COMPLIANCE COMPARISON

Which EU Sustainability Laws Actually Apply to Your Brand? SME Thresholds Compared

Published 28.09.2026 · Fact-checked and corrected 28.09.2026 · Reading time ~11 min · by Lior Gabriel Graetz · LG Fashion Labs

ESPR, EUDR, PPWR and CSRD do not share one small-business exemption. Each is a separate EU legal act, each sets its own size test, and each grants different relief to different size categories — sometimes for the same size category. Worse, two of these laws don't even agree on what "small" means: they use two different official definitions, with different euro thresholds.

This guide compares all four laws directly, sourced only from EUR-Lex, with the exact article numbers and dates. Where the site already covers a law's SME rules in full depth, this guide links out rather than repeating it.

4 laws, 0 shared test

ESPR, EUDR, PPWR and CSRD each set their own size test and grant different relief — sometimes for the same size category.

2 definitions of “small”

Two of these laws don't even agree on what “small” means, using different official euro thresholds.

30 Jun 2027

CSRD's shrunk scope changes nothing under EUDR: its due-diligence duty still starts for micro/small operators on this date, with supply-chain traceability that overlaps what the DPP will need too.

1. Two different legal definitions of "small"

EU sustainability law doesn't use one company-size test. It uses two, borrowed from two separate legal instruments — and which one applies depends entirely on which regulation you're reading.

Accounting Directive 2013/34/EU, Article 3 — used by EUDR and CSRD

Tests a company against three criteria and asks whether it stays under at least two of the three on its balance sheet date:

Category	Balance sheet total	Net turnover	Employees	Test
Micro	≤ €450,000	≤ €900,000	≤ 10	2 of 3
Small	≤ €5,000,000	≤ €10,000,000	≤ 50	2 of 3
Medium	≤ €25,000,000	≤ €50,000,000	≤ 250	2 of 3
Large	> €25,000,000	> €50,000,000	> 250	exceeds 2 of 3

Member States may raise the small-undertaking thresholds, but not past €7,500,000 (balance sheet) / €15,000,000 (turnover). The Commission must now review all these figures for inflation at least every five years (Article 3(13), added February 2026).

Commission Recommendation 2003/361/EC — used by ESPR and PPWR

Caps the employee count outright, then asks whether turnover or balance sheet (either one) stays under the limit:

Category	Employees (always required)	Turnover or balance sheet (either one)
Micro	Fewer than 10	€2,000,000 or less
Small	Fewer than 50	€10,000,000 or less
Medium (SME ceiling)	Fewer than 250	€50,000,000 turnover, or €43,000,000 balance sheet

The two tests don't line up. A microenterprise under the Recommendation is capped at €2,000,000 turnover; a micro-undertaking under the Accounting Directive is capped at €900,000 — less than half. A brand can sit in one size bracket for ESPR and a different one for EUDR, on the same set of accounts.

Law	Definition it uses	Legal basis
ESPR	Recommendation 2003/361/EC	Regulation (EU) 2024/1781, Art. 2
PPWR	Recommendation 2003/361/EC (as applicable 11.02.2025)	Regulation (EU) 2025/40, Arts. 15, 25, 29, 33
EUDR	Accounting Directive Art. 3(1)–(3)	Regulation (EU) 2023/1115, Art. 2(30)
CSRD	Accounting Directive framework (turnover + employees are now the direct trigger, not a bracket)	Directive (EU) 2022/2464 as amended by Directive (EU) 2026/470

2. What each law actually requires, by size

Compact version first. Full detail and article numbers for each law are below.

Law	Micro	Small	Medium	Large
ESPR	No DPP exemption. Not covered by the unsold-goods destruction ban & disclosure duty (Art. 25(1), 24(1)); the Commission may extend both by delegated act where there is sufficient evidence that such enterprises could be used to circumvent them (Art. 25(5)).	Same as micro.	No DPP exemption. Destruction ban & disclosure apply from 19.07.2030.	No DPP exemption. Destruction ban applies from 19.07.2026; disclosure duty already applies.
EUDR	Due diligence duty applies from 30.06.2027 (if established by 31.12.2024). No compliance officer, audit or public-reporting duty (SME-wide relief).	Same as micro.	Due diligence duty applies from 30.12.2026 — no later-start relief, that's micro/small only. Still no compliance officer, audit or public-reporting duty: medium counts as an SME too.	Due diligence duty applies from 30.12.2026. Full compliance officer, audit & reporting duty — the only EUDR tier without SME governance relief.
PPWR	Exempt from re-use targets if ≤ 1,000 kg/yr made available on the territory of a Member State. Exempt from take-away re-use offer. Possible restricted-format derogation (HORECA single-use plastic, Annex V point 3).	No exemption — full re-use targets & take-away obligation apply.	No exemption.	No exemption.
CSRD	Not in scope.	Not in scope, including listed small companies.	Not in scope, unless part of a group exceeding the large-tier threshold on a consolidated basis.	In scope only if it exceeds > €450,000,000 net turnover and > 1,000 employees.

3. If your brand is...

Same information, organised by your brand's size instead of by law. Use whichever definition applies to the law in question — see the table in Section 1.

Microenterprise

Fewer than 10 employees

ESPR: full DPP obligation applies; not covered by the unsold-goods destruction ban and disclosure duty (the Commission may extend both by delegated act where there is sufficient evidence that such enterprises could be used to circumvent them, Art. 25(5)).

EUDR: due diligence duty applies from 30 June 2027; no compliance officer, audit or public-reporting duty.

PPWR: exempt from re-use targets under the 1,000 kg/year threshold and from the take-away offer duty.

CSRD: not in scope.

Small enterprise

Fewer than 50 employees

ESPR: full DPP obligation; not covered by the destruction ban and disclosure duty (extendable by delegated act where there is sufficient evidence that such enterprises could be used to circumvent them, Art. 25(5)).

EUDR: same start date and relief as micro, if established by 31.12.2024.

PPWR: no exemption — full re-use and take-away obligations apply.

CSRD: not in scope, even if listed on a regulated market.

Medium-sized

Fewer than 250 employees

ESPR: full DPP obligation; destruction ban and disclosure apply from 19 July 2030.

EUDR: due diligence duty from 30 December 2026 — no later-start relief, that's micro/small only. Still excused from a compliance officer, audit and public reporting: medium counts as an SME under EUDR's own definition (Art. 2(30)).

PPWR: no exemption.

CSRD: not in scope unless part of a group that clears the > €450m / > 1,000-employee bar on a consolidated basis.

Large

250+ employees

ESPR: full DPP obligation; destruction ban applies from 19 July 2026; the disclosure duty already applies.

EUDR: due diligence duty from 30 December 2026, full compliance-officer, audit and public-reporting duty — the only EUDR size tier without SME governance relief.

PPWR: no exemption.

CSRD: in scope only once it individually or as part of a group exceeds > €450,000,000 net turnover and > 1,000 employees — "large" under the Accounting Directive alone is no longer enough.

4. ESPR: no exemption from the DPP, real relief elsewhere

The Digital Product Passport obligation itself carries no size exemption — micro-enterprises and listed groups face the identical data duty once the textile delegated act applies (Regulation (EU) 2024/1781, Article 2). Size does matter for two related but separate ESPR obligations: the ban on destroying unsold apparel, clothing accessories and footwear listed in Annex VII (Article 25), and the duty to disclose all discarded unsold consumer products (Article 24), which is wider than the ban. Micro and small enterprises are exempt from both (Articles 24–25); medium-sized enterprises are covered from 19 July 2030; for large enterprises the ban applies from 19 July 2026, while the disclosure duty already applies. The Commission may, by delegated act (Article 25(5)), extend either duty to micro and small enterprises where there is sufficient evidence that they could be used to circumvent it. For the full SME breakdown, including ownership rules that can strip a small label of its SME status, see our dedicated DPP & SME guide and ESPR compliance guide.

5. EUDR: same duty, later start, lighter paperwork

EUDR defines "SME" by direct reference to the Accounting Directive (Article 2(30)) — and, unlike the Accounting Directive's own "2-of-3" size test, this SME definition covers micro, small and medium-sized undertakings alike. That distinction matters because EUDR grants two separate kinds of relief on two separate size cut-offs. Only micro- and small operators (Article 3(1)/(2)) established by 31 December 2024 get the later start date — 30 June 2027 instead of 30 December 2026 (Article 38(2)-(3)); medium-sized operators get no such delay. But the lighter governance duties are SME-wide, with no establishment-date cut-off: every SME, including medium-sized operators, is excused from appointing a compliance officer at management level, from running an independent audit function (Article 11(2)), and from the annual public reporting duty on the due-diligence system (Article 12(3)) — only non-SME (large) operators carry the full governance duty. None of this excuses the substantive due-diligence duty itself. Leather stopped being an EUDR commodity in September 2026 — a separate change, covered in full in our EUDR & leather guide.

6. PPWR: narrow, specific micro-enterprise carve-outs

PPWR (Regulation (EU) 2025/40) uses the Recommendation 2003/361/EC microenterprise definition "as applicable on 11 February 2025" throughout, and grants relief only in specific places, not as a blanket exemption:

Where PPWR actually gives microenterprises relief

Re-use targets (Art. 29(13)): exempt for a calendar year if the enterprise made not more than 1,000 kg of packaging available on the territory of a Member State that year and qualifies as a microenterprise — both conditions required.

Take-away re-use offer (Art. 33(4)): microenterprise final distributors are fully exempt.

Restricted packaging formats (Art. 25(4)): Member States may — it is optional, not automatic — allow microenterprises to place on the market single-use plastic packaging for food and beverages filled and consumed within the premises in the HORECA sector (Annex V, point 3), where it has been demonstrated that it is not technically feasible to avoid such packaging or to obtain access to the infrastructure needed for a re-use system. The derogation does not extend to the other Annex V formats.

Private-label packaging (Art. 15): if the brand that puts its name on the packaging is a microenterprise, compliance responsibility shifts to its EU-based packaging supplier instead.

Outside these provisions (see also point (b) of Art. 3(13) and the second subparagraph of Art. 21, which contain comparable microenterprise rules for private-label packaging), PPWR's core packaging-design, labelling and recyclability requirements apply regardless of size.

7. CSRD: the scope just shrank, sharply, in February 2026

This is the change most compliance content hasn't caught up with. Directive (EU) 2026/470, adopted 24 February 2026 and published in the Official Journal on 26 February 2026, entered into force on 18 March 2026 (the twentieth day after publication) and rewrote the Accounting Directive's sustainability-reporting scope. The trigger is no longer a size bracket — it's two absolute numbers, both required:

Accounting Directive Art. 19a(1) / 29a(1), as amended

An undertaking — or a group, on a consolidated basis — is subject to CSRD sustainability reporting only if it exceeds, on its balance sheet date, both a net turnover of €450,000,000 and an average of 1,000 employees during the financial year. A subsidiary established in a Member State whose ultimate parent is governed by the law of a third country is separately in scope (Article 40a(1)) only if it exceeds, on its balance sheet date, a net turnover of €200,000,000 in the preceding financial year and the third-country undertaking, at its group level (or, if not applicable, its individual level), generated a net turnover in the Union exceeding €450,000,000 in each of the last two consecutive financial years. A comparable rule applies to EU branches of third-country undertakings.

Three consequences for a fashion brand checking whether CSRD applies:

Small and medium-sized companies are out, including listed ones. The separate scope for SMEs listed on a regulated market — previously due from financial year 2026, with an opt-out available to 2028 — was removed from the Directive entirely.

The change needs national transposition by 19 March 2027. Directive (EU) 2026/470 is a directive, not a regulation: each Member State still has to write it into national law, by that date.

Companies already reporting since FY2024 aren't dropped immediately. Large public-interest entities that entered scope for financial year 2024 remain technically covered through FY2026 under a transitional rule; from financial years starting on or after 1 January 2027, only the new €450m/1,000-employee threshold governs. Member States may optionally exempt transitional-period companies for FY2025–2026.

One protection survives for smaller suppliers even though they're outside CSRD's scope: if a large reporting company asks its supply chain for sustainability data, any supplier with 1,000 employees or fewer is a "protected undertaking" (Article 19a(3)) with a statutory right to decline requests beyond the voluntary VSME reporting standard — and a contract clause demanding more isn't binding.

8. What this means for your brand

Check each law separately, using that law's own definition — a single "are we an SME?" answer doesn't carry across ESPR, EUDR, PPWR and CSRD. If your brand is under roughly €450 million turnover or 1,000 employees, CSRD's direct reporting duty almost certainly does not apply to you as of February 2026 — but that exemption is CSRD-specific. EUDR's own due-diligence duty still starts for micro- and small operators on 30 June 2027 (medium-sized operators from 30 December 2026), regardless of falling outside CSRD's scope. A large customer further up your supply chain may also still ask you for VSME-standard data. None of the four laws' size-based relief reaches the Digital Product Passport obligation itself.

DPP AUDIT

How ready is your collection for the DPP?

Benchmark one complete collection against the LGFL DPP Data Framework. 10 domains, four ESPR categories. Under NDA.

Start Your DPP Audit

Frequently asked questions

Is there one EU-wide small-business exemption for sustainability laws? +

No. There is no single EU-wide small-business carve-out. ESPR, EUDR, PPWR and CSRD are four separate legal acts, each written by a different part of the legislative process, and each sets its own size test and its own list of what smaller companies are and are not excused from. Being "small" under one of them says nothing about your status under the other three.

Why do ESPR and EUDR define "small business" differently? +

Because they adopt two different pre-existing EU legal instruments rather than inventing their own test. ESPR (Article 2) and PPWR both adopt Commission Recommendation 2003/361/EC, which caps a microenterprise at fewer than 10 employees and €2 million turnover or balance sheet. EUDR (Article 2(30)) and CSRD instead adopt Article 3 of the Accounting Directive (2013/34/EU), which caps a micro-undertaking at 10 employees but a much lower €900,000 turnover and €450,000 balance sheet, tested on a "meets 2 of 3 criteria" basis rather than a mandatory employee cap plus either financial test.

Does CSRD still apply to small and medium-sized fashion brands? +

No, not since Directive (EU) 2026/470 of 24 February 2026 raised the scope threshold: an undertaking (or group, on a consolidated basis) is now only subject to CSRD sustainability reporting if it exceeds both a net turnover of €450,000,000 and an average of 1,000 employees in the same financial year (Article 19a(1) and 29a(1) of the amended Accounting Directive). The separate scope for listed SMEs, which previously had an opt-out only until 2028, was removed entirely. Member States must transpose this change by 19 March 2027; large public-interest entities already reporting since FY2024 remain technically in scope through FY2026 under a transitional rule.

Can a large customer still demand CSRD-style sustainability data from a small supplier? +

Only up to a point. The amended Accounting Directive (Article 19a(3)) creates a "protected undertaking" status for any company with 1,000 employees or fewer that sits in a reporting undertaking's value chain. A protected undertaking has a statutory right to decline requests for information beyond what the voluntary VSME reporting standard covers, and any contract clause that tries to demand more is not binding.

Does EUDR's due diligence duty exempt small fashion brands? +

Not from the substantive duty, no. EUDR's own SME definition (Article 2(30)) covers micro, small and medium-sized operators alike, and every SME is excused from appointing a compliance officer, running an independent audit function, and publicly reporting on its due-diligence system (Articles 11(2) and 12(3)) — only large (non-SME) operators carry that full governance duty. A separate, narrower cut-off applies to the start date: only micro- and small operators (Article 3(1)/(2)) established by 31 December 2024 get a later start date, 30 June 2027 instead of 30 December 2026 (Article 38(2)-(3)); medium-sized operators start on the same date as large ones. The core obligation to exercise due diligence itself still applies to everyone. This is separate from the removal of leather from EUDR's scope in September 2026; see our dedicated EUDR guide.

Does the EU's packaging law (PPWR) exempt small fashion brands from anything? +

Only specific, narrow carve-outs, all keyed to the Commission Recommendation 2003/361/EC microenterprise definition. A microenterprise that makes not more than 1,000 kg of packaging available on the territory of a Member State in a calendar year is exempt from the re-use targets in Article 29; a microenterprise final distributor is exempt from the take-away re-use offer obligation in Article 33; and Member States may (not must) let microenterprises place on the market single-use plastic packaging for food and beverages filled and consumed within the premises in the HORECA sector (Annex V, point 3), where it has been demonstrated that it is not technically feasible to avoid such packaging or to obtain access to the infrastructure needed for a re-use system (Article 25(4)). The core packaging-design, labelling and recyclability requirements carry no size exemption.

Sources

Accounting Directive — size categoriesDirective 2013/34/EU, consolidated text, Article 3 (categories of undertakings and groups) and Article 3(13) (five-yearly inflation review, added by Directive (EU) 2026/470). Consolidated text CELEX 02013L0034, version 18.03.2026 ↗
CSRD scope changeDirective (EU) 2026/470 of the European Parliament and of the Council of 24 February 2026, amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting requirements and certain corporate sustainability due diligence requirements, in particular recitals 30–32 and Article 5 (transposition deadlines). CELEX 32026L0470 ↗
CSRD reporting threshold, articlesAccounting Directive as amended, Article 19a (individual sustainability reporting), Article 29a (consolidated), Article 40a (third-country undertakings). Same consolidated text as above.
SME/micro/small/medium definition (Recommendation)Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises, Annex, Article 2. CELEX 32003H0361 ↗
ESPR — DPP, destruction ban, disclosureRegulation (EU) 2024/1781, Article 2 (definitions, SME cross-reference), Article 24 (disclosure of discarded unsold goods), Article 25 (destruction ban), Annex VII items 1 and 2 (apparel and clothing accessories; footwear). CELEX 32024R1781 ↗
EUDR — SME definition, relief, timelineRegulation (EU) 2023/1115, consolidated text, Article 2(30) (SME definition), Article 11(2) (compliance officer/audit exemption), Article 12(3) (reporting exemption), Article 38(2)-(3) (application dates). Consolidated text CELEX 02023R1115, version 26.12.2025 ↗
PPWR — microenterprise carve-outsRegulation (EU) 2025/40 of 19 December 2024, Article 15 (private-label packaging), Article 25(4) (restricted formats derogation), Article 29(13) (re-use target exemption), Article 33(4) (take-away offer exemption), recital citing Recommendation 2003/361/EC (footnote 35). CELEX 32025R0040 ↗
Voluntary reporting standard for value-chain SMEs (VSME)Accounting Directive as amended, Article 19a(3) (definition of "protected undertaking") and Article 29ca (sustainability reporting standards for voluntary use); Commission Recommendation (EU) 2025/1710 of 30 July 2025 on a voluntary sustainability reporting standard for small and medium-sized undertakings, recital 10 (naming the "VSME" standard). CELEX 32025H1710 ↗

All sources were accessed and verified directly on EUR-Lex on 28.09.2026, and fully re-checked after publication — that full re-check caught and corrected two errors: an incorrect entry-into-force date for Directive (EU) 2026/470 (it is 18 March 2026, twenty days after its 26 February 2026 publication, not 26 February 2026 itself), and an incomplete description of EUDR's SME governance relief (it covers medium-sized operators too, not only micro and small, since EUDR's own SME definition includes medium-sized undertakings). Where this guide quotes a figure or date, it reproduces the consolidated legal text in force on that date; consolidated texts are unofficial documentation tools per EUR-Lex's own disclaimer, with the Official Journal as the authentic source. This is general information, not legal, financial or investment advice.