• The European Commission has presented a voluntary sustainability reporting standard for SMEs to ease data-sharing burdens and improve access to sustainable finance.
• The standard, developed by EFRAG, is intended to guide large companies and financial institutions in their sustainability data requests to SMEs.
• This interim recommendation will serve until a formal delegated act is adopted, following negotiations on the Omnibus I proposal.

The European Commission has introduced a new voluntary sustainability reporting standard aimed at small and medium-sized enterprises (SMEs), providing a simplified framework to meet growing information demands from financial institutions and large companies.

The voluntary standard for SMEs (VSME) was developed by EFRAG, the Commission’s technical advisor on sustainability reporting. It is designed for SMEs that fall outside the scope of the Corporate Sustainability Reporting Directive (CSRD) but face increasing sustainability data requests from their larger business partners.

According to the Commission, “SMEs may also wish to voluntarily report sustainability information to improve their access to sustainable finance and better understand and monitor their own sustainability performance, thereby improving their resilience and competitiveness.”

The Commission is urging large companies and financial institutions to align their sustainability information requests with this voluntary standard wherever possible, to help mitigate compliance burdens for smaller businesses.

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The recommendation is an interim measure, introduced ahead of the formal adoption of a delegated act establishing a voluntary reporting framework. The delegated act will form part of the Omnibus I simplification package, which proposes limiting mandatory CSRD reporting to companies with more than 1,000 employees.

“This future voluntary reporting standard will also act as a ‘value-chain cap’ to protect SMEs and other companies not subject to mandatory reporting under the CSRD from excessive information requests from their value chain partners,” the Commission stated.

The final content and adoption timeline of the delegated act will depend on ongoing negotiations between EU co-legislators regarding the Omnibus I proposal.

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