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Many small and medium-sized enterprises are currently experiencing increasing pressure to provide ESG data to customers, banks and other business partners.
The requirements may seem incalculable, but the EU's new voluntary standard VSME provides a simple place to start.
At the end of July, the European Commission presented an official recommendation of these standards for SMEs. The aim is clear: to make it more streamlined and manageable to deal with the increasing demands for ESG data.
Although SMEs are not covered by the Corporate Sustainability Reporting Directive (CSRD), they can choose to report voluntarily.
This can provide several benefits: easier access to finance, better insight into the company's own sustainability performance, enhanced competitiveness and the ability to meet the demands of customers and partners.
Voluntary reporting is also an obvious opportunity to take stock of goals, progress and forward action—and to communicate efforts to key stakeholders.
To support the reporting work, EFRAG — Technical Adviser to the European Commission — has developed the voluntary framework VSME. The standards are designed to be practical and manageable, and they can be advantageously coupled to a dual materiality assessment.
In this way, you not only get a handle on reporting, but also a strategic basis that can be used to prioritize and create value in the business.
In addition, the Commission recommends that larger companies and financial institutions base their enquiries to SMEs on the VSME. This means that companies that follow the standard can reduce the administrative burden and respond more effectively to requests from partners who are themselves subject to CSRD.
Everything points to the fact that the VSME will become a common reference point in the market in the future, making it a good starting point for voluntary reporting. At the same time, the current VSME standard will form the basis for a future voluntary reporting framework under the ommibus package.
Adjustments may come depending on final legislative agreements and possible simplifications in European standards, but at this stage it is not high on the agenda.
Time for action
Our recommendation is clear: If your company needs to choose an approach to sustainability reporting, VSME is a solid and future-proof starting point.
It is a tool that can help you get started in a simple way, create insights into your climate and sustainability efforts and strengthen your position with customers, investors and partners.
In short, it's time to get started, and VSME gives you a safe place to start.
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