20/12/2023 - Call for participation in field test of EFRAG exposure drafts on sustainability reporting standards for SMEs
The EFRAG SRB approved the ESRS LSME Exposure Draft (ED) on 15 December and VSME ED on 29 November 2023, to launch for public consultation the two Exposure Drafts in January 2024 (for a period of 4 months).
Participation in this field test is a unique opportunity to be part of the standard-setting process and help shape the future requirements, as well as to gain valuable insights into the new requirements. See below for further details.
The versions approved by EFRAG SR TEG but subject to changes by the EFRAG SRB are available at the following links (ESRS LSME proposal here and VSME proposal here). Please see Background below for more details.
Field test: During the consultation period, EFRAG will conduct a field test of the requirements in the two EDs with preparers and other stakeholders. The field test consists of answering a questionnaire and preparing (part of) the disclosures contained in the ED. It is not necessary to test the entire standard, i.e. it will be possible to selectively test lists of disclosures. Companies will be invited to one-to-one interviews with the EFRAG Secretariat to provide their comments about the feasibility, costs, challenges, benefits and usefulness of the individual disclosures, and their suggested improvements to the EDs. Detailed instructions will be provided by mid-January.
Call for participation in the field test: EFRAG is looking for preparers and users of the two EDS. Please communicate your interest in participating in the test by 31 January 2024. EFRAG is looking for individuals, companies and associations belonging to the following categories for the two standards:
ESRS LSME ED:
- Preparers, i.e. SMEs which are public-interest entities (i.e. securities traded on a regulated market in the Union), SNCIs, and captive insurance and reinsurance undertakings that are in the scope of ESRS LSME to test the requirements in the ED; and
- Users of the reporting information of listed SMEs, including investors (asset managers, banks, other financial market participants) and other types of users.
VSME ED:
- Preparers, i.e., European non-listed SMEs and micro entities (service providers could be considered as proxy for SMEs);
- Lenders and investors that collect data from non-listed SMEs in order to manage sustainability matters as part of their business decisions or to meet their own ESRS requirements;
- Corporates that collect data from non-listed SMEs suppliers to meet their own ESRS requirements or manage sustainability matters as part of their business decisions;
- Data aggregators or platforms that support the provision of data from SMEs to corporate clients.
Contacts: Please signal your interest in participating by 31 January 2024 by sending an email to VSME@efrag.org for VSME ED and LSME@efrag.org for ESRS LSME ED. Should you have any inquiries, we kindly invite you to include them in your correspondence.
BACKGROUND
EFRAG has been mandated to develop a standard for SMEs which are public-interest entities. These include those whose transferable securities are admitted to trading on a regulated market in the European Union, SNCIs (small and non-complex institutions) and captive insurers and reinsurers, in what is called ESRS LSME. The standard would be applicable from 2026 with an additional 2-year opt out. The standard will be issued as delegated act. ESRS LSME ED has the function of enhancing ESG data availability from smaller undertakings to investors, hence increasing their access to sustainability portfolios and avoiding discrimination due to lack of sustainability information.
EFRAG has also been asked to develop a voluntary standard for non-listed SMEs (VSME). This standard aims to be a simple reporting tool used by micro-, small- and medium-sized enterprises (SMEs) to monitor their sustainability performance and to face growing and different ESG data requests from their business counterparts (i.e., banks, investors, or larger companies in the upstream value chain).
