European Commission recommends a voluntary sustainability reporting standard for small and medium-sized undertakings

The European Commission published the Commission Recommendation (EU) 2025/1710 of 30 July 2025 on a voluntary sustainability reporting standard for small and medium-sized undertakings in the Official Journal of the European Union on 5 August 2025.

This Recommendation presents a constitutes a voluntary sustainability reporting standard for small and medium-sized undertakings.

This standard is an intermediary solution to address market demand until a voluntary standard based on the Voluntary SME standard developed by EFRAG is adopted by means of a delegated act under the omnibus simplification proposal.

When this takes place will depend on the pace and conclusion of negotiations between the co-legislators (Council and Parliament).

In the meantime, the Commission believes it is urgent and necessary to help SMEs to respond to the information requests that they already receive from financial institutions, large companies and other stakeholders.

Following the adoption of this Recommendation, large corporates and financial intermediaries should limit, as far as possible, requesting information from SME value chain partners to information that is coherent with the disclosures included in the VSME.

Through this Recommendation, the Commission recommends that non-listed SMEs and micro-undertakings that wish to voluntarily report sustainability information should do so in accordance with the VSME standard developed by EFRAG. To this end, the use of self-declarations by non-listed SMEs and micro-undertakings is deemed proportionate. This means that there is no obligation to provide assurance to the information reported by non-listed SMEs and that a self-declaration by the SME is sufficient.

Micro-undertakings are undertakings which on their balance sheet dates do not exceed the limits of at least two of the three following criteria:

(a) balance sheet total: EUR 450 000 ;

(b) net turnover: EUR 900 000 ;

(c) average number of employees during the financial year: 10.

Small undertakings shall be undertakings which on their balance sheet dates do not exceed the limits of at least two of the three following criteria:

(a) balance sheet total: EUR 5 000 000 ;

(b) net turnover: EUR 10 000 000 ;

(c) average number of employees during the financial year: 50.

Member States may define thresholds exceeding the thresholds in points (a) and (b) of the first subparagraph. However, the thresholds shall not exceed EUR 7 500 000 for the balance sheet total and EUR 15 000 000 for the net turnover.

Medium-sized undertakings shall be undertakings which are not micro-undertakings or small undertakings and which on their balance sheet dates do not exceed the limits of at least two of the three following criteria:

(a) balance sheet total: EUR 25 000 000 ;

(b) net turnover: EUR 50 000 000 ;

(c) average number of employees during the financial year: 250.

More information: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202501710

Contact: Lebo Mofolo, lmofolo@frucom.eu