Investors call for a credible sustainability reporting standard for small and mid-caps
Omnibus simplification package:
Investors call for a credible voluntary sustainability reporting standard for small and mid-caps
In a critical stage of the negotiations on the Omnibus Simplification package, Eurosif, the European Fund and Asset Management Association (EFAMA) and Principles for Responsible Investment (PRI) join forces to call for a credible and proportionate voluntary sustainability reporting standard for companies with over 250 employees that will fall outside of the CSRD scope. This minimum voluntary set would allow financial institutions, including investors, to access meaningful sustainability-related information crucial for their investment decisions.
Why does it matter?
Sustainability data is essential for informed investment decisions and assessing sustainability risks. However, the current European Commission’s proposal risks excluding many companies already reporting under the Non-Financial Reporting Directive (NFRD)/CSRD, creating data gaps and market fragmentation. In addition, the use of VSME as a basis for non-SME voluntary reporting is not fit for purpose. Designed for very small and micro-companies, the VSME lacks the granularity and reliability needed for reporting to larger companies and financial market participants as users of information. Its application as a value chain cap may further restrict the information available to investors.
Our recommendations
To ensure that investors have access to meaningful, decision-useful ESG data across a wide range of companies and their entire value chain, our organisations suggest that the voluntary reporting standard should be grounded in the revised European Sustainability Reporting Standards (ESRS). This initiative aims to provide proportionate and scalable requirements that also enable companies, particularly growing businesses, to gradually transition toward mandatory sustainability reporting. By enhancing the comparability, reliability, and usability of both voluntary and mandatory ESG disclosures, the standard will help close critical data gaps and foster greater transparency. Ultimately, this fit-for-purpose framework will support the growth of sustainable finance, empower informed investment decisions, reduce greenwashing, and ensure continued access to capital for European businesses navigating the evolving regulatory landscape.
For any queries, please contact Pierre Garrault, Eurosif Senior Policy Adviser (pierre.garrault@eurosif.org).
Access the PDF of the press release here
