EFRAG launched official consultations on two draft standards for sustainability reporting
EFRAG launched official consultations on two draft standards for sustainability reporting by small and medium-sized enterprises (SMEs) with the main objective of collecting feedback from stakeholders.
On 22 January 2024, EFRAG (the European Financial Reporting Advisory Group) opened official consultations on two draft standards for sustainability reporting by small and medium-sized enterprises (SMEs). The main objective is to gather feedback from stakeholders through questionnaires, which will be available until 21 May 2024. Interested parties were also encouraged to participate in joint field tests. Registration was possible until 31 January 2024.
The two draft standards focus on the following areas:
1. Listed SMEs (ESRS LSME ED): EFRAG is developing this standard on behalf of the European Commission, known as ‘ESRS LSME ED’. This standard is intended for small and medium-sized enterprises (SMEs) that are considered public interest entities. This includes SMEs whose securities are traded on a regulated market within the European Union, as well as small and non-complex institutions (SNCIs) and captive insurance and reinsurance companies, also known as ‘LSMEs’. The aim of this consultation is to define reporting requirements consistent with the nature of LSMEs’ business, complexity, capabilities and characteristics. This standard is expected to come into force on 1 January 2026, following the publication of the official delegated act incorporating this ESRS.
2. Unlisted SMEs (VSME ED): The aim of this draft standard is to standardise current requests for ESG data. These requests often constitute a significant administrative burden for (very) small companies and unlisted SMEs. The standard aims to provide a simple reporting tool for these SMEs to respond to information requests from commercial partners such as banks, investors or large companies when acting as suppliers.
These consultations and draft standards are an important step towards more standardised and feasible sustainability reporting for both listed and unlisted SMEs within the European Union.
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