | €1,499 |
| Materiality assessment service | You lack the time and want a finished result including stakeholder engagement | a few meetings | from €6,999 |
Traditional consulting projects by large firms are usually significantly more expensive and rarely necessary for a voluntary assessment in a mid-sized company. If you are unsure whether Excel or software is the better fit, see our comparison Materiality assessment: Excel vs. software.
Conclusion: voluntary, but not arbitrary
For most SMEs, the materiality assessment has no longer been mandatory since the Omnibus. It remains the fastest tool for giving banks, customers and ratings a clear, well-founded answer. The advantage of doing it voluntarily: you can keep it lean. Five steps, one to two working days, traceable documentation, and you know what really matters in your company. All the basics of the method are covered in our guide to the materiality assessment.
Frequently asked questions about materiality assessments for SMEs
Does an SME have to carry out a materiality assessment?
As a rule, no. Since the Omnibus, only companies with more than 1,000 employees and more than €450m net turnover are subject to the CSRD from financial year 2027 and therefore required to carry out a double materiality assessment under the ESRS. For everyone else it is voluntary.
Do I need a double materiality assessment for a VS report?
No, the VS (Voluntary Standard, formerly VSME) does not require it, but it recommends it. It helps you prioritise the topics in your report sensibly and answer supply chain requests in a targeted way.
How long does a materiality assessment take for a mid-sized company?
With a pragmatic approach, expect one to two working days spread over two to four weeks. Most of the time goes into stakeholder conversations and justifying the ratings.
Can large customers require me to carry out a materiality assessment?
From financial year 2027, CSRD-obligated companies may not request information from partners with up to 1,000 employees that goes beyond the VS. A full ESRS materiality assessment therefore cannot be demanded. Many customers do ask about topics covered by the VS, though, and your own assessment helps you there.
Do I need a stakeholder survey?
Not necessarily. For an SME, three to six targeted conversations with customers, suppliers and employees are often enough. What matters is that the outside view is included at all and that you document it.
How often should I update the materiality assessment?
A brief annual review is usually sufficient. A full reassessment makes sense when your business model, sites, supply chains or the requirements of key customers change significantly.
