Europe’s ESG regulations are changing. In December 2024, European Commission President Ursula von der Leyen announced a “competitive compass” to boost EU competitiveness. By February, the Commission proposed changes to the Corporate Sustainability Reporting Directive (CSRD), exempting nearly 80% of companies from mandatory ESG reporting.
Now, only EU companies with over 1,000 employees and meeting specific financial thresholds must comply with CSRD, including double materiality assessments. For smaller entities, the European Financial Reporting Advisory Group (EFRAG) introduced the Voluntary ESRS for SMEs (VSME). This simpler standard helps SMEs with sustainability reporting, larger companies’ data requests, and risk assessments for financial institutions.
While Europe refines its rules, the Asia Pacific region is advancing ESG regulations. The Hong Kong Stock Exchange (HKEX) will require climate-related disclosures aligned with TCFD and ISSB standards for all Main Board issuers by 2026. Japan, China, Singapore, and Australia are also strengthening ESG frameworks, positioning Asia Pacific to lead in ESG strategy and regulation.
Asia-based businesses operating in the EU should review the VSME package now to ensure compliance. Adopting these standards can improve access to European markets, resources, and funding while supporting growth. Aligning with VSME can be simple and cost-effective, helping businesses meet requirements and gain an edge.
This is an opportunity for SMEs to enhance their ESG strategies. Contact Peter Dampier for a free consultation to see how Vision Zero Connect can help with your sustainability journey.