SMEs to get EU sustainability reporting guidance before Christmas, says EFRAG

EFRAG has confirmed it will publish sustainability guidance for SMEs in the next two weeks, in the latest in a string of recent efforts to clarify the EU’s reporting expectations.  

Speaking at an event held in Brussels today, Chiara Del Prete, the chair of EFRAG’s sustainability reporting technical expert group, said the voluntary standards, known as VSME, would be out shortly.  

She noted that more than 300 entities responded to a consultation on the standards, and 164 participated in a “field test”.    

EFRAG will now work on capacity building, education, and creating incentives for the uptake of VSME.   

“It’s a necessity to enable online platforms where SMEs can populate their data, ideally with the support of user-friendly, VSME-compliant tools and databases, so SMEs don’t have to depend unduly on external skills,” Del Prete said. 

“So, with a click, their VSME report would be available to current and potential counterparts, therefore opening new business opportunities. This is the vision”.  

EFRAG is the European Commission’s corporate reporting advisory body and has been shaping its thinking on the European Sustainability Reporting Standards (ESRS) that underpin the Corporate Sustainability Reporting Directive.   

On Friday, it published a fresh batch of responses to questions from the market, bringing the total number published so far this year to 257. 

Its response to questions about how to map disclosure requirements to sustainability topics was put into a dedicated 23-page document, due to its “importance and size”. 

The ESRS outline which sustainability matters must be considered when a company conducts a double materiality assessment (DMA) to identify what to disclose to the market.  

EFRAG has now provided a flowchart to help firms determine their reporting obligations after that assessment has been completed.  

The document maps the sustainability topics addressed in the first standard (ESRS 1) to their respective disclosure requirements in the second (ESRS 2).  

The authors warned the new information “does not imply automatism relating to the conclusion on the materiality of a [particular] metric when the related matter has been deemed material”. 

“It is still possible for the undertaking to conclude that a metric is not material to itself despite it pertaining to a material matter,” they added.  

“Conversely, some metrics may be related to more than one subtopic. The assessment of the materiality of information requires the exercise of judgment.” 

The long-awaited update has been welcomed by those struggling to understand how to move from completing a DMA to creating a suitable list of final disclosure topics. 

Tom Carr, director of sustainability strategy at consultancy SB+CO, described the mapping as “helpful” but said it should have been published last year so that companies required to report against CSRD in 2025 could have used it in their preparation.    

“The lack of this mapping has been one of the biggest frustrations we’ve heard from sustainability practitioners this year,” Carr said on LinkedIn. “It’s absurd that this guidance has only just been released now.”  

A number of speakers at today’s EFRAG event in Brussels said it was necessary for the group to be given a bigger budget and more resources by the European Commission so that it can work more quickly and provide greater clarity to the market.

Last month, EFRAG released proposed guidance for how non-EU companies in scope of the CSRD should use ESRS.