Sustainability Reporting: what is an SME to do?
Sustainability reporting well on its way to becoming a mandatory exercise for all large companies based in the EU and the UK.
2025 will see the publication of a huge wave of new reports from large European companies, prompted by the requirements set out in the Corporate Sustainability Reporting Directive.
In the UK, the number of large companies subject to a mandatory sustainability reporting requirements is also set to increase dramatically under new UK Sustainability Reporting Standards – the government has said it will consult on a first draft of this legislation in the first quarter of 2025.
While much uncertainty remains, large companies are starting to get a clearer idea of what is expected from them in the way of sustainability reporting. On balance, SMEs have probably had less guidance on this topic so far. This cohort of companies is not yet able to ask itself ‘what does the law require me to do? It remains a case of ‘what should I do?’ and ‘what are my investors and business partners asking me to do?’
SMEs asking themselves these questions may be interested to learn of the publication of a new set of voluntary sustainability reporting standards for SMEs (VSME) by the European Financial Reporting Advisory Group (EFRAG) on the 17th of December. The VSME has been created to offer a standardised, straightforward and proportional reporting mechanism that should satisfy most sustainability disclosure requests that SMEs receive from third parties, such as investors and large corporate clients who are subject to mandatory reporting requirements.
This VSME has two modules that SMEs can use to prepare sustainability reports – a basic module which targets micro-undertakings and a comprehensive module which includes additional datapoints likely to be requested by banks, investors and large corporate clients. If you need advice on what your business could, should or must be doing in the way of sustainability reporting in 2025 and beyond, please get in touch.
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