ESG Reporting with a Simplified CSRD
The First Omnibus Package on Sustainability aims to simplify the CSRD. One of the most impactful proposals is that large companies with fewer than 1,000 employees will no longer be subject to CSRD obligations. This could affect 80% of large companies. What does this mean for them?
Despite the proposed simplification, the demand for transparency from business partners such as banks, investors, customers, and consumers remains high. A well-prepared sustainability report provides insight into the impact of a company’s strategy and the resilience of its business model. It helps businesses improve operations by reducing waste, saving energy, or optimizing supply chains.
ESG Remains Relevant
Reporting on a company’s impact on people, the environment, and corporate behaviour (ESG) remains relevant, even if it is not mandatory under the CSRD. Various reporting standards offer guidance on essential elements to include in an ESG report. They also provide a solid framework for mapping out goals, policies, actions, risks, and opportunities. Here are three key reporting standards to consider:
VSME
The Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) is designed specifically for small and medium-sized enterprises that are not covered by the CSRD. The VSME consists of a basic module and an optional extended module. Topics such as climate, biodiversity, pollution, circularity, and workforce management are covered, but in a less detailed and less time-consuming way than required by the European Sustainability Reporting Standards (ESRS) under the CSRD.
Materiality as a Foundation
The VSME modules address a large portion of data requests from supply chain partners. The European Commission has indicated that reporting under the VSME can also serve as protection against excessive data requests. Additionally, the VSME is significantly less complex than the ESRS, as it does not require a materiality assessment. This is unfortunate because identifying the impact of key (material) topics provides a strong foundation for sustainability policies.
GRI and CSRD-Light
A well-established global standard is the Global Reporting Initiative (GRI). Based on the impact materiality principle, GRI offers a solid framework for voluntary sustainability reporting. Many leaders in sustainability reporting, including SMEs, have been using it for years.
Another option is “CSRD-light”, a simplified version of CSRD reporting that focuses on key requirements without mandatory detailed reporting. By following the standard "objectives, policies, actions, and metrics" framework of the CSRD, companies can create a robust sustainability report. They can then voluntarily expand their CSRD reporting step by step over time.
Our Advice
The best choice for a reporting guideline depends on several factors, such as ambition, budget, internal capacity, and stakeholder expectations. An ESG strategy based on the double materiality perspective is crucial—choose that as a starting point and build from there.
Report on the most relevant data points, monitor developments and progress, and avoid taking the easy route. Stay transparent about challenges and report not only on milestones. Whatever choice you make, we are happy to support your company in drafting its ESG report, whether based on VSME, GRI, or CSRD.