EFRAG (European Financial Reporting Advisory Group) has been asked to develop a voluntary sustainability reporting standard specifically for non-listed SMEs (VSME), that means SMEs that are not traded in a regulated market in the European Union.
The VSME proposes a simple reporting tool to assist non-listed micro-, small- and medium-sized enterprises in responding to sustainability information requests that they receive from business counterparts (i.e. banks, investors, or larger companies for which SME are suppliers), in an efficient and proportionate manner, as well as to facilitate their participation in the transition to a sustainable economy.
The scoping thresholds for SMEs are outlined below:
(a) An undertaking is Micro if it does not exceed two of the following thresholds:
i. €350,000 in balance sheet total,
ii. €700,000 in net turnover, and
iii. 10 employees.
(b) An undertaking is Small if it does not exceed two of the following thresholds:
i. €4 million in balance sheet total,
ii. €8 million in net turnover, or
iii. an average of 50 employees.
(c) An undertaking is Medium if it does not exceed two of the following thresholds:
i. €20 million in balance sheet total,
ii. €40 million in net turnover, and
iii. 250 employees.
Based on market acceptance, the VSME is expected to standardise the current multiple ESG data requests (representing a significant burden for SMEs), reducing the number of uncoordinated requests they receive. This is expected to support them in having better access to lenders, investors and clients.
The VSME is a reporting standard intended for undertakings that fall outside the scope of the Corporate Social Reporting Directive (CSRD). They are encouraged to use this VSME Standard to prepare and share with whomever such sustainability information may concern. This Standard covers the same sustainability issues as the European Sustainability Reporting Standards (ESRS) for large undertakings. However, it is based upon the key concept of proportionality and therefore takes into account micro-, small- and medium-sized undertakings’ fundamental characteristics.
Consistency with ESRS for large undertakings has been carefully considered in the preparation of this Standard, while defining proportionate requirements. This Standard has no legal authority, unlike the ESRS for large undertakings. It provides undertakings that are outside the scope of the CSRD with a voluntary tool for sustainability reporting.
Pragmatica have a team of experts experienced in the SME market and can offer precise, tailored support for companies that fall outside of the mandatory CSRD threshold but will be required to provide sustainability information to their stakeholders and business partners.
If you would like more information on bringing sustainability reporting solutions to your organisation that meet your specific needs in a proportionate way, please get in touch with one of our experts via www.pragmatica.com
