EFRAG issues draft sustainability disclosure standards for SMEs

The EU’s advisory body is consulting on voluntary guidelines and new rules under CSRD

EU advisors are seeking feedback on proposed new standards for SMEs reporting under the Corporate Sustainability Reporting Directive (CSRD).

The European Financial Reporting Advisory Group (EFRAG) published two draft standards this week and is inviting entities to participate in tests running alongside the consultation.

One set of expectations, known as ‘ESRS LSME ED’, is aimed at companies in scope CSRD: smaller entities with securities trading on EU exchanges, captive insurers and reinsurers, and small and non-complex institutions.

It covers policies, target-setting, metrics, environmental and social disclosures and business conduct.

The final version will be brought into law in 2026.

The other document, known as ‘VSME ED’, is ​a set of voluntary standards for non-listed SMEs, which are not covered by current legal requirements, but may wish to report in order to access sustainable finance or meeting stakeholder expectations.

“This Exposure Draft proposes a simple reporting tool to assist non-listed micro-, small- and medium-sized enterprises in responding to requests for sustainability information that they receive from business counterparts (i.e., banks, investors or larger companies for which non-listed SMEs are suppliers) in an efficient and proportionate manner as well as to facilitate their participation in the transition to a sustainable economy,” EFRAG said in a statement.

“Based on market acceptance, the VSME ED is expected to standardise the current multiple ESG data requests (which represent a significant burden on non-listed SMEs), by reducing the number of uncoordinated requests they receive.”

EFRAG has also reiterated its call for companies with SMEs in their supply chains, as well as investors and lenders in the space, to participate in “field tests”. It described the tests as “a unique opportunity to be part of the standard-setting process and help shape future requirements as well as to gain valuable insights into the new requirements”.

The call for field testing is open until the end of the month. The consultation lasts until 21 May.