Sustainability Reporting Standards for Small Businesses: GHG Protocol, GRI, IFRS S2, ESRS or VSME?
GHG Protocol, GRI, IFRS S2, UK SRS, ESRS and VSME compared for small firms: what each one is for, who asks for it, and where to start.
In brief
- The GHG Protocol is the method for counting greenhouse gas emissions (Scope 1, 2 and 3). Almost every other standard uses it, so it is the first thing a small business needs.
- IFRS S1 and S2 (and the UK version, UK SRS) are for investors and listed companies. GRI is a broad impact report used by larger companies. ESRS is the EU standard for companies in scope of the CSRD.
- Most small businesses are not required to use any of them. The pressure comes from customers, banks and tenders asking for data.
- For a small firm, the practical path is: a GHG Protocol footprint first, then a Carbon Reduction Plan (UK public tenders) or a VSME report (EU customers and banks).
Search for “sustainability reporting” and you will find a long list of letters: GHG Protocol, GRI, ISSB, IFRS S2, UK SRS, CSRD, ESRS, VSME. Most guides are written for large companies or for people starting a career in sustainability. This one is for owners and managers of small businesses who have been asked for “your sustainability report” and want to know which standard the request means.
The standards at a glance
| Standard | What it is for | Who uses it | Required for small firms? |
|---|---|---|---|
| GHG Protocol | Counting emissions: Scope 1, 2 and 3 | Almost everyone, inside other standards | No, but it is the method customers expect |
| IFRS S1 and S2 (ISSB) | Sustainability and climate risks that affect the company’s finances, for investors | Listed companies, in countries that adopt them | No |
| UK SRS S1 and S2 | The UK version of IFRS S1 and S2, published 25 February 2026 | UK-listed companies, comply or explain, from 2027 | No |
| GRI Standards | A company’s impacts on the economy, environment and people | Mostly large companies that publish a full sustainability report | No |
| ESRS | The EU reporting standards under the CSRD, with double materiality | EU companies with more than 1,000 employees and €450m turnover | No |
| VSME | A short voluntary report built for SMEs | EU SMEs asked for data by customers and banks | No, but large customers may only ask for this much |
1. GHG Protocol: the method, not a report
The GHG Protocol sets out how to count emissions. Scope 1 is fuel you burn, Scope 2 is electricity you buy, and Scope 3 is everything else in your value chain, in 15 categories. It does not tell you what to publish. Instead, the other standards point to it: IFRS S2, ESRS E1, the VSME and the UK Carbon Reduction Plan format all expect emissions counted the GHG Protocol way.
That is why it comes first. If you have a footprint calculated to the GHG Protocol, most questionnaires become easier. Read what the GHG Protocol is, or start with the free business carbon footprint calculator and the GHG inventory template.
2. IFRS S1, S2 and UK SRS: for investors
The International Sustainability Standards Board (ISSB) published IFRS S1 (general sustainability) and IFRS S2 (climate) in June 2023. They ask one question: how could sustainability and climate issues affect this company’s cash flows and value? The audience is investors.
Countries adopt them in their own way. The UK published UK SRS S1 and S2 on 25 February 2026, and the FCA requires listed companies to report against them on a comply or explain basis for periods from 1 January 2027. Australia’s climate standard, AASB S2, is also based on IFRS S2 and is being phased in for large companies. See our UK SRS guide.
For a small private firm, the effect is indirect. A listed customer reporting Scope 3 under these standards will ask its suppliers for emissions data. You do not report under IFRS S2; you supply the numbers that go into someone else’s report.
3. GRI: the broad impact report
The GRI Standards cover a company’s impact on the world: emissions, but also water, waste, labour, human rights and more. A company picks its material topics and reports on each one. GRI is widely used by large companies for their annual sustainability report.
For a small business, a full GRI report is usually more work than anyone has asked for. If a customer specifically asks for GRI, it is often enough to answer the climate and energy disclosures, which again rest on a GHG Protocol footprint.
4. ESRS and the VSME: the EU pair
The ESRS are the detailed standards behind the EU’s Corporate Sustainability Reporting Directive (CSRD). They use double materiality: how sustainability affects the company, and how the company affects people and the environment. After the Omnibus I Directive in 2026, the CSRD applies only to EU companies with more than 1,000 employees and more than €450 million net turnover. See who still has to report.
The VSME is the small-company version. It was published by EFRAG in December 2024 and recommended by the European Commission in July 2025. Its Basic Module has 11 disclosures (B1 to B11). From financial years starting in 2027, companies reporting under the CSRD may not ask value-chain partners with up to 1,000 employees for more than the voluntary standard covers. In practice, that makes the VSME the answer to most EU customer questionnaires. Read what the VSME is and the VSME report template guide.
Which one should you start with?
| If you are asked by | What they usually need | Start with |
|---|---|---|
| A UK public-sector buyer (NHS, central government) | A Carbon Reduction Plan in the PPN 006 format | GHG Protocol footprint, then a Carbon Reduction Plan |
| A large EU customer or an EU bank | Sustainability data in a standard format | GHG Protocol footprint, then a VSME report |
| A listed customer (UK, Australia or elsewhere) | Your Scope 1 and 2 emissions, sometimes a target | GHG Protocol footprint |
| A customer who names GRI | Usually the climate and energy topics | GHG Protocol footprint, then the GRI climate disclosures |
| No one yet | Nothing required | A simple footprint, so you are ready when asked |
The pattern is the same in every row. The footprint comes first, and the format comes second. If you are not sure which format a buyer wants, ask them which standard their questionnaire follows. Most will name one. For UK public tenders, see what a Carbon Reduction Plan under PPN 006 must include, and our worked sample plan.
Common mistakes
Three mistakes come up often. First, starting with a full GRI or ESRS report when the customer only wanted Scope 1 and 2 figures. Second, calling a report “IFRS S2 aligned” without the governance, risk and scenario sections that the standard requires. Third, using a different emissions method for each request, so the numbers do not match from one customer to the next. One GHG Protocol footprint, used for every request, avoids all three.
All the dates for these rules, and others such as CBAM and ESOS, are in one table on our climate deadlines page.
Frequently asked questions
Do small businesses have to report sustainability?
In most countries, no. The CSRD now covers EU companies with more than 1,000 employees and €450m turnover, and UK SRS applies to listed companies. The pressure on small firms comes from customers, banks and public tenders.
What is the difference between GRI and IFRS S2?
GRI reports a company’s impacts on the world, for all stakeholders. IFRS S2 reports how climate issues affect the company’s finances, for investors.
Is the GHG Protocol a reporting standard?
It is a method for counting emissions. Other standards, including IFRS S2, ESRS, the VSME and the UK Carbon Reduction Plan format, expect emissions counted the GHG Protocol way.
Which standard should an SME in the EU use?
Usually the VSME, with emissions calculated under the GHG Protocol. Large customers reporting under the CSRD may not ask partners with up to 1,000 employees for more than the voluntary standard from financial year 2027.
Which standard does a UK supplier to the NHS need?
A Carbon Reduction Plan in the PPN 006 format, with Scope 1, 2 and five Scope 3 categories counted under the GHG Protocol.
Sources & further reading
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