On November 8th, the EFRAG published simplified ESRS standards for SMEs. With these standards, part of the Corporate Sustainability Reporting Directive (CSRD), the sustainability landscape for Small and Medium-sized Enterprises is undergoing a significant transformation. Let’s discuss what this means for your business.

ESRS explained

The ESRS are central to the EU‘s CSRD, initiated in early 2023. Aimed at enhancing corporate accountability, these standards are now extending their reach to include SMEs. For listed SMEs, the clock starts ticking in 2026 for ESRS reporting, setting a new benchmark in corporate transparency and accountability. These standards were introduced to modernize and strengthen the reporting requirements for companies on social and environmental issues.

SME-sustainability reporting

As an SME, you might not have faced the stringent reporting requirements of larger firms, but your role in sustainability is increasingly coming under the spotlight. Larger companies in your network will be seeking information about your sustainability practices, integrating you into a sustainable value chain. It’s time to prepare, especially for listed SMEs who will be reporting under ESRS from 2026.

The introduction of the simplified ESRS for SMEs is a significant development, as it acknowledges the challenges SMEs face in complying with the comprehensive reporting requirements and the importance of their role in the broader sustainability ecosystem. These new standards are custom-made for SMEs. They streamline the reporting process, focusing on material aspects relevant to your business. They reduce the reporting burden with fewer topics and a user-friendly format. This means you can report on crucial aspects like your environmental impact and workforce conditions in a practical, manageable way.

What the simplified standards include

The simplified ESRS standards are a tailored version of the broader framework, specifically designed for SMEs. They recognize the unique challenges smaller businesses face in sustainability reporting, offering a more feasible approach without compromising the core objectives of transparency and accountability. These adjustments ensure SMEs can participate effectively in sustainability reporting, aligning with broader environmental and social goals. Let’s explore the key elements of these simplified standards.

  • Focus on Materiality: SMEs are only required to report on sustainability matters that are materially significant to their business.
  • Simplified Reporting Process: The standards guide conducting a simplified materiality assessment.
  • Reduced Reporting Topics: Unlike the comprehensive list for large companies, SMEs have fewer topics to cover.
  • Easy-to-Follow Format: The reporting format is designed to be straightforward and easy for SMEs to implement.

Consider for instance a small manufacturing firm in the Netherlands. Under the simplified standards, it would report on material aspects like greenhouse gas emissions, waste management practices, and workforce safety measures. This approach contrasts with the extensive reporting a multinational corporation would undertake, covering a wider range of ESG aspects.

Benefits: More than compliance

Embracing these standards is more than a regulatory tick-box. It’s about seizing strategic opportunities – attracting conscious investors, enhancing your market reputation, and unlocking innovation in sustainable practices. By adopting these standards, you’re positioning your business at the forefront of the sustainability curve.

The Bigger Picture – Your Role in Global Sustainability

Your commitment to these standards contributes to a larger global effort towards sustainability. By reporting on your sustainable practices, you’re not only enhancing your business profile but also playing a crucial role in the collective move towards a greener economy.

Future-Proofing Your Business

Sustainability reporting is quickly becoming a universal business requirement. Starting your journey now with simplified ESRS standards places you ahead of the curve, preparing you for future regulations and market expectations.

Timeline ESRS Standards

The publication of the draft simplified ESRS standards signifies a larger trend: sustainability reporting is becoming a staple in the business world and is expected to extend to all businesses in time. This development underscores the importance of early preparation. For SMEs, beginning to align with these standards now can significantly ease future transitions and avoid potential difficulties.

At Eevery, we’re dedicated to supporting SMEs like yours in this transition. With our platform, we offer the latest insights, tools, and guidance to help you navigate these new reporting standards effectively, ensuring you’re well-equipped for the evolving demands of sustainability reporting.