Here’s What Small and Medium-Sized Companies (SMEs) 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 Environmental, Social, and Governance (ESG) topics might be on the decline.
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, Fortifai 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 who have spent decades in the sustainabilty and compliance 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 EU Voluntary Sustainability Reporting Standard for non-listed SMES (VSME), which introduces a new market of 25M SMEs in Europe. If you haven’t heard of it yet, it’s a game-changer for ESG reporting for SMEs. It is the first time the EU has recommended ESG management for companies as small as 1-4 employees (Micro-enterprises) to Larger 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. See text from EU below.
Why Does This Matter for SMEs?
For anyone working at an SME, you already know the pain: endless amounts of different ESG questionnaires from investors, partners, and larger customers that take up time and resources.
The EU created VSME to simplify that by:
In short, the EU wants VSME to become the default standard for ESG for SMEs.
It is similar to the reporting and management standards SOC2 and ISO27001 is also voluntary and not mandatory but has become the default standard for security and privacy for smaller companies to work with larger companies.
A Huge Opportunity
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:
The EU states that there are almost 26 million SMEs in the EU alone:
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 or standard reporting software who built their business on complexity. We’re excited to see the EU recognize the role of digital platforms like ours in driving VSME adoption and simplifying ESG for SMEs.
For SMEs, it’s a huge win to be not be required to be CSRD and can satisfy their external stakeholders with a simplified sustainabilty management fit for the size and maturity of the company..
At Fortifai, our ESG management and reporting platform is designed to help SMEs implement ESG quickly and affordably, using the existing resources they have in house.
Early adopters in the SME space will be ahead of the curve—better prepared, more competitive, and well-positioned for long-term success. Reach out if you want to manage ESG in hours using the resources you already have!
Contact abbey@fortifai.co to learn more.
