The European Financial Reporting Advisory Group (#EFRAG) is actively developing a new sustainability reporting standard specifically designed for small and medium-sized enterprises (SMEs). This initiative, known as the VSME (Voluntary Sustainability for SMEs), seeks to encourage SMEs to adopt sustainability reporting practices similar to those mandated for larger companies under the Corporate Sustainability Reporting Directive (#CSRD). Unlike the CSRD, which imposes reporting requirements on large-size companies, the VSME is voluntary. It aims to offer a structured approach for SMEs to evaluate their environmental, social, and governance impacts through a process known as double #materiality assessment.
Double materiality is a key concept in modern sustainability reporting, highlighting the importance of both financial and non-financial impacts. It requires companies to consider not only how sustainability issues affect their financial performance, but also how their activities impact the environment and society. For SMEs, this approach can provide a comprehensive understanding of their role and responsibility in achieving broader sustainability goals.
The VSME standard includes specific indicators and guidelines tailored to the unique challenges and opportunities faced by SMEs. By adopting these guidelines, SMEs can enhance their transparency, meet stakeholder expectations, and potentially unlock new market opportunities. Moreover, as sustainability becomes increasingly integrated into business strategies, those adopting early can gain a competitive edge, demonstrating commitment to responsible business practices.
For those interested in exploring the VSME standard and learning more about implementing sustainability measures in their business operations, EFRAG offers a detailed paper that serves as a valuable resource. This paper provides practical guidelines and best practices for SMEs looking to improve their sustainability reporting and performance.
We recommend you to have a look at this paper, which provides good guidelines to increase your implementation of sustainability measures!