Here’s What Small and Medium-Sized Companies Need to Know
Recent headlines about Omnibus caused a stir in the ESG space. The EU’s decision to shrink the scope of the CSRD led some to claim that ESG itself might be on the decline—similar to the noise we’ve heard around DEI. Another round of doomsday predictions?
If you’re working in a small or medium-sized enterprise (SME), you might be wondering: Do we still need to care about ESG? Does this change anything for us?
After the initial alarm, I consulted ESG experts, Big Four partners, consultants, investors, and customers to get a clear picture. Here’s what we found—and why it matters to SMEs like yours.
1. The Industry Shake-Up
Consultancies and auditors that built their business around complex CSRD reporting are now facing headwinds. The EU is pivoting from complexity to simplicity, aiming to direct resources toward real ESG implementation rather than endless reporting cycles.
2. ESG Is Here to Stay
For those of us who’ve spent decades in the ESG world, the message is clear: ESG is not fading—it’s evolving. Demand for responsible business practices continues to grow, and ESG expectations are fast becoming a baseline requirement for companies of all sizes.
VSME: A New Framework for ESG Reporting for SMEs
While many headlines zoomed in on the claim that “80% of companies are no longer in scope of CSRD,” the bigger story is the EU’s introduction of a new framework called VSME (Voluntary SME) which introduces a new market of 25M SMEs in Europe. If you haven’t heard of it yet, you’re not alone—but it’s a game-changer for ESG reporting for SMEs.
At first glance, VSME sounds easy to ignore because it’s labeled “voluntary.” But after reviewing 300+ pages of EU documentation, it’s clear that VSME is laying down minimum standards for ESG implementation across SMEs—setting the stage for a more streamlined, standardized approach.
Why Does This Matter for SMEs?
For anyone working at an SME, you know the pain: endless amounts of different ESG questionnaires from investors, partners, and customers that take up time and resources. VSME aims to simplify that by:
In short, the EU wants VSME to become the default standard for ESG for SMEs, remember that the reporting and management standards SOC2 and ISO27001 is also voluntary and not mandatory but has become the default standard for security and privacy.
25 Million SMEs: A Huge Opportunity
There are almost 26 million SMEs in the EU alone. While the CSRD’s direct reporting requirements target larger companies, the reality is that those large companies need to collect ESG data from their suppliers—many of which are SMEs. To streamline that process, they’re being encouraged to use VSME.
For SMEs, this creates a golden opportunity:
Why This Is Exciting
We’re not witnessing the death of ESG. We’re seeing the next stage of its evolution—from fragmented, inconsistent processes to standardized practices that make ESG implementation simpler and more accessible.
This transition challenges traditional ESG consultants who built their business on complexity. But for SMEs? It’s a huge win.
At Fortifai, our ESG management and reporting platform is designed to help SMEs implement ESG quickly and affordably. We’re excited to see the EU recognize the role of digital platforms like ours in driving VSME adoption and simplifying ESG for SMEs.
Early adopters in the SME space will be ahead of the curve—better prepared, more competitive, and well-positioned for long-term success.
Contact info@fortifai.co to learn more.
