Exposure Drafts on sustainability reporting standards for SMEs

The European Financial Reporting Advisory Group (“EFRAG”) has launched a public consultation on the Exposure Draft European Sustainability Reporting Standards for listed SMEs (“ESRS LSME ED”) and the Exposure Draft for the voluntary reporting standard for non-listed SMEs (“VSME ED”).

ESRS LSME ED is developed by EFRAG under the mandate granted by the Corporate Sustainability Reporting Directive (“CSRD”) and is relevant for SMEs that are public interest entities. It is expected to be issued as a delegated act with effect from 1 January 2026 (with a 2-year opt out). The standards are expected to support listed SMEs in getting better access to finance and enable availability of standardized sustainability information. The standards are composed of three general sections: (i) general requirements, (ii) general disclosures and (iii) policies, actions and targets – along with three sections dedicated to environment, social and business conduct.

VSME ED is a voluntary sustainability reporting standard for non-listed SMEs. It suggests a simple reporting tool to assist non-listed SMEs in connection with sustainability information that they receive from business counterparts. The standard may be regarded as a measure to support SMEs in accessing sustainable finance. EFRAG expects that the VSME ED will standardize the current multiple ESG data requests by reducing the number of uncoordinated requests non-listed SMEs receive. Thus, reducing the significant burden ESG data requests tend to be on non-listed SMEs. The standard is structured in a basic module with two additional optional modules: (i) Narrative-Policies, Actions and Targets (PAT) and (ii) Business Partner Module.

More information from EFRAG on the two Exposure Drafts and how to provide responses to the consultations can be accessed here.

Next steps: The consultation period is open until 21 May 2024.

Tags:  CSRDESRSSustainability