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Public Consultation on Sustainability Reporting Standards for Small and Medium-Sized Enterprises

On 22 January 2024, the European Financial Reporting Advisory Group (EFRAG) published 2 exposure drafts on European Sustainability Reporting Standards (ESRS) for SMEs. The consultation period is open until 21 May 2024.

As of 1 January 2026, SMEs that are public-interest entities must disclose sustainability information based on a set of sustainability reporting standards, published by EFRAG in the form of an exposure draft (ED). The requirement applies to SMEs whose transferable securities (bonds, shares and other securities) are admitted to trading on a regulated market in the European Union, small and non-complex institutions and captive insurers and reinsurers (listed SMEs). The purpose of the ESRS LSME ED is to set reporting requirements that are proportionate and relevant to the activities and capacities of the listed SMEs.

The ESRS LSME ED is structured in 6 sections:
• General requirements;
• General disclosures;
• Policies, actions and targets;
• Environment;
• Social; and
• Business conduct.


EFRAG prepared an exposure draft with voluntary sustainability reporting standard for SMEs (VSME) which are not legally required to disclose sustainability information. The aim of the VSME is to provide a reporting tool, which non-listed SMEs are encouraged to use to disclose sustainability information when requested by other business stakeholders, for example when the SME is a supplier to a large company which must submit a sustainability report.

The VSME ED is structured as follows:
• Basic Module
• Narrative-Policies, Actions Targets (PAT) Module; and
• Business Partners Module.

Additional information

Interested parties are encouraged to provide feedback and comments by using the online questionnaires rather than comment letters for each exposure draft separately. If necessary, letters or other documents can be attached as supplements to the questionnaire responses.

Directive (EU) 2022/2464, also known as the Corporate Sustainability Reporting Directive (CSRD), came into effect on 5 January 2023, amending the Directive 2013/34/EU and the Member States of the European Union (EU) must transpose it into national legislation within 18 months (by 6 July 2024). The CSRD extends the scope to more companies, including large companies and all companies listed on regulated markets. The CSRD requires companies to disclose information on how sustainability factors affect their business and how their business operations impact the environment and society. Companies must report according to European Sustainability Reporting Standards (ESRS). The standards are developed by EFRAG (European Financial Reporting Advisory Group), a private association established in 2001, and adopted by the European Commission. The first set of 12 sector-agnostic ESRS standards entered into force on 1st January 2024.

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