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  • Studio Paci

EFRAG: New ESG Standards for SMEs - Public Consultation

🌐 Introduction

The EFRAG (European Financial Reporting Advisory Group) has recently initiated a public consultation on two draft standards for sustainability reporting principles, specifically targeting SMEs, both listed (ESRS LSME ED) and unlisted (VSME ED).

This initiative follows the consultation on ESRS standards for large enterprises, which began with the adoption of the CSRD (Corporate Sustainability Reporting Directive) in January 2024.

Stakeholders have until May 21, 2024, to contribute via online questionnaires.


📈 Importance of ESG Standards for SMEs 

The ESG standards for EU SMEs play a critical role.

According to the CSRD, from 2026, even listed SMEs will be subject to sustainability reporting obligations.

Therefore, the EFRAG is paying particular attention to defining these standards, both through the publication of the consultation and through the "field test" launched at the end of December, to allow companies to experience the impacts of applying the CSRD.


🔍 Focus on the Two Exposure Drafts

Patrick de Cambourg, president of the EFRAG’s SRB, emphasizes the importance of SMEs, which represent 41% of Italy’s national turnover, for the European economy.

The two Exposure Drafts aim to support SMEs in transitioning to a sustainable economy, facilitating access to financing and reducing complexity in managing heterogeneous data requests.

Chiara Del Prete, president of the EFRAG SR TEG, highlights the importance of market acceptance for the success of the voluntary standard for unlisted SMEs.


📋 Details of the Standards and the Consultation

The standards for listed SMEs include 3 general sections:

  • "General Requirements",

  • "General Disclosure",

  • "Policies, Actions, and Objectives",

and 3 specific sections:

  • "Environment",

  • "Social", and

  • "Business Conduct".


For unlisted SMEs, the proposed standard is a simple reporting tool, designed to efficiently respond to sustainability information requests.

The public consultation aims to gather feedback on key aspects of the Exposure Drafts, with particular focus on the proposed architecture, implementation of CSRD requirements, relevance of the information, realized simplifications, and market acceptance.


🔬 Field Test and the Future of ESG Standards

The EFRAG has also launched a "field test" to assess feasibility, costs, challenges, benefits, and the usefulness of individual disclosures.

This test provides a unique opportunity for stakeholders to actively contribute to the standard-setting process.

Participating companies are invited to workshops or individual interviews to share their experiences and suggestions.

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