What is EFRAG and what role does it play in VSME ESG reporting?
EFRAG (European Financial Reporting Advisory Group) is the independent EU advisory body for financial reporting standards, based in Brussels. It developed both the ESRS standards for the CSRD framework and the VSME standard for SMEs. The European Commission officially recommended the VSME, based on the EFRAG draft, on 30 July 2025 to support streamlined ESG reporting.
What is the role of EFRAG?
Established in 2001, EFRAG (European Financial Reporting Advisory Group) serves as an advisor to the European Commission on the development of financial and sustainability reporting standards. EFRAG formulates technical frameworks which the European Commission subsequently adopts through legislation or formal recommendations.
EFRAG’s role in shaping the VSME standard
EFRAG developed the draft VSME standard following extensive stakeholder consultations with SME associations, financial institutions and investors. The primary objective was to establish a framework that delivers high-quality ESG data acceptable to large corporates while remaining highly feasible and cost-effective for SMEs. EFRAG submitted the final draft at the end of 2024, and the European Commission officially recommended the VSME standard on 30 July 2025.
Why is EFRAG-compliant ESG reporting essential?
Financial institutions, investors and large enterprise partners recognise only EFRAG-compliant disclosures as credible, high-quality sustainability data. ESG Lift delivers fully EFRAG-compliant VSME reports that are audit-ready, bankable and ideally suited for all standard supply chain assessments.
What is EFRAG? The EU standardisation body behind VSME and ESRS explained simply – and why EFRAG compliance is crucial for SME ESG reporting.