Focus on SMEs: EFRAG publishes new consultation drafts

According to Article 19a (6) CSRD, the sustainability reporting requirements for SMEs are lower than for large companies. These requirements are issued by the European Financial Reporting Advisory Group (EFRAG).   

The ESRS LSME sets a standard tailored to the complexity and capacities of SMEs. It defines information that companies must disclose to explain their material impacts and risks related to environmental, social, and governance sustainability aspects. 

The following entities fall within the scope of the ESRS LSME: 

The ESRS LSME is structured into six sections. The first two sections are cross-cutting and cover general requirements and disclosures. Section three covers policies, actions, and targets and is to be applied with section two and the thematic sections. Thematic sections four, five, and six list the areas of Environment, Social, and Business Conduct. Both the cross-cutting and thematic sections apply across industries. 

In the future, the ESRS VSME can be voluntarily adopted by non-listed micro, small, and medium-sized enterprises. The aim is to assist companies in improving their sustainability management and to facilitate the response to requests for sustainability information that SMEs receive from business partners. 

Non-listed SMEs have various options for preparing a sustainability report by selecting one or more of the mentioned modules.  

The Basic Module represents the target approach for micro-enterprises and establishes the minimum requirements for other companies. The module on narrative strategies, actions and targets is recommended for companies that have already formalized and implemented them. The module on business partners defines data points that are likely to be included in the data requirements of lenders, investors, and corporate customers of the company. A materiality analysis is required to complete the modules, with the exception of the basic module.​