Updates
What the new EFRAG guideline means for voluntary sustainability reporting for SMEs
20 Dec 2024
On 17 December 2024, the new EFRAG Guideline for voluntary sustainability reporting was published. This guideline is specifically aimed at small and medium-sized enterprises (SMEs) that are not yet subject to statutory reporting obligations but are faced with increasing demands from their business partners. Especially for SMEs exposed to a rising number of sustainability inquiries from large customers or potential investors, this guideline provides a clear framework for effectively and systematically communicating their sustainability measures.
What is behind the new EFRAG Guideline?
The EFRAG Guideline aims to support SMEs in meeting the growing demands of their stakeholders in the field of sustainability. It has been specifically developed for companies that do not fall under the Corporate Sustainability Reporting Directive (CSRD), yet wish or need to provide sustainability information.
The guideline pursues three central objectives:
Data provision for large companies: Many SMEs act as suppliers to large companies, which increasingly demand detailed sustainability data from their value chains.
Improving access to financing: Banks and investors increasingly require sustainability information to assess risks and opportunities in their decision-making processes.
Strengthening internal sustainability management: Companies can use the guideline to identify sustainability risks and enhance their competitiveness.
Which companies are targeted?
The guideline is aimed at non-listed companies, which are divided into three categories:
Micro-enterprises:
Balance sheet total ≤ €450,000
Net revenue ≤ €900,000
On average 10 employees or fewer
Small enterprises:
Balance sheet total ≤ €5 million
Net revenue ≤ €10 million
On average 50 employees or fewer
Medium-sized enterprises:
Balance sheet total ≤ €25 million
Net revenue ≤ €50 million
On average 250 employees or fewer
The modular structure: Basic and Comprehensive Modules
The guideline offers SMEs two reporting options, tailored to the resources and capacities of the companies:
A) Basic Module:
The Basic Module is intended for companies that wish to provide their sustainability information in a compact form. It includes 11 key disclosure requirements (B1-B11) covering general information, environmental metrics, social metrics, and governance metrics.
B) Comprehensive Module:
The Comprehensive Module contains all the disclosure requirements (B1-B11) from Option A and expands the reporting with 9 additional disclosure requirements (C1-C9) that address specific demands from investors, banks, and large customers.
Why should companies adopt this voluntary reporting?
The introduction of a voluntary sustainability report can be strategically beneficial for many SMEs. Here are the key advantages:
Meeting supply chain requirements:
Large companies increasingly demand specific data on environmental and social standards.
Using the standard facilitates the provision of this information.
Improved access to financing:
Banks and investors assess sustainability risks. A structured report can build trust and increase the chances of securing credit or investments.
Internal optimisation:
Companies can better understand their strengths and weaknesses in the area of sustainability.
Sustainability strategies can be specifically developed and implemented.
Competitive advantage:
Proactive reporting is increasingly seen as a quality feature in the industry.
Companies that credibly communicate sustainability can attract new customers and strengthen existing relationships.
Regulatory preparation:
Companies that report voluntarily now are better prepared for future statutory requirements.
Conclusion: Who is the standard suitable for?
Voluntary reporting according to the EFRAG Guideline is particularly beneficial for the following SMEs:
Companies that are suppliers to large corporations and need to prove their sustainability performance.
Companies aiming to increase their attractiveness to banks and investors.
Companies that wish to optimise their sustainability strategy and prepare for future market demands.
By engaging with the EFRAG Guideline, SMEs can not only minimise risks but also actively create opportunities for their business fields.
The link to the complete guideline can be accessed here!
How can turnus.ai support SMEs?
turnus.ai specialises in assisting small and medium-sized enterprises in managing sustainability inquiries posed by large customers. Our AI-based solution reads requirements, creates response proposals, and thus enables a quick and efficient processing without SMEs having to invest valuable time and resources. This allows you to focus on your core business while simultaneously meeting the growing expectations of your customers.
