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In a significant move to foster broader participation in sustainable business practices, the European Commission has officially adopted a simplified sustainability reporting standard specifically tailored for small and medium-sized companies (SMEs). This initiative is designed to reduce the administrative burden on smaller enterprises while enabling them to meet growing demands for ESG transparency from larger business partners and financial institutions.
Adopted on July 29, 2025, this new standard provides a streamlined framework for SMEs that are either listed on EU regulated markets or are part of the value chain of larger companies subject to the Corporate Sustainability Reporting Directive (CSRD). It aims to make sustainability reporting more accessible and less resource-intensive for these companies, which often lack the extensive compliance departments of larger corporations.
Key features of the adopted standard include:
The requirements are significantly less complex than those for large companies, focusing on the most material and impactful disclosures relevant to SMEs.
While mandatory for listed SMEs, the standard is available for voluntary use by unlisted SMEs, allowing them to proactively respond to requests for ESG data from their business partners.
This standard will facilitate the flow of ESG information within value chains, helping larger companies meet their own extensive reporting obligations under CSRD, particularly concerning Scope 3 emissions and supply chain sustainability.
This adoption underscores the EU’s commitment to an inclusive green transition, recognizing that SMEs are a vital part of the European economy and play a crucial role in achieving broader sustainability goals. By providing a clear and simplified pathway for reporting, the Commission aims to empower SMEs to engage more effectively with sustainable finance, enhance their competitiveness, and contribute to the EU’s ambitious environmental and social objectives. Companies, especially those in the value chain of larger EU entities, are encouraged to familiarize themselves with this new standard.
