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EU voluntary sustainability system for SMEs

The European Commission has backed a voluntary standard for sustainability reporting that is aimed at small and medium-sized companies (SMEs).

The EU body says that the  measure will make it easier for smaller firms that are not covered by the Corporate Sustainability Reporting Directive (CSRD) to respond to requests for information on sustainability from large financial institutions and companies.

In February, the commission adopted an ‘omnibus’ simplification package that proposed to limit mandatory sustainability reporting under the CSRD to large companies with more than 1,000 employees.

For smaller companies, it proposed a voluntary reporting standard, which will be based on the recommendation adopted today (30 July).

Delegated act

The commission describes the recommendation as “an intermediary solution” that will address market demands until a delegated act on a voluntary standard is formally adopted.

It adds that the voluntary standard will also act as a “value-chain cap” to protect SMEs and other companies not covered by the CSRD from excessive information requests from their value-chain partners.

The timing of the adoption of the delegated act will depend on the pace and conclusion of negotiations on the omnibus package between the commission, member states, and MEPs.