Voluntary sustainability reporting by SMEs: EC recommendation to apply EFRAG’s VSME standard

The proposals developed by EFRAG have therefore been directly incorporated by the EC into the annexes to the recommendation: 

• Annex I comprises the standard itself, which consists of two separate modules (a basic module and a comprehensive optional module); 
• Annex II sets out practical guidelines for implementation. 

It is worth noting that French and German translations of the recommendation and its annexes are also available. The recommendation was welcomed by EFRAG (see the press release accessible here), which also linked it to the tools available elsewhere to support the implementation of the VSME standard. 

This recommendation aims in particular to enable SMEs to respond more readily to specific requests for sustainability information from financial institutions and large undertakings that fall within the scope of the CSRD and which include these SMEs in their value chain. 

The EC also encourages large undertakings and financial institutions that request information from SMEs under these circumstances to base their requests, as far as possible, on this voluntary standard, while recognising that additional information may be requested from SMEs by financial institutions for the purposes of lending or investment. 

Significantly, this publication comes in the context of the simplification proposals of the Omnibus I package which aims, among other things, to reduce the number of companies subject to mandatory sustainability reporting under the CSRD (note that discussions on the “Content” Directive are still ongoing at the European level).Therefore, while the voluntary standard was initially intended for non-listed SMEs and micro-enterprises outside the scope of the CSRD, it should in future serve as the basis for the development of a voluntary reporting standard applicable to larger undertakings falling outside the scope of the revised CSRD. 

The EC states in its press release that this recommendation constitutes an interim solution in response to market demands, pending the formal adoption of the delegated act on a voluntary standard, applicable by all undertakings not subject to the revised CSRD. This adoption is expected to occur within four months following the entry into force of the “Content” Directive. 

Recommendation inviting non-listed SMEs and micro-enterprises