In July, the European Commission adopted a recommendation on voluntary sustainability reporting for small and medium-sized enterprises (SMEs). The recommendation presents a voluntary standard that will make it easier for SMEs that are not covered by the Corporate Sustainability Reporting Directive (CSRD) to respond to specific requests for sustainability information from large financial institutions and companies.
To the extent possible, the Commission encourages large companies and financial institutions that seek sustainability information from SMEs to base their requests on the voluntary standard. SMEs may also wish to voluntarily report sustainability information to improve their access to sustainable finance and better understand and monitor their own sustainability performance, thereby improving their resilience and competitiveness.
As background, in February the Commission adopted the “Omnibus I” simplification package, which proposes to limit mandatory sustainability reporting under the CSRD to large companies with more than 1,000 employees. For companies with up to 1,000 employees, the Commission proposes a voluntary reporting standard. This voluntary standard will also act as a “value-chain cap” to protect SMEs and other companies not subject to mandatory reporting under the CSRD from excessive information requests from their value chain partners.
The timing of the formal adoption of the voluntary standard will depend on the pace and conclusion of negotiations between the co-legislators on the Omnibus I proposal. The content of the final draft may vary with respect to the recommendation.
This article originally appeared on inc.nutfruit.org.
