Adapting to CSRD: A Qualitative Study of Organizational Change in Swedish Subsidiary SMEs

The Corporate Sustainability Reporting Directive (CSRD) introduces the most comprehensive regulatory shift in sustainability reporting within the European Union, extending reporting obligations beyond large enterprises to also indirectly affect small and medium (SMEs) enterprises within corporate groups. This thesis investigates the indirect effects of the CSRD on Swedish subsidiary SMEs within large corporate groups. It examines how these subsidiaries adapt to their parent companies’ compliance demands and the challenges they face in doing so. Using a qualitative research design grounded in interpretivism and an inductive approach, the study is based on semi-structured interviews with representatives from Swedish industrial SMEs whose parent companies are obligated to report under the CSRD. The results reveal that while subsidiaries are not directly subject to the CSRD, they are significantly impacted by their parent companies’ demands for data collection and compliance. The implementation challenges stem from limited internal resources, interpretive ambiguity surrounding the directive and increased expectations from stakeholders. Despite these challenges, the CSRD has prompted organizational changes in routines, communication flows, and internal awareness of sustainability issues. The study contributes to both the fields of sustainability accounting and organizational change by highlighting the indirect yet significant implications of regulatory frameworks on smaller entities within corporate structures. It also offers practical insights for subsidiaries and parent companies navigating the early phases of CSRD compliance and informs policymakers about the support structures SMEs may require in the transition towards more transparent sustainability reporting.