ESG, CSRD & VSME Key Definitions
Understand the essential terminology used in ESG data management and sustainability reporting
ESG (Environmental, Social, Governance)
ESG refers to a set of non-financial factors used to understand how a company manages its environmental impact, social responsibilities, and governance practices. ESG data is increasingly requested by regulators, customers, investors, and business partners for transparency and risk assessment purposes.
The Three Pillars of ESG
Environmental (E)
The Environmental dimension covers how a company interacts with the natural environment. This typically includes energy use, greenhouse gas emissions, water consumption, waste generation, and environmental impacts related to operations and logistics.
Social (S)
The Social dimension relates to how a company manages relationships with employees, contractors, customers, and communities. Common topics include employment conditions, health and safety, diversity, training, and workforce stability.
Governance (G)
The Governance dimension focuses on how a company is directed and controlled. This includes internal policies, management structures, compliance processes, and decision-making frameworks that support responsible business conduct.
EU Regulatory Framework
CSRD (Corporate Sustainability Reporting Directive)
The CSRD is an EU directive that expands sustainability reporting requirements for certain companies. It aims to improve the consistency, comparability, and reliability of sustainability information disclosed by companies operating in or connected to the EU. CSRD applicability depends on factors such as company size, structure, listing status, and location.
ESRS (European Sustainability Reporting Standards)
ESRS are standardized reporting frameworks developed under CSRD. They define what sustainability information should be reported and how it should be structured for companies that fall within CSRD scope.
ESRS Mapping
ESRS Mapping is an informational alignment layer that connects a company's ESG metrics to the corresponding ESRS datapoints (e.g., E1 — Climate Change, E3 — Water, E5 — Circular Economy, S1 — Own Workforce). In ESGdesk™, the ESRS Mapping Reference is included as a chapter in the Audit-Ready Report (PRO). It is provided for orientation purposes only and does not constitute a complete ESRS-compliant disclosure.
VSME (Voluntary Sustainability Reporting Standard for SMEs)
VSME is EFRAG's proportionate sustainability reporting standard designed specifically for small and medium-sized enterprises. Voluntary in nature, it provides SMEs with a structured framework to respond to ESG questionnaires from B2B customers, banks, and investors — without the complexity or cost of full CSRD/ESRS reporting. The standard is expected to become a delegated act in June 2026.
VSME Basic Module (B1–B11)
The Basic Module is the core layer of the VSME standard, covering 11 disclosure topics (B1–B11) across environmental, social, and governance areas: B1 Basis for Preparation, B2 Practices and Policies, B3 Energy & GHG Emissions, B4 Pollution, B5 Biodiversity, B6 Water, B7 Resource Use and Waste, B8–B10 Workforce, and B11 Convictions and Fines. ESGdesk reports cover the complete Basic Module — see the full chapter scope on the Reporting Scope page.
Omnibus I Directive
EU Directive 2026/470 (in force since 18 March 2026) that revised CSRD scope: mandatory reporting now applies only to companies with ≥1,000 employees AND ≥€450M annual turnover. Roughly 80% of previously in-scope companies were released from mandatory CSRD obligations. Omnibus I also introduced a value chain cap protecting smaller suppliers from over-broad ESG data requests beyond the VSME standard.
ESG Data Concepts
Non-Financial Data
Non-financial data refers to information that is not part of traditional financial statements but relates to environmental, social, and governance topics, such as energy consumption, workforce data, or safety incidents.
ESG Data Collection
ESG data collection is the process of gathering structured, consistent non-financial information across a company's operations, locations, and departments for internal management and reporting purposes.
Internal ESG Reporting
Internal ESG reporting refers to the preparation of ESG-related reports for internal use, such as management review, internal audits, customer requests, or preparation for external reporting.
Operational Terms
Reporting Year
The Reporting Year is the defined time period for which ESG data is collected and reviewed. In ESGdesk™, the Reporting Year acts as a working context that determines data visibility, editability, and report scope.
Multi-location Reporting
Multi-location reporting means collecting and managing ESG data separately for different sites, plants, offices, or operational units within the same company, while maintaining a consolidated structure.
Data Input Progress
Data Input Progress is a real-time dashboard feature in ESGdesk™ that allows Admins and Contributors to monitor ESG data collection status across locations and sections. It includes visual heatmaps, completion charts, and filters to identify gaps and prioritize data entry efforts.
Audit Trail
An audit trail is a record of changes made to ESG data, showing when data was entered or modified and by whom. It supports internal transparency and accountability.
Data Retention
Data retention defines how long ESG data and reports are stored before being automatically deleted. In ESGdesk™, data is retained for a fixed number of reporting years to support internal continuity and historical reference.
Year Closure
Year Closure is the process of locking a Reporting Year to prevent further edits. Once closed, ESG data becomes read-only, protecting the integrity of finalized information. Only Administrators can close or reopen a Reporting Year.
Audit-Ready Report
ESGdesk's PRO-tier report format. Includes the full VSME Basic Module (B1–B11) plus the complete audit appendix (A1–A5: VSME Standard, Files Evidence, Audit Trail, ESRS Mapping, Methodology). Generated from a closed reporting year with a locked methodology snapshot for full traceability. Designed to support external assurance workflows under the customer's own certification process — see the Audit-Ready Report page.
Management Extract
ESGdesk's Standard-tier report format. Includes the VSME Basic Module (B1–B11) plus universal appendix chapters A1 (VSME Standard reference) and A2 (Files Evidence). Available in PDF and CSV. Structured under a read-only Table of Contents — designed for B2B questionnaire responses, banking requests, and internal management review.
Additional Concepts
ESG Relevance
ESG relevance describes how important ESG topics may be for a specific company based on its size, industry, structure, and position in the value chain. Relevance does not automatically imply legal reporting obligations.
Value Chain
The value chain includes all activities and business relationships involved in producing and delivering products or services, including suppliers, logistics partners, customers, and distributors.
ESG Self-Assessment
An ESG self-assessment is an internal, non-binding evaluation used to understand how ESG topics may apply to a company. It does not determine legal obligations and does not replace professional advice.
Important Note
ESGdesk™ is a software tool supporting structured ESG data collection and internal reporting. It does not provide legal or regulatory advice and does not guarantee compliance with CSRD, ESRS, or any other regulatory requirements.