Sustainability Reporting for SMEs: A New Chapter
Sustainability reporting for SMEs has a new framework. On 21 September 2026, the EU published Commission Delegated Regulation (EU) 2026/1560. It entered into force on 24 September.
The regulation sets a voluntary reporting standard. It builds on VSME, which the Commission recommended in July 2025.
For Czech businesses, the goal is clear: make sustainability data easier to share with customers and banks. As a result, firms can spend less time answering separate requests.
But why do smaller businesses need their own standard?
The Corporate Sustainability Reporting Directive (CSRD) sets reporting duties for companies within its scope. These firms must use the European Sustainability Reporting Standards (ESRS).
However, smaller businesses often receive requests for sustainability data too. EFRAG therefore developed VSME to help them respond through a simpler, voluntary approach.
The framework covers environmental, social and governance (ESG) data. It can help firms meet customer needs, support loan discussions and build trust.
Early feedback shows its potential. In EFRAG’s first market acceptance survey, 43% of responding preparers reported full use and 23% partial use. Moreover, reported benefits included meeting large companies’ data needs (41%), better access to finance (25%) and better internal sustainability management (18%). [1]
VSME Reporting: Two Modules Explained
VSME reporting offers two modules, allowing businesses to choose the right level of detail.
- Basic Module: Its 11 disclosures cover company details, energy, emissions, water, waste, staff conditions and corruption convictions.
- Comprehensive Module: Its nine extra disclosures add detail on topics such as climate targets, climate risks and human rights.
The Basic Module comes first. Then, firms can add the Comprehensive Module to meet more detailed needs from banks, investors or customers.
In addition, some disclosures apply only in specific cases. Unlike ESRS, this approach does not require a formal double materiality assessment.
The standard that is preparing firms for ESG disclosure
The new framework does more than guide reporting. It also sets clear limits on data requests.
From financial years starting on or after 1 January 2027, the value chain cap protects firms with no more than 1,000 employees. Under these rules, CSRD-reporting companies cannot ask them for data beyond the points listed in Annex II for their sustainability reports.
In addition, the rules clarify what to report and when. Data points fall into four groups: essential, conditional, voluntary or sector-specific. Some essential data points are voluntary for firms with 10 employees or fewer.
So, sustainability reporting for SMEs starts with checking available data and choosing the right module. Clear data can help build trust with customers and banks.
Axevera’s ESG compliance and regulatory analysis services can help firms understand the rules and what their supply-chain partners expect.
References:
EFRAG Annual Review 2025: [1]
https://eur-lex.europa.eu/eli/reco/2025/1710/oj/eng
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