SME’s Proportionate Standards
A simplified version of the ESRS for SMEs
The European Sustainability Reporting Standards (ESRS), developed by EFRAG, are central to the CSRD for Small and Medium Entreprises (SMEs). To make compliance achievable, EFRAG has created simplified standards for SMEs, adapted to their size, resources, and reporting needs.
These proportionate ESRS for SMEs ensure that small and medium-sized enterprises can implement sustainability reporting in a way that is both practical and relevant. While CSRD applies mandatorily to listed SMEs that meet specific thresholds, non-listed SMEs and micro-enterprises can adopt the standards voluntarily to strengthen SME sustainability reporting and enhance transparency for investors, banks, and supply chain partners.
Under CSRD for SMEs, listed SMEs on regulated European markets will need to comply if they meet at least two of the following criteria:
- a balance sheet total of €4 million
- net turnover of €8 million, or
- an average of 50 employees during the financial year.
The directive does not apply to non-listed SMEs and micro-enterprises, but they can comply with the standards voluntarily.
For larger companies, CSRD reporting obligations apply if they meet at least two of the following criteria:
- a €20 million balance sheet total
- €40 million net turnover, or
- an average of 250 employees.
To reflect the unique characteristics of SMEs, EFRAG has developed two tailored versions of the ESRS for SMEs:
- VSME (Voluntary Sustainability Reporting Standard): designed for non-listed SMEs that want to report ESG information in a proportionate and flexible way.
- LSME (ESRS for Listed SMEs): mandatory from January 1, 2026, with first reports due in 2027.
Together, these standards mark a milestone in the evolution of SME sustainability reporting. By aligning with the CSRD for SMEs, they provide a framework that balances transparency with proportionality — enabling SMEs to disclose relevant ESG information, strengthen resilience, and drive sustainable growth.
