EFRAG initiates public consultation on sustainability reporting standards for SMEs

Posted on January 28, 2024 by Editor

The European Financial Reporting Advisory Group (EFRAG) has launched a public consultation on two Exposure Drafts concerning sustainability reporting standards for Listed SMEs. Before you ask, “What’s a Listed SME?”, well… it’s complicated. It’s a public company listed on an exchange that (very roughly) turns over less than EUR40M, and/or has less than 250 employees and/or less than 20M in {Ed: Net?} assets.

With sustainability reporting presenting a more significant challenge for these smaller listed entities the EU’s Corporate Sustainability Reporting Directive (CSRD) includes different reporting requirements, designed to be proportional to the activities of smaller enterprises.

The ESRS LSME ED aims to establish reporting requirements proportionate to the scale and complexity of smaller firms, supporting their access to finance and ensuring standardized sustainability information availability.

The Exposure Draft ESRS for listed SMEs (ESRS LSME ED) and the related Exposure Draft for the voluntary reporting standard for non-listed SMEs (VSME ED) are open for comments until 21 May.

It’s worth noting that in November the European Commission slowed down the LSME reporting requirements and the European Parliament confirmed that change just this week.

Nevertheless, as part of this initiative, EFRAG invites stakeholders to participate in a field test, emphasising the importance of market acceptance. The field test, open for participation to sign up for until 31 January, focuses on assessing feasibility, costs, challenges, benefits, and the usefulness of individual disclosures, allowing participants to contribute to shaping future requirements.

We encourage our readers to get involved! The public consultation provides a great opportunity for stakeholders to offer feedback and road-test the ESRS, ensuring the eventual approved standards effectively meet the needs and expectations of (L)SMEs.

For more details and to participate in the consultation, access the Exposure Drafts and Field Test Questionnaires here.

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