Voluntary Sustainability Reporting: EFRAG’s 2024 Revisions Explained

In April 2024, we discussed the European Financial Reporting Advisory Group’s (EFRAG) Exposure Draft of the Voluntary Sustainability Reporting Standard for non-listed Small and Medium-sized Enterprises (VSME). Since then, EFRAG has finalised the VSME, incorporating significant changes based on stakeholder feedback. These revisions aim to simplify sustainability reporting for SMEs, including sport organisations.

Key Revisions in the Final VSME:

1. Elimination of Materiality Analysis:

   • The requirement for SMEs to conduct a materiality analysis has been removed, acknowledging the burden it imposed. Instead, the standard prescribes predefined reporting areas such as climate risk, biodiversity, and working conditions, facilitating more straightforward compliance.

     
     

2. Simplified Module Structure:

   • Previous Structure: The draft featured three modules: Basic, Narrative-PAT, and Business Partners.

   • Final Structure: The Narrative-PAT module has been removed, and its relevant elements integrated into the remaining two modules, now named Basic and Comprehensive. This streamlining reduces complexity and enhances usability for SMEs. 
     

3. Enhanced Focus on Practicality and Support Tools:

   • The standard has been refined to be more practically applicable for SMEs. Additionally, there is recognition of the need for an online platform to assist SMEs in sustainability reporting. While EFRAG will not develop this platform, the European Commission may consider its development post-approval of the VSME standard. 
     

4. Updated Reporting Requirements:

   • Adjustments have been made to reporting points, including the addition, removal, or modification of data points related to climate risk, biodiversity, and working conditions. These changes respond to feedback from SMEs, banks, and large enterprises, ensuring the standard addresses pertinent sustainability issues effectively.
     

Implications for Sport Organiations:

Sport organisations, particularly non-listed entities, stand to benefit from these revisions:

• Reduced Reporting Burden: The elimination of the materiality analysis and the streamlined module structure simplify the reporting process, making it more accessible for organisations with limited resources.

• Alignment with Stakeholder Expectations: By focusing on predefined areas such as climate risk and working conditions, sport organisations can more easily meet the information needs of partners, investors, and regulatory bodies. This also makes it easier to compare between reports from different organisations of course.

• Potential Access to Support Tools: The anticipated development of an online platform could provide valuable assistance in navigating sustainability reporting requirements, further easing the compliance process.
  

In conclusion, EFRAG’s final VSME standard introduces significant simplifications and practical adjustments that facilitate more straightforward and effective sustainability reporting for SMEs, including sport organisations. Staying informed about these developments and preparing to implement the revised standards will be crucial for maintaining transparency and meeting stakeholder expectations in the evolving landscape of sustainability reporting.