B1 Basis of Preparation under the VSME Standard for ESG Reporting
B1 Basis of Preparation is a mandatory reporting section within the EFRAG VSME standard. It outlines the methodological and organizational framework for generating a sustainability report, detailing key elements such as the reporting period, reporting boundary, and data sources for robust ESG reporting.
Objective of B1 in the VSME Standard
B1 establishes the fundamental rules of sustainability reporting. It ensures methodological consistency, disclosed assumptions, documented data sources, and explained changes compared to the previous year. Crucially, it's not just the figure itself that matters, but how it was calculated.
Relevance for Sustainability Reports
Creditworthiness & Risk Assessment: Credit institutions systematically assess ESG risks based on verifiable, consistent data. A lack of methodological documentation can lead to uncertain ratings.
Supply Chain Pressure: Large companies subject to CSRD must evaluate the data quality of their suppliers. Without a documented methodology, SME data becomes unauditable for ESG reporting.
Content Requirements of B1
Reporting Year: The fiscal year covered by the sustainability report
Address: Corporate address; head office for corporate groups
Reporting Scope: Description of multiple sites or group entities included
Total Assets: Total balance sheet value for the reporting year
Revenue: Corporate revenue, rounded to the nearest Euro
Employee Count/FTE: Number of employees in full-time equivalents
Software Support
ESG Lift automates B1 preparation through structured data source queries and standardised, VSME-compliant templates, enabling audit-ready ESG reports without requiring in-house specialist expertise.