Impact Europe, the Global Alliance of Impact Lawyers, and Euclid Network, endorsed by the signatory organisations including Smart Kolektiv and Responsible Business Forum, jointly issue this statement to welcome the EFRAG’s Exposure Draft for a Voluntary Sustainability Reporting Standard (VSME ED) and share our key recommendations to further align it with the needs of the impact and social economy ecosystems.
The VSME is a significant step forward towards the standardisation of ESG reporting, which has the potential to benefit SMEs, stakeholders, larger companies in the value chain, and investors. The draft reporting standard provides a simple and proportionate tool to guide the sustainability reporting of non-listed SMEs. We particularly welcome the modular and gradual approach to reporting tailored to SMEs’ different stages of maturity in their sustainability journey as well as the varying data needs of business partners and stakeholders.
Impact and social enterprises are predominantly non-listed SMEs. These undertakings are ahead of the sustainability curve with a business model focused on intentionally generating measurable positive impacts on underserved social and/or environmental issues. To maximize the acceptance of VSME in this sector, the statement presents five specific recommendations that EFRAG could implement. The recommendations include integrating voluntary positive impact disclosures into standard modules, developing supplementary modules for impact-oriented enterprises, providing guidance on clarifying segments not covered by the VSME standard, incorporating additional governance information, and offering centralized digital tools to simplify the reporting process.
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This adaptation holds significant potential to contribute to Europe’s transformation into a sustainable economy and society while addressing the financing gap for social and environmental challenges, fostering the growth of the impact and social economy sectors.
