Page 1 of 66

VSME Standard

DISCLAIMER

Disclaimer
The Voluntary standard for non-listed micro-, small- and medium-sized undertakings
(VSME) is published by EFRAG and is accompanied by the VSME Basis for
Conclusions. EFRAG assumes no responsibility or liability whatsoever for the content
or any consequences or damages direct, indirect or incidental arising from following the
advice or guidance contained in this document. Information contained in this publication
does not constitute advice and should not be substituted for the services of an
appropriately qualified professional.
About EFRAG
EFRAG’s mission is to serve the European public interest in both financial and
sustainability reporting by developing and promoting European views in the field of
corporate reporting. EFRAG builds on and contributes to the progress in corporate
reporting. In its sustainability reporting activities, EFRAG provides technical advice to
the European Commission in the form of draft European Sustainability Reporting
Standards (ESRS) elaborated under a robust due process and supports the effective
implementation of ESRS. EFRAG seeks input from all stakeholders and obtains
evidence about specific European circumstances throughout the standard setting
process. Its legitimacy is built on excellence, transparency, governance, due process,
public accountability and thought leadership. This enables EFRAG to speak
convincingly, clearly, and consistently, and be recognised as the European voice in
corporate reporting and a contributor to global progress in corporate reporting.

EFRAG is funded by the European Union through the Single Market Programme in
which the EEA-EFTA countries (Norway, Iceland and Liechtenstein), as well as Kosovo
participate. Any views and opinions expressed are however those of the author(s) only
and do not necessarily reflect those of the European Union, the European Commission
or of countries that participate in the Single Market Programme. Neither the European
Union, the European Commission nor countries participating in the Single market
Programme can be held responsible for them.

© 2024 EFRAG All rights reserved. Reproduction and use rights are strictly limited. For further details please contact
efragsecretariat@efrag.org

Page 2 of 66
 VSME Standard

Table of Contents

Objective of this Standard and to which undertakings it applies 4

Structure of this Standard 5
Principles for the preparation of the sustainability report (Basic and Comprehensive
Module) 6
Basic Module 8
Basic Module – General information 8
B1 – Basis for preparation 8
B2 – Practices, policies and future initiatives for transitioning towards a more sustainable
economy 8
Basic Module – Environment metrics 9
B3 – Energy and greenhouse gas emissions 9
B4 – Pollution of air, water and soil 9
B5 – Biodiversity 9
B6 – Water 10
B7 – Resource use, circular economy and waste management 10
Basic Module – Social metrics 10
B8 – Workforce – General characteristics 10
B9 – Workforce – Health and safety 10
B10 – Workforce – Remuneration, collective bargaining and training 10
Basic Module – Governance metrics 11
B11 – Convictions and fines for corruption and bribery 11
Comprehensive Module 12
Comprehensive Module – General information 12
C1 – Strategy: Business Model and Sustainability – Related Initiatives 12
C2 – Description of practices, policies and future initiatives for transitioning towards a more
sustainable economy 12
Comprehensive Module - Environmental Metrics 12
Consideration when reporting on GHG emissions under B3 (Basic Module) 12
C3 – GHG reduction targets and climate transition 13
C4 – Climate risks 13
Comprehensive Module – Social Metrics 13
C5 – Additional (general) workforce characteristics 13
C6 – Additional own workforce information - Human rights policies and processes 13
C7 – Severe negative human rights incidents 14
Comprehensive Module – Governance Metrics 14
C8 – Revenues from certain sectors and exclusion from EU reference benchmarks 14
C9 – Gender diversity ratio in the governance body 14
Basic Module: Guidance 15
Basic Module Guidance – General information 15
Basic Module Guidance – Environmental Metrics 17
Basic Module Guidance – Social Metrics 38
Basic Module Guidance – Business Conduct Metrics 41
Comprehensive Module: Guidance 43
Comprehensive Module Guidance – General information 43
Comprehensive Module Guidance – Environmental Metrics 44
Comprehensive Module Guidance – Social Metrics 46
Comprehensive Module Guidance – Business Conduct Metrics 47
Appendix A: Defined terms 49
Appendix B: List of possible sustainability issues 56
Appendix C: Background information for financial market participants that are users of the
information produced using this Standard (reconciliation with other EU regulations) 59

Page 3 of 66
 VSME Standard

Objective of this Standard and to which undertakings it applies

1. The objective of this voluntary Standard is to support micro-, small- and medium-sized
undertakings in:
(a) providing information that will help satisfy the data needs of large undertakings requesting
sustainability information from their suppliers;
(b) providing information that will help satisfy data needs from banks and investors, therefore
helping undertakings in their access to finance;
(c) improving the management of the sustainability issues they face, i.e. environmental and
social challenges such as pollution, workforce health and safety. This will support their
competitive growth and enhance their resilience in the short-, medium- and long-term; and
(d) contributing to a more sustainable and inclusive economy.
2. This Standard is voluntary. It applies to undertakings1 whose securities are not admitted to trading
on a regulated market in the European Union (not listed). [Article 3 of Directive 2013/34/EU] defines
three categories of small- and medium-sized undertakings based on their balance sheet total, their
net turnover and their average number of employees during the financial year.
(a) An undertaking is micro if it does not exceed two of the following thresholds:
i. €450,000 in balance sheet total;
ii. €900,000 in net turnover; and
iii. an average of 10 employees.
(b) An undertaking is small if it does not exceed two of the following thresholds:
i. €5 million in balance sheet total;
ii. €10 million in net turnover; and
iii. an average of 50 employees.
(c) An undertaking is medium if it does not exceed two of the following thresholds:
i. €25 million in balance sheet total;
ii. €50 million in net turnover; and
iii. an average of 250 employees.
3. These undertakings fall outside the scope of the Corporate Social Reporting Directive (CSRD) but
are encouraged to use this Standard. This Standard covers the same sustainability issues as the
European Sustainability Reporting Standards (ESRS) for large undertakings. However, it is
proportionate and therefore takes into account micro-, small- and medium-sized undertakings’
fundamental characteristics. Micro-undertakings are welcome to use only certain parts of this
Standard as highlighted in paragraph 5(a).
4. Consistency with ESRS for large undertakings has been carefully considered in the preparation of
this Standard while defining proportionate requirements. This Standard has no legal authority
unlike the ESRS for large undertakings.

1 This includes self-employed, non-incorporated undertakings and listed micro undertakings.

Page 4 of 66
 VSME Standard

Structure of this Standard

5. This Standard has two modules that the undertaking can use to prepare its sustainability report:
(a) Basic Module: Disclosures B1 and B2 and Basic Metrics (B3 to B11). This module is the
target approach for micro-undertakings and constitutes a minimum requirement for other
undertakings; and
(b) Comprehensive Module: this module sets datapoints in addition to disclosures B1-B11,
which are likely to be requested by banks, investors and corporate clients of the undertaking
on top of the Basic Module.
Paragraph 24 below illustrates the available options for the preparation of a sustainability report
using this Standard by adopting one or more of these modules. Once chosen, a module shall be
complied with in its entirety (with flexibility allowed under paragraph 22); however, each item of
disclosure shall be provided only when it is applicable to the undertaking’s specific
circumstances.
6. Applying the Basic Module is a prerequisite for applying the Comprehensive Module.
7. Appendix A Defined terms includes the definitions of the terms used in this Standard. Throughout
the VSME Standard, the terms defined in the glossary of definitions (Appendix A) are set in bold
italics, except when a defined term is used more than once in the same paragraph.

Page 5 of 66
 VSME Standard

Principles for the preparation of the sustainability report (Basic and

Comprehensive Module)
Complying with this Standard
8. This Standard sets requirements that allow the undertaking to provide relevant information on:
(a) how it has had and is likely to have a positive or negative impact on people or on the
environment in the short-, medium- or long-term; and
(b) how environmental and social issues have affected or are likely to affect its financial position,
performance and cash flows in the short-, medium- or long-term.
9. The undertaking shall report information that is relevant, faithful, comparable, understandable and
verifiable.
10. Depending on the type of activities carried out by the undertaking, the inclusion of additional
information (metrics and/or narrative disclosures) not covered in this Standard is appropriate in
order to disclose sustainability issues that are common in the undertaking’s sector (i.e. typically
encountered by businesses or entities operating within a specific industry or field) or that are
specific to the undertaking, as this supports the preparation of relevant, faithful, comparable,
understandable and verifiable information. This includes the consideration of information on Scope
3 GHG emissions (see paragraphs 50 to 53 of this Standard). Appendix B provides a list of possible
sustainability issues.
11. The undertaking may complement the metrics from the Basic and Comprehensive modules with
additional qualitative and/or quantitative information where appropriate in accordance with
paragraph 10 above.
Comparative information
12. The undertaking shall report comparative information in respect of the previous year except for
metrics disclosed for the first time. The undertaking shall report comparative information from the
second year of reporting.
If applicable principle
13. Certain disclosures only apply to specific circumstances 2. In particular, the instructions provided in
each disclosure specify such circumstances and the information that is to be reported only if
considered ‘applicable’ by the undertaking. When one of these disclosures is omitted, it is assumed
to not be applicable.
Inclusion of subsidiaries in the reported data
14. If the undertaking is a parent company of a group, it is recommended that it prepares its
sustainability report on a consolidated basis, including information from its subsidiaries.
15. If the parent undertaking has prepared its sustainability report on a consolidated basis, including
information from its subsidiaries, the subsidiary undertakings are exempted from reporting.
Timing and location of the sustainability report
16. If a sustainability report is prepared to meet the needs of large undertakings or banks that require
an update annually, it shall be prepared annually. If the undertaking prepares financial statements,
the sustainability report shall be prepared with a period of time that is consistent with the
preparation of the financial statement. If specific datapoints did not change from the previous
reporting year, the undertaking may indicate that no changes occurred and refer to the information
provided for that specific datapoint in the previous year’s report.
17. The primary function of this report is to inform actual or potential business counterparties. The
undertaking may decide to make its sustainability report available to the public. In this case, the
undertaking may present its sustainability report in a separate section of the management report if

2 For example, the legal requirement to disclose specific information, or already voluntarily disclosing specific
information through an Environmental Management System.

Page 6 of 66
 VSME Standard

it has one. Otherwise, the undertaking may present its sustainability report as a separate
document.
18. To avoid publishing the same information twice, the undertaking may refer in its sustainability report
to disclosures published in other documents that can be accessed at the same time as the
sustainability report3.
Classified and sensitive information
19. When the provision of the disclosures in this Standard require disclosing classified or sensitive
information, the undertaking may omit such information. If the undertaking decides to omit such
information, it shall state that this is the case under disclosure B1 (see paragraph 24).
Coherence and linkages with disclosures in financial statements
20. If the undertaking also prepares financial statements, the information provided in its sustainability
report following this Standard shall:
(a) be coherent with what is reported in the financial statements for the same period; and
(b) be presented in a way that facilitates the understanding of the linkages that exist with the
information reported in financial statements, for example by using appropriate cross-
references.

3
In a future online tool version of the VSME Standard, when appropriate, the undertaking may refer to disclosures
published in other documents rather than the sustainability report using incorporation by reference. Such reference
is made by including the page number of the relevant source, provided that the PDF format of the source document
is also made available in the online tool version.

Page 7 of 66
 VSME Standard

Basic Module
21. The undertaking shall report on its environmental, social and business conduct issues (together
‘sustainability issues’) using the B1 to B11 disclosures below.
22. If the undertaking wants to provide more comprehensive information, it may also integrate the
metrics required from B1 to B11 with disclosures, selecting them from the Comprehensive Module.
23. Additional guidance on disclosures B1 to B11 is available in paragraphs 66 to 209.

Basic Module – General information

B1 – Basis for preparation

24. The undertaking shall disclose:
(a) which of the following options it has selected:
i. OPTION A: Basic Module (only); or
ii. OPTION B: Basic Module and Comprehensive Module;
(b) if the undertaking has omitted a disclosure as it is deemed classified or sensitive
information (see paragraph 19), the undertaking shall indicate the disclosure that has
omitted.
(c) whether the sustainability report has been prepared on an individual basis (i.e. the report
is limited to the undertaking’s information only) or on a consolidated basis (i.e. the report
includes information about the undertaking and its subsidiaries);
(d) in case of a consolidated sustainability report, the list of the subsidiaries, including their
registered address4, covered in the report; and
(e) the following information:
i. the undertaking’s legal form;
ii. NACE sector classification code(s);
iii. size of the balance sheet (in Euro);
iv. turnover (in Euro);
v. number of employees in headcount or full-time equivalents;
vi. country of primary operations and location of significant asset(s); and
vii. geolocation of sites owned, leased or managed.
25. If the undertaking has obtained any sustainability-related certification or label, it shall provide a
brief description of those (including, where relevant, the issuers of the certification or label, date
and rating score).

B2 – Practices, policies and future initiatives for transitioning towards a more sustainable
economy
26. If the undertaking has put in place specific practices, policies or future initiatives for transitioning
towards a more sustainable economy, it shall state so. The undertaking shall state whether it has:
(a) practices. Practices in this context may include, for instance, efforts to reduce the
undertaking’s water and electricity consumption, to reduce GHG emissions or to prevent
pollution, and initiatives to improve product safety as well as current initiatives to improve
working conditions and equal treatment in the workplace, sustainability training for the
undertaking’s workforce and partnerships related to sustainability projects;
(b) policies on sustainability issues, whether they are publicly available, and any separate
environmental, social or governance policies for addressing sustainability issues;

4 The registered address is the official address of the undertaking.

Page 8 of 66
 VSME Standard

(c) any future initiatives or forward-looking plans that are being implemented on sustainability
issues; and
(d) targets to monitor the implementation of the policies and the progress achieved towards
meeting such targets.
27. Such practices, policies and future initiatives include what the undertaking does to reduce its
negative impacts and to enhance its positive impacts on people and the environment, in order to
contribute to a more sustainable economy. Appendix B provides a list of possible sustainability
issues that could be covered in this disclosure. The undertaking may use the template found in
paragraph 78 to report this information.
28. If the undertaking also reports on the Comprehensive module, it shall complement the information
provided under B2 with the datapoints found in C2.

Basic Module – Environment metrics

B3 – Energy and greenhouse gas emissions

29. The undertaking shall disclose its total energy consumption in MWh, with a breakdown as per the
table below, if it can obtain the necessary information to provide such a breakdown:

Renewable Non-renewable Total

Electricity (as reflected

in utility billings)

Fuels

Total

30. The undertaking shall disclose its estimated gross greenhouse gas (GHG) emissions in tons of
CO2 equivalent (tCO2eq) considering the content of the GHG Protocol Corporate Standard (version
2004), including:
(a) the Scope 1 GHG emissions in tCO2eq (from owned or controlled sources); and
(b) the location-based Scope 2 emissions in tCO2eq (i.e. emissions from the generation of
purchased energy, such as electricity, heat, steam or cooling).
31. The undertaking shall disclose its GHG intensity calculated by dividing ‘gross greenhouse gas
(GHG) emissions’ disclosed under paragraph 30 by ‘turnover (in Euro)’ disclosed under paragraph
24(e)(iv)5.

B4 – Pollution of air, water and soil

32. If the undertaking is already required by law or other national regulations to report to competent
authorities its emissions of pollutants, or if it voluntarily reports on them according to an
Environmental Management System, it shall disclose the pollutants it emits to air, water and soil in
its own operations, with the respective amount for each pollutant. If this information is already
publicly available, the undertaking may alternatively refer to the document where it is reported, for
example, by providing the relevant URL link or embedding a hyperlink.

B5 – Biodiversity
33. The undertaking shall disclose the number and area (in hectares) of sites that it owns, has leased,
or manages in or near a biodiversity sensitive area.
34. The undertaking may disclose metrics related to land-use:
(a) total use of land (in hectares);

5
In a future online tool version of the VSME Standard, this will be automatically calculated.

Page 9 of 66
 VSME Standard

(b) total sealed area;

(c) total nature-oriented area on-site; and
(d) total nature-oriented area off-site.

B6 – Water
35. The undertaking shall disclose its total water withdrawal, i.e. the amount of water drawn into the
boundaries of the organisation (or facility); in addition, the undertaking shall separately present the
amount of water withdrawn at sites located in areas of high water-stress.
36. If the undertaking has production processes in place which significantly consume water (e.g.
thermal energy processes like drying or power production, production of goods, agricultural
irrigation, etc.), it shall disclose its water consumption calculated as the difference between its
water withdrawal and water discharge from its production processes.

B7 – Resource use, circular economy and waste management

37. The undertaking shall disclose whether it applies circular economy principles and, if so, how it
applies these principles.
38. The undertaking shall disclose:
(a) the total annual generation of waste broken down by type (non-hazardous and hazardous);
(b) the total annual waste diverted to recycling or reuse; and
(c) if the undertaking operates in a sector using significant material flows (for example
manufacturing, construction, packaging or others), the annual mass-flow of relevant
materials used.

Basic Module – Social metrics

B8 – Workforce – General characteristics

39. The undertaking shall disclose the number of employees in headcount or full-time equivalent for
the following metrics:
(a) type of employment contract (temporary or permanent);
(b) gender; and
(c) country of the employment contract, if the undertaking operates in more than one country.
40. If the undertaking employs 50 or more employees, it shall disclose the employee turnover rate for
the reporting period.

B9 – Workforce – Health and safety

41. The undertaking shall disclose the following information regarding its employees:
(a) the number and rate of recordable work-related accidents; and
(b) the number of fatalities as a result of work-related injuries and work-related ill health.

B10 – Workforce – Remuneration, collective bargaining and training

42. The undertaking shall disclose:
(a) whether the employees receive pay that is equal or above applicable minimum wage for the
country it reports in, determined directly by the national minimum wage law or through a
collective bargaining agreement;
(b) the percentage gap in pay between its female and male employees. The undertaking may
omit this disclosure when its headcount is below 150 employees noting that this threshold
will be reduced to 100 employees from 7 June 2031;
(c) the percentage of employees covered by collective bargaining agreements; and

Page 10 of 66
 VSME Standard

(d) the average number of annual training hours per employee, broken down by gender.

Basic Module – Governance metrics

B11 – Convictions and fines for corruption and bribery

43. In case of convictions and fines in the reporting period, the undertaking shall disclose the number
of convictions, and the total amount of fines incurred for the violation of anti-corruption and anti-
bribery laws.

Page 11 of 66
 VSME Standard

Comprehensive Module
44. This module provides disclosures to address in a comprehensive way the information needs of the
undertaking’s business partners, such as investors, banks and corporate clients in addition to the
ones included in the Basic Module. The disclosures in this module reflect the financial market
participants and corporate clients’ respective obligations under relevant laws and regulations. They
also reflect the information needed by the business partners, to assess the sustainability risk profile
of the undertaking, e.g. as a (potential) supplier or a (potential) borrower.
45. The text below provides the list of disclosures from C1 to C9 to be considered and reported upon,
if they are applicable to the undertaking’s business and organisation. When one of these
disclosures is omitted, it is assumed to not be applicable.
46. Additional guidance on disclosures C1 to C9 is available in paragraphs 210 to 244.

Comprehensive Module – General information

C1 – Strategy: Business Model and Sustainability – Related Initiatives

47. The undertaking shall disclose the key elements of its business model and strategy, including:
(a) a description of significant groups of products and/or services offered;
(b) a description of significant market(s) the undertaking operates in (such as B2B, wholesale,
retail, countries);
(c) a description of main business relationships (such as key suppliers, customers distribution
channels and consumers); and
(d) if the strategy has key elements that relate to or affect sustainability issues, a brief description
of those key elements.

C2 – Description of practices, policies and future initiatives for transitioning towards a more
sustainable economy
48. If the undertaking has put in place specific practices, policies or future initiatives for transitioning
towards a more sustainable economy, which it has already reported under disclosure B2 in the
Basic Module, it shall briefly describe them. The undertaking may use the template found in
paragraph 213 for this purpose.
49. The undertaking may indicate, if any, the most senior level of the undertaking accountable for
implementing them.

Comprehensive Module - Environmental Metrics

Consideration when reporting on GHG emissions under B3 (Basic Module)

50. Depending on the type of activities carried out by the undertaking, disclosing a quantification of its
Scope 3 GHG emissions can be appropriate (see paragraph 10 of this Standard) to yield relevant
information on the undertaking’s value chain impacts on climate change.
51. Scope 3 emissions are indirect GHG emissions (other than Scope 2) that derive from an
undertaking’s value chain. They include the activities that are upstream of the undertaking’s
operations (e.g. purchased goods and services, purchased capital goods, transportation of
purchased goods, etc.) and activities that are downstream of the undertaking’s operations (e.g.
transport and distribution of the undertaking’s products, use of sold products, investments, etc.).
52. If the undertaking decides to provide this metric, it should refer to the 15 types of Scope 3 GHG
emissions identified by the GHG Protocol Corporate Standard and detailed by the GHG Protocol
Corporate Value Chain (Scope 3) Accounting and Reporting Standard. When it reports on Scope
3 GHG emissions, the undertaking shall include significant Scope 3 categories (as per the
Corporate Value Chain (Scope 3) Accounting and Reporting Standard) based on its own
assessment of relevant Scope 3 categories. Undertakings can find further guidance on specific
calculation methods for each category in the GHG Protocol’s Technical guidance for Calculating
Scope 3 Emissions.

Page 12 of 66
 VSME Standard

53. When reporting its Scope 1 and Scope 2 emissions, if the undertaking discloses entity-specific
information on its Scope 3 emissions, it shall present it together with the information required under
B3 – Energy and greenhouse gas emissions.

C3 – GHG reduction targets and climate transition

54. If the undertaking has established GHG emission reduction targets, it shall disclose its targets in
absolute values for Scope 1 and Scope 2 emissions. In line with paragraphs 50 to 53 above and if
it has set Scope 3 reduction targets, the undertaking shall also provide targets for significant Scope
3 emissions. In particular, it shall provide:
(a) the target year and target year value;
(b) the base year and base year value;
(c) the units used for targets;
(d) the share of Scope 1, Scope 2 and, if disclosed, Scope 3 that the target concerns; and

(e) a list of main actions it seeks to implement to achieve its targets.

55. If the undertaking that operates in high climate impact sectors6 has adopted a transition plan for
climate change mitigation, it may provide information about it, including an explanation of how it is
contributing to reduce GHG emissions.
56. In case the undertaking operates in high-climate impact sectors and does not have a transition
plan for climate change mitigation in place, it shall indicate whether and, if so, when it will adopt
such a transition plan.

C4 – Climate risks
57. If the undertaking has identified climate-related hazards and climate-related transition events,
creating gross climate-related risks for the undertaking, it shall:
(a) briefly describe such climate-related hazards and climate-related transition events;
(b) disclose how it has assessed the exposure and sensitivity of its assets, activities and value
chain to these hazards and transition events;
(c) disclose the time horizons of any climate-related hazards and transition events identified;
and
(d) disclose whether it has undertaken climate change adaptation actions for any climate-
related hazards and transition events.
58. The undertaking may disclose the potential adverse effects of climate risks that may affect its
financial performance or business operations in the short-, medium- or long-term, indicating
whether it assesses the risks to be high, medium, low.

Comprehensive Module – Social Metrics

C5 – Additional (general) workforce characteristics

59. If the undertaking employs 50 or more employees, it may disclose the female-to-male ratio at
management level for the reporting period.
60. If the undertaking employs 50 or more employees, it may disclose the number of those self-
employed without personnel who are working exclusively for the undertaking, and temporary
workers provided by undertakings primarily engaged in ‘employment activities’.

C6 – Additional own workforce information - Human rights policies and processes

61. The undertaking shall disclose an answer to the following questions.

6 High climate impact sectors are those listed in NACE Sections A to H and Section L as defined in Annex I to
Regulation (EC) No 1893/2006.

Page 13 of 66
 VSME Standard

(a) Does the undertaking have a code of conduct or human rights policy for its own workforce?
(YES/NO)
(b) If yes, does this cover:
i. child labour (YES/ NO);
ii. forced labour (YES/ NO);
iii. human trafficking (YES/NO);
iv. discrimination (YES/NO);
v. accident prevention (YES/NO); or
vi. other? (YES/NO – if yes, specify).
(c) Does the undertaking have a complaints-handling mechanism for its own workforce? (YES/
NO)

C7 – Severe negative human rights incidents

62. The undertaking shall disclose an answer to the following questions:
(a) Does the undertaking have confirmed incidents in its own workforce related to:
i. child labour (YES/ NO);
ii. forced labour (YES/ NO);
iii. human trafficking (YES/ NO);
iv. discrimination (YES/ NO); or
v. other? (YES/NO – if yes, specify).
(b) If yes, the undertaking may describe the actions being taken to address the incidents
described above.
(c) Is the undertaking aware of any confirmed incidents involving workers in the value chain,
affected communities, consumers and end-users? If yes, specify.

Comprehensive Module – Governance Metrics

C8 – Revenues from certain sectors and exclusion from EU reference benchmarks

63. If the undertaking is active in one or more of the following sectors, it shall disclose its related
revenues in the sector(s):
(a) controversial weapons (anti-personnel mines, cluster munitions, chemical weapons and
biological weapons);
(b) the cultivation and production of tobacco;
(c) fossil fuel (coal, oil and gas) sector (i.e. the undertaking derives revenues from exploration,
mining, extraction, production, processing, storage, refining or distribution, including
transportation, storage and trade, of fossil fuels as defined in Article 2, point (62), of
Regulation (EU) 2018/1999 of the European Parliament and the Council 17), including a
disaggregation of revenues derived from coal, oil and gas; or
(d) chemicals production if the undertaking is a manufacturer of pesticides and other
agrochemical products.
64. The undertaking shall disclose whether it is excluded from any EU reference benchmarks that are
aligned with the Paris Agreement as described in paragraph 241 of the guidance.

C9 – Gender diversity ratio in the governance body

65. If the undertaking has a governance body in place, the undertaking shall disclose the related
gender diversity ratio.

Page 14 of 66
 VSME Standard

Basic Module: Guidance

66. The guidance below is intended as part of an ecosystem that will include also the development of
further support guides by EFRAG, further digital tools and implementation support (educational
activities, stakeholders’ engagement) that aim to facilitate the understanding of some of the
technical elements in the guidance.
67. This guidance supports undertakings that wish to apply the Basic Module.

Basic Module Guidance – General information

B1 – Basis for Preparation
68. When reporting on the legal form of the undertaking according to national legislation under
paragraph 24(e)(i), the undertaking can choose from one of the following undertaking structures:
(a) private limited liability undertaking
(b) sole proprietorship
(c) partnership
(d) cooperative
(e) other (please specify based on country specifications for legal forms).
69. When reporting on the NACE code(s) of the undertaking under paragraph 24(e)(ii), NACE codes
(Nomenclature statistique des Activités économiques dans la Communauté Européenne) are
classifications of economic activities used in the European Union. They provide a standardized
framework for classifying economic activities into sectors, enabling comparability and a common
understanding among the various EU countries.
70. The NACE code consists of a number of digits ranging from 2 to 5 depending on the level of
specificity with which the economic activity is identified. The list of NACE codes can be found in
the following document: REGULATION (EC) No 1893/2006.

Level Identifier Description

Nr

1 Section Sections are identified by an alphabetic letter, and they define 21 general
economic areas such as agriculture, manufacturing industry or commerce.

2 Division The division is identified by a two-digit numerical code and identifies a

specific sector within the general economic area. There are a total of 88
divisions.

3 Group The group is identified by a three-digit numerical code (also considering the
division's two digits) and defines a specific area within the sector. There are
about 270 groups.

4 Class The class is identified by a four-digit numerical code (considering the digits
of division and group) and defines a specific activity within the group. There
are about 450 classes.

71. When reporting the number of employees under paragraph 24(e)(v), full-time equivalent (FTE) is
the number of full-time positions in an undertaking. It can be calculated by dividing an employee's
scheduled hours (total effective hours worked in a week) by the employer's hours for a full-time
workweek (total hours performed by full-time employees). For example, an employee who works
25 hours every week for a company where the full-time week is 40 hours represents a 0,625 FTE
(i.e. 25/ 40 hours).
72. Headcount is the total number of people employed by the undertaking at a given time.

Page 15 of 66
 VSME Standard

73. When reporting on the country of primary operations and the location of significant assets under
paragraphs 24(e)(vi) and (vii), the undertaking shall disclose this information for each of its sites
using the table below:

Sites Address Postal Code City Country Coordinates

(geolocation)

Registered Office
(e.g.)

Warehouse (e.g.)

Industrial Plant
(e.g.)

74. The geolocation of an undertaking is expected to be a valuable datapoint for stakeholders for the
assessment of risks and opportunities connected to the SME, particularly in relation to the
sustainability issues of climate change adaptation, water, ecosystems and biodiversity.
75. The geolocation shall be provided in spatial points for single units or polygon points defining the
boundaries of a larger, less unit-like site, such as a farm, mine or facility. The undertaking may
also provide a cluster of points to allow for the easy identification of the concerned area. The spatial
points shall be provided as coordinates, with five decimal places (e.g. 0° 00′ 0.036″).
76. When disclosing the geolocation of sites owned, leased, or managed, the undertaking shall include
the coordinates of the sites in the table shown in paragraph 73. The undertaking may use web
mapping tools (e.g. google maps, apple maps) to identify the coordinates of sites that it owns,
leases or manages. The undertaking may also use any appropriate software tools or platforms to
further establish the perimeter or area of larger sites.
77. In relation to paragraph 25, sustainability-related certification can include registered eco-labels
from an EU, national or international labelling scheme, corresponding to the main activity of an
SME. For instance, the EU Ecolabel covers specific products, such as textiles and footwear,
coverings (e.g. wood floor coverings), cleaning and personal care products, electronic equipment,
or furniture. The undertaking may consult the EU Ecolabel Product Groups and Product Catalogue
for further information.
B2 – Practices, policies and future initiatives for transitioning towards a more sustainable
economy
78. Undertakings may use the following template to report on B2 datapoints.

Do you have existing

sustainability practices/ policies/
Are they publicly Do the policies have any
future initiatives that address
available? targets?
any of the following
[YES/NO] [YES/NO]
sustainability issues?
[YES/NO]

Climate
Change

Pollution

Water and
Marine
Resources

Page 16 of 66
 VSME Standard

Biodiversity
and
Ecosystems

Circular
Economy

Own
Workforce

Workers in
the Value
Chain

Affected
Communities

Consumers
and end-
users

Business
conduct

79. If the undertaking is a cooperative, it may disclose:

(a) the effective participation of workers, users or other interested parties or communities in
governance;
(b) the financial investment in the capital or assets of social economy entities referred to in the
Council Recommendation of 29 September 2023 (excluding donations and contributions);
and
(c) any limits to the distribution of profits connected to the mutualistic nature or to the nature of
the activities consisting in services of general economic interest (SGEI).

Guidance for own workforce, workers in the value chain, affected communities and consumers and
end/users
80. In order to understand the sustainability issues that relate to social and human rights, refer to
Appendix B for a list of possible sustainability issues. This list could help identify if the policies,
practices or future initiatives are aimed at addressing negative human rights impacts in a
comprehensive way or if they are limited to certain groups of affected stakeholders (for example,
workers in the upstream value chain). As part of this disclosure undertakings may also disclose
whether they have a process to address human rights related complaints.

Basic Module Guidance – Environmental Metrics

B3 – Energy and greenhouse gas emissions

Impacts on climate: energy usage and greenhouse gas emissions

81. Under paragraphs 29 and 30, the undertaking reports on its climate impacts, providing information
about its energy use and greenhouse gas emissions. This guidance for disclosure B3 does not
constitute an additional datapoint to the disclosures described in paragraphs 29 (on energy
consumption) and 30 (on GHG emissions) but rather reinstates an overarching objective and
provides context for the Basic disclosure B3.

Page 17 of 66
 VSME Standard

Energy consumption
82. Climate related impacts are significantly driven by energy consumption. Therefore, it is relevant
to disclose both the quantity as well as the type – e.g. fossil fuels such as coal, oil and gas versus
renewable energy – and mix of energy consumed. Examples of energy disclosures are total
energy consumption broken down by fossil fuels and electricity. Other breakdowns may be
reported such as consumption of purchased or self-generated electricity from renewable sources.
An example of the information requested in paragraph 29 follows.

Renewable Energy Non-renewable Total 202(x) Energy

Consumption (MWh) Energy consumption (MWh)
Consumption
(MWh)

Electricity (as 300 186 486

reflected in
utility billings)

Fuels 3 7 10

Total 303 193 496

83. In case the undertaking purchases fossil fuels (e.g. natural gas, oil) or renewable fuels (e.g.
biofuels, such as biodiesel and bioethanol) to generate electricity, heat or cooling for its own
consumption, it has to avoid double counting. Therefore, the undertaking accounts for the energy
content of the purchased fuel only as fuel consumption, but it does not account for, or report on,
its electricity and heat consumption produced from that fuel yet again. In case of electricity
generation from renewable energies such as solar or wind – and where no fuel use is necessary
– the undertaking accounts for the amount of electricity generated and consumed as electricity
consumption.
84. The undertaking shall not offset its energy consumption by its energy production even if on site
generated energy is sold to and used by a third party. The undertaking shall also avoid double
counting fuel consumption when disclosing self-generated energy consumption. If the undertaking
generates electricity from either a non-renewable or renewable fuel source and then consumes the
generated electricity, the energy consumption shall be counted only once under fuel consumption.
The share of renewable energy consumption can be calculated based on guarantees of origin,
renewable energy certificates or electricity composition as stated in the electricity bill. The
electricity bill may refer to electricity units consumed and specify the percentage of electricity
provided coming from renewable sources and it may look like the figure below.

Electricity mix
Fossil fuel
9%
Windpower
10%

Nuclear Hydropower
23% 58%

Hydropower Nuclear Windpower Fossil fuel

Page 18 of 66
 VSME Standard

85. When preparing the information on energy consumption required under paragraph 29, the
undertaking shall exclude feedstocks and fuels that are not combusted for energy purposes. The
undertaking that consumes fuel as feedstocks can disclose information on this consumption
separately from the required disclosures.

Conversion between different energy units

86. Undertakings are to report their energy consumption in terms of final energy, which is understood
as the amount of energy delivered to the undertaking, for example, the Megawatt-Hours (MWh) of
electricity purchased from the utility steam received from a nearby industrial plant or diesel
purchased at petrol stations. Electricity explicitly refers to heat, steam and cooling. Fuels include
anything burned, e.g. gas, natural gas, biomass, etc.
87. Paragraph 29 indicates MWh as the unit of choice for measuring energy consumption. In case of
fuel or biomass, a conversion to MWh is necessary for data expressed in other units such as
energy content (e.g. kJ, Btu), volume (e.g. litres, m³) or mass (e.g. metric tonnes, short tonnes).
88. For fuel consumption measured by mass (e.g. wood, coal), the undertaking should:
(a) obtain the Net Calorific Value (e.g. kJ/metric ton, TJ/Gg) of the fuel (it can be a typical value
published by reliable sources, e.g. IPCC, or may be provided by the supplier or attained
internally);
(b) convert the Net Calorific Value to MWh/ton, for example:
1 TJ = 1012 J = 277.78 MWh ; 1 Gg = 109 g = 1,000 t
11.9 TJ/Gg = 11.9 * 277.78/1000 t = 3.31 MWh/ton; and
(c) calculate the energy content of the mass, for example:
1,245,345 t * 3.31 MWh/ton = 4,117,111 MWh.
89. For liquid fuel, the undertakings should:
(a) convert volume information to mass, multiplying volume by fuel density, for example,
Diesel = 4,456,000 l; Diesel density = 0.84 kg/l
4,456,000 (l) * 0.84 (kg/l) = 3,43,040 kg = 3,743 t;
(b) calculate the energy content, multiplying mass by Net Calorific Value, for example, 3,743 [t]
* 43 [TJ/Gg] = 3,743 t * 43 TJ/(1,000 [t]) = 160.95 [TJ] ; and
(c) convert TJ to MWh, for example 1 TJ = 1012 J = 277.778 MWh
160.95 [TJ] = 277.78 [MWh/TJ] * 160.95 [TJ] = 44,708 MWh.

Documentation Source:

Data Documentation Source

CDP CDP Technical Note: Conversion of fuel data to MWh

https://cdn.cdp.net/cdp-
production/cms/guidance_docs/pdfs/000/000/477/original/CDP-
Conversion-of-fuel-data-to-MWh.pdf?1479755175

Greenhouse gas emissions

90. As for gross greenhouse gas emissions (GHG) arising from the undertaking’s activities, the
requirement in paragraph 30 builds on the definitions and rules of the GHG Protocol, the leading
accounting standard for GHG emissions. Under paragraph 30, undertakings are to report on their
Scope 1 and Scope 2 emissions. Scope 1 GHG emissions cover direct emissions from owned or
controlled sources. Scope 2 emissions are indirect GHG emissions resulting from the activities
of the reporting company (as they derive from the undertaking’s consumed energy) which,
however, occur at sources owned or controlled by another company. Further guidance is provided
in the sections below on how to calculate Scope 1 and 2 emissions.

Page 19 of 66
 VSME Standard

91. Scope 1 and 2 emissions may be reported in the following format.

202(x) GHG emissions (tCO2e)

Scope 1 45

Scope 2 6

Total 51

92. The GHG Protocol is a global standard for measuring, reporting and managing GHG emissions
while ensuring consistency and transparency. The corporate standard covers Scope 1, Scope 2
and Scope 3 emissions guidance for companies and other organisations (NGOs, government,
etc.).
93. To ensure a fair account of the undertaking’s emissions, the GHG Protocol has set a list of reporting
principles:
(a) relevance: ensuring that the GHG inventory reflects the GHG emissions of the organisation.
(b) completeness: ensuring that the GHG inventory account for all GHG emission sources and
activities within the chosen boundary;
(c) consistency: ensuring the consistency of the methodology used to allow for comparisons
over time;
(d) transparency: disclosing the assumptions, references and methodology used when
computing GHG emissions; and
(e) accuracy: ensuring that GHG emissions data is sufficiently precise to allow users to make
decisions.
94. In alternative to the GHG Protocol, undertakings may resort to ISO 14064-1, should it be better
suited to their reporting needs.
95. When reporting on GHG emissions, it is important to set the appropriate boundaries to ensure that
the GHG inventory is correct and to avoid double counting emissions. The GHG Protocol defines
two main types of boundaries – organisational or operational boundaries.
(a) Organisational boundary: the GHG Protocol defines it as the boundaries that determine the
operations owned or controlled by the reporting undertaking depending on the consolidation
approach taken. There are two approaches to consolidation of emissions – the equity or
control approach. The undertaking will choose the approach that reflects its circumstances.
(b) The equity share approach relates to accounting for GHG emissions from operations
according to its shares of equity in the operation.
(c) When using the control approach, the undertaking accounts for GHG emissions from
operations over which it has either financial or operational control. Companies will use either
the operational control or financial control criteria when using this approach to consolidate
and capture its emissions in the report.
i. Financial control means that the undertaking has financial control over the
operation if the former has the ability to direct the financial and operating
policies of the latter with a view to gaining economic benefits from its activities.
ii. Operational control means that an undertaking has operational control over
an operation if the former or one of its subsidiaries has full authority to
introduce and implement its operating policies at the operation.
(d) Operational boundary: the GHG Protocol defines it as the boundaries that determine the
direct and indirect emissions associated with operations owned or controlled by the reporting
company. This assessment offers an undertaking the ability to establish which operations
and sources cause direct (Scope 1) and indirect emissions (Scope 2 and Scope 3) and to
decide which indirect emissions to include resulting from its operations.

Page 20 of 66
 VSME Standard

(e) Boundary considerations need to follow the principles detailed above (consistency over time,
transparency in documenting them and completeness) and are visualised in the image
below7.

96. The GHG Protocol also introduces guidance as well as steps to follow to identify, calculate and
track GHG emissions as visualised in the image below8.

97. Different tools have been developed by private and public initiatives to help undertakings in
developing their GHG emissions inventory and facilitating challenges related to its preparation:
(a) calculation tools and guidance by the GHG Protocol: https://ghgprotocol.org/calculation-
tools-and-guidance
(b) SME Climate hub: https://smeclimatehub.org/start-measuring/
(c) Business Carbon Calculator by Normative: https://businesscarboncalculator.normative.io/en/
(d) Carbon Trust SME Carbon Footprint Calculator: https://www.carbontrust.com/our-work-and-
impact/guides-reports-and-tools/sme-carbon-footprint-calculator
(e) UK Business Climate hub: https://businessclimatehub.uk/carbon-footprint-calculators/

Scope 1 and location-based Scope 2 emissions guidance

98. Typical Scope 1 emissions include CO2 (as well as CH4 and N2O) emissions associated with fuel
combustion (for example in boilers, furnaces, vehicles, etc.) and fugitive emissions from air
conditioning and industrial processes.

7 Greenhouse Gas Protocol Corporate Standard: https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-

revised.pdf
8 Greenhouse Gas Protocol Corporate Standard: https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-
revised.pdf

Page 21 of 66
 VSME Standard

99. Location-based Scope 2 includes emissions from electricity, heat, steam and cooling purchased
or acquired and consumed by the reporting company. It reflects the average emissions intensity of
grids on which the energy consumption occurs and uses mostly grid-average emission factor data.
Typical sources of Scope 2 emissions relate to any equipment that consumes electricity (electrical
engines, lights, buildings, etc.), heat (heating in industrial processes, buildings, etc.), steam
(industrial processes) and cooling (industrial processes, buildings, etc.).
100. Evaluating GHG emissions can be done in several ways, including by the calculation approach,
measurement, or a combination of measurement and calculations. One common approach is
based on calculating with use of emission factors (EF) – which may incorporate the global warming
potential (GWP) of the GHG. Direct measurement using sensors (flow and concentration) can also
be applied. The table below summarises the most common methods.

GHG Details Necessary data

evaluation
method

Measuring Multiplying the quantities of gas Direct quantity of gas emitted obtained
directly measured by their respective from gas measurement (flow,
global warming potential. concentration, volume)
Global warming potential (GWP) of the
gases

Calculating Multiplying the activity data by the Activity data

emission factor (EF) that integrates
Emission factors (EF)
the global warming potential (GWP)

101. The table above introduces the following terms:

(a) activity data, which typically corresponds to the quantity of fuel consumed. It may be
expressed in energy units (e.g. MWh), volume (e.g. m³ or l) or mass (e.g. tonnes or kg.).
These can be accessed by the undertaking by reviewing fuel purchase receipts or utility bills:
(b) global warming potential, which quantifies the impact of the given GHG on the climate
compared to an equivalent unit of carbon dioxide; and
(c) emission factors (FE), quantifying how much GHG is emitted per unit of activity. The emission
factors frequently take into account the GWP of the GHG, in which case the undertaking
does not need to consider the latter.
102. The table below summarises non-exhaustive sources where both emission factors (FE) and global
warming potential (GWP) can be easily accessed by undertakings. Undertakings may also refer to
authoritative national sources that may be more relevant to their circumstances.

Emission factors (FE) ADEME – Base Empreinte®

IPCC – Emissions Factor Database
IPCC – Guidelines for National Greenhouse Gas Inventories
Association of Issuing Bodies (AIB) – Residual Mix Grid Emission Factors
JRC – Historical GHG emissions factor for electricity consumption
Life-cycle electricity production emission factors
USEPA GHG emission factors Hub
Emission Factors and reference values published by the Government of
Canada
IEA’s Annual GHG emission factors for World countries from electricity and
heat generation (2022 data set, paid data set)

Global warming potential IPCC – Global Warming Potential

(GWP)

Page 22 of 66
 VSME Standard

103. The undertakings can also find more guidance and tools on how to act and report on their GHG
emissions and climate impacts by visiting https://smeclimatehub.org/.

Example of Scope 1 emission calculation

104. Company A burns Nr. 4 fuel oil in an industrial boiler. For its financial accounting, it keeps track of
its costs, and for GHG accounting purposes, it keeps track of volumes (m³) as reflected in their fuel
receipts. From the receipts, it determines the annual volumes of fuel oil bought, and it keeps track
as well of the fuel oil inventory on the first calendar day of the year. In 2023 it purchased 100 m³
of fuel oil. Based on its records, on 1 January 2023 it had 2.5 m³ in its reservoirs, and on 1 January
2024 it had 1 m³. Thus, it determines (through purchase and measurement of inventory) that during
2023 it consumed 101.5 m³ of fuel oil.
105. Using the IPCC list of emissions factors (Table 2.3, page 2.18), it estimates its emission factor to
be a fifty-fifty blend of diesel oil and residual oil as 75.75 t CO 2/TJ, and by using published statistics
on energy, determines that its net calorific value of the fuel is 0.03921 TJ/m 3. Given that the CO2
GWP equals one, its CO2 emission for this specific Scope 1 source is:
101.5 m3 * 0.03921 TJ/m3 * 75.75 t CO2/TJ * 1 = 301.5 t CO2
106. For the purpose of completeness in this example, the CH4 and N2O emissions are also calculated.
Checking the IPCC list of emission factors shows that these are, respectively, 3 kg of CH4/TJ and
0.6 kg of N2O/TJ, the emissions thus being:
CH4 emissions = 101.5 m3 * 0.03921 TJ/m3 * 3 kg CO2/TJ * 29.8 = 0.36 tCO2e
N2O emissions = 101.5 m3 * 0.03921 TJ/m3 * 0.6 kg CO2/TJ * 273 = 0.65 tCO2e
107. As mentioned, CH4 and N2O emissions add around 1 tCO2e to the CO2 value of 301.5 tCO2, which
amounts to about 0.3% of the total. This could be considered well within an acceptable reporting
error and so could not have been calculated and reported. Global Warming Potentials for CH 4 and
N2O are derived from the IPCC’s Sixth Assessment Report, Chapter 7SM9.

Example of Scope 2 emission calculation

108. Company A occupies an office building of 2000 m2 in Paris, where it pays the electricity consumed
for the central heating and cooling, lighting, computers and other electric equipment such as
appliances. With its utility bills, it has estimated that the building consumed 282 MWh of electricity
in 2022. By using the emission factor provided by nowtricity.com for France in 2022, it has
estimated its Scope 2 emissions for its building electricity consumption to be
𝑔 𝐶𝑂2 𝑒𝑞
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠𝐺𝐻𝐺 = 282 000 [𝑘𝑊ℎ] ∗ 73 [ ] = 20.6 t CO22 𝑒𝑞
𝑘𝑊ℎ
109. Undertakings may also want to provide their market-based Scope 2 figures. Emission factors for
market-based Scope 2 emissions reflect the contractual arrangements of the undertaking with its
energy suppliers. Market-based emission factors can be provided by their electricity or heat
suppliers as well as supported by their own purchase of Energy Attribute Certificates or Power
Purchase Agreements (PPAs) or the use of residual-mix emission factors.
B4 – Pollution of air, water and soil

Guidance on which undertakings need to report on pollution and what pollutants undertakings need to
report on.
110. Paragraph 32 establishes that the undertaking shall disclose the pollutants it emits to air, water
and soil in its own operations if such information is already required to be reported by law to
competent authorities or under an Environmental Management System. This means that the
undertaking will first assess whether it already reports such information, either as a legal

9 Smith, C., Z.R.J. Nicholls, K. Armour, W. Collins, P. Forster, M. Meinshausen, M.D. Palmer, and M. Watanabe,
2021: The Earth’s Energy Budget, Climate Feedbacks, and Climate Sensitivity Supplementary Material. In Climate
Change 2021: The Physical Science Basis. Contribution of Working Group I to the Sixth Assessment Report of the
Intergovernmental Panel on Climate Change (Masson-Delmotte, V., P. Zhai, A. Pirani, S.L. Connors, C. Péan, S.
Berger, N. Caud, Y. Chen, L. Goldfarb, M.I. Gomis, M. Huang, K. Leitzell, E. Lonnoy, J.B.R. Matthews, T.K.
Maycock, T. Waterfield, O. Yelekçi, R. Yu, and B. Zhou (eds.)). Available on https://www.ipcc.ch/.

Page 23 of 66
 VSME Standard

requirement or voluntarily. If it already reports information on pollutants emissions (or is legally

required to do so), the undertaking will then provide further information on such emissions
according to the requirements in paragraph 32. However, if the undertaking does not yet report
such information (and is not legally required to do so), it is simply required to state this to be the
case.
111. In general, this requirement is expected to apply to undertakings that are operators of an industrial
installation or intensive livestock farm covered by the Industrial and Livestock Rearing Emissions
Directive (IED 2.0), amending the Industrial Emissions Directive (IED). The IED 2.0 applies to some
75,000 installations in Europe, covering activities such as burning fuel in boilers with rated power
of more than 50 MW, founding in metal foundries, processing of non-ferrous metals, production of
lime, manufacturing of ceramic products by firing, production of plant protection products or
biocides, rearing of any mix of pigs or poultry representing 380 livestock units or more, tanning of
hides, slaughterhouses, etc. In these cases, the installation must already report to the competent
authority the pollutants released to air, water and soil, and the data is publicly available at the
Industrial Emissions Portal Regulation (IEPR), replacing the European Pollutant Release and
Transfer Register (E-PRTR). Companies that operate in more than one facility do not have to report
on their consolidated company-wide emissions under the EPRTR, as they report only at facility
level. This Standard requires the reporting of the total amount of pollutants of all the facilities.
Similarly, companies owning but not operating in a facility do not have to report to the E-PRTR but
are expected to reflect their facility-owned emissions in their sustainability report.
112. Likewise, if an undertaking has been identified as having to monitor and report on the pollutants
listed in the E-PRTR under an Environmental Management System such as, for example, an Eco-
Management and Audit Scheme (EMAS) or ISO 14001 certification. These are in principle relevant
aspects for the undertaking to include in its sustainability report.
113. If an undertaking has only one facility or operates in only one facility, and if its pollution data is
already publicly available, the undertaking may refer to the document where such information is
provided instead of reporting it once again. Likewise, if the undertaking publishes an organisation-
wide report such as, for example, an EMAS report that incorporates pollution data, it can include it
in the sustainability report by reference.
114. To report information on pollutants in the sustainability report, the undertaking should indicate the
type of pollutant material being reported alongside the amount emitted to air, water and soil in a
suitable mass unit (e.g. t or kg).
115. Below can be found an example of how undertakings may present information on their emissions
to air, water and soil divided by pollutant type.

Pollutant Emissions (kg) Medium of release (air, water, soil)

e.g. Cadmium and compounds 10 Water

Type of pollutant 2

Type of pollutant 3

116. As for the types of pollutants that need to be considered when reporting under paragraph 32, the
undertaking may refer to the following main pollutants that are currently covered under EU law.
Nevertheless, each undertaking shall consider the specific pollutants covered by the legislation in
their respective jurisdictions.
117. Examples of key pollutants to air (Dir. 2024/299; Reg. 2024/1244; EC, 2024; EEA, 2022) are:
sulphur oxides (Sox/SO2 – e.g. from energy generation and heating in manufacturing), nitrogen
oxides (NOx/NO2 – e.g. from transport), non-methane volatile organic compounds (NMVOC – e.g.
from agricultural activities), carbon monoxide (CO – e.g. from fossil fuel combustion), ammonia
(NH3 – e.g. manure application and storage), particulate matter (PM10 – e.g. from combustion in
manufacturing, transport, agricultural activities), heavy metals (Cd, Hg, Pb, As, Cr, Cu, Ni, Zn),
POPs (total PAHs, HCB, PCBs, dioxins/furans), ozone-depleting substances or ‘ODS’

Page 24 of 66
 VSME Standard

(chlorofluorocarbons ‘CFCs’, hydrochlorofluorocarbons ‘HCFCs’, halons), black carbon (BC – e.g.

from energy consumption), etc.
118. According to the Guide for Business on air pollutants emissions adopted by the Alliance for Clean
Air, the major sources of emissions of air pollutants in the private sector (that are also highly
impactful for the entire value chain) include: (a) electricity generation from fossil fuel or biomass
combustion (which may be done externally, distributed through a national grid, then consumed
along the value chain activities); (b) direct stationary fossil fuel or biomass combustion within an
undertaking’s activities or industrial processes, or the operation of stationary machinery or other
activities that require fuel combustion; (c) transport (freight, road, rail, shipping and aviation, off-
road vehicles such as those used in agriculture or construction); (d) industrial processes (all other
emissions that do not stem from fuel combustion and that occur during industrial processes); (e)
agriculture (livestock and manure management, crop production such as crop residue burning,
manure and fertiliser application); (f) waste disposal (e.g. landfilling, incineration or open burning,
or composting).
119. The Guide represents an example of a simple methodology for developing a company's air
pollutant emission inventory and calculating the emissions of respective air pollutants. This
methodology is divided into the following steps; excluding the mapping of the value chain as under
the VSME Standard the information required by this Disclosure Requirement is to be reported at
the level of the reporting company: (1) identifying emission sources within the value chain, (2)
identifying methodologies for quantifying emissions, (3) collecting activity data, (4) identifying
emissions factors, and (5) quantifying emissions. The guide provides a mapping of sources of
pollution to methodologies for calculating information on emissions stemming from the main air
pollutants (table below).

Sources of pollution Methodology for quantifying

emissions
(Section in the guidance)

Electricity Section 4,1

Fuel combustion Section 4,2

Transport Section 4,3

Industrial processes Section 4,4

Agriculture Section 4,5

Waste Section 4,6

120. Below is an example of a calculation method for air pollutant emissions using the method for
manufacturing taken from the Guide above. In the example considered, Mp is the quantity of
material M used in (or produced by) a company’s value chain produced using process p (tonnes,
litres); EFk,p is the emission factor for pollutant k for process p (g unit production-1); Emk,p are
emissions of the specific pollutant k for process p (g).
Emk,p = Mp * EFk,p
121. For instance, a medium-sized chocolate manufacturer producing 1.750 tonnes of chocolate in 2022
would apply the default emission factor of 2 to calculate its emissions of NMVOCs, which would
result in the following calculation:
1.750 tonnes of chocolate * 2 (emission factor of NMVOCs) = 3.500 tonnes of emissions of NMVOCs.
122. Transport may be another significant source of air pollution within own operations and at value
chain level. In this case, to estimate the emission of a particular pollutant from road transport, for
example, the entity will need to use the following formula, where FCv,f is the fuel consumption of
vehicle type v using fuel f (kg); EFk,v,f is the emission factor for pollutant k for vehicle type v and
fuel f (g vehicle-km-1); Emk,v,f represents the emissions of the specific pollutant k for vehicle type
v and fuel f (g).

Page 25 of 66
 VSME Standard

Emk,v,f = FCv,f * EFk,v,f

123. For example, a light commercial vehicle (LCV) running on diesel that travelled a total of 2.800 km
in 2022 produced the following amount of PM10 emissions (PM10 emission factor of 1,52 g/kg):
2.800 km * 1,52 = 4.256 grammes of emissions of PM 10.
124. Fuel combustion is an additional critical source of air emissions. In this case an example of a
formula may be the following, where FCn is the fuel n consumed within the source category (Gj);
EFk is the emission factor for this pollutant k (g/Gj); and Emk are emissions of the specific pollutant
k (g).
Emk = FCn * EFk;
125. For example, a company consuming 3.000.000 grammes of fuel in 2020 will have an EF of 0,67
for SO2, resulting in:
3.000.000 * 0,67 = 2.010.000 grammes of emissions of SO2. from fuel combustion in 2020.
126. Examples of key pollutants to water (Reg. 2024/1244; Dir. 2000/60/EC; Dir. 2006/118/EC; Dir.
91/676/EEC; Dir. 2010/75/EU; and amendment Dir. 2024/1785; EEA, 2024) are: nitrogen (N),
phosphorus (P), heavy metals (Cd, Hg, Pb as well as As, Cr, Cu, Ni, Zn), POPs and pesticides,
BTEX (benzene, toluene, ethylbenzene, xylenes) and other Volatile Organic Compounds (VOCs),
substances unfavourably influencing the oxygen balance (measured using parameters such as
BOD, COD, etc.), total organic carbon (TOC), etc.
127. Pesticides and nutrients (e.g. N and P) may be released through agricultural activities (EEA, 2023;
UNEP, 2023) (e.g. manure or inorganic fertiliser application). Heavy metal concentrations may
stem from mining and wastewater discharges. TOC is a generic indicator of water contamination
with organic matter which indicates the presence of living material, for example in wastewater, but
also surface and groundwater (usual concentration levels of less than 10 mgl -1 and 2 mgl-1,
respectively). COD widely indicates the presence of industrial effluents or sewage, with values that
are typically lower than 20 mgl-1 in unpolluted waters and industrial wastewaters reaching values
of up to 60.000 mgl-1. BOD is normally used to determine pollution by organic matter in surface
waters as well as for the efficiency of sewage treatment, and it usually features values around 2
mgl-1 in unpolluted waters and 10 mgl-1 and more in polluted waters. The release of VOCs can be
the result of spills to water.
128. As for the methodology used to measure emissions to water, the EEA recommends a simple
estimation technique similar to the one used for the aforementioned air pollutants. In the formula
below, ARa is the activity rate for activity a (to be chosen based on the specific activity or process;
e.g. see Mp in the air emissions calculation above); EFp,a is the emission factor for pollutant p for
activity a; and Emissionsp,a are emissions of the specific pollutant p for activity a.
Emissionsp,a = ARa * EFp,a
129. Examples of key pollutants emitted to soil (Reg. 2024/1244; Dir. 86/278/EEC) are: N, P, heavy
metals (e.g. land application of sewage sludge), BTEX and other VOCs, POPs and pesticides.
130. Overall, the private sector sources of soil pollution are mainly the products or by-products of
industrial processes (e.g. production of chemicals, energy, textiles manufacturing), accidental spills
of petrol-derived products, livestock and agricultural activities (e.g. irrigation with untreated
wastewater, poultry rearing), production and treatment of wastewater, production and processing
of metals and minerals, and transportation (FAO, 2021).
131. Several national manuals have been developed to support companies in the calculation of their
emissions to air, water and soil, For example, in Australia and South Africa entities are presented
with a few estimation options to choose from, depending on their possibilities: direct measurement
(e.g. sampling, continuous monitoring system), mass balance, engineering calculations, emission
factors (same formula as above for air and water emissions), etc. The general approach to
calculating such emissions is to: 1) identify the emission sources within the facility (combustion,
manufacturing, solvent evaporation, storage, fugitive); 2) make a stock of the information available;
3) identify in the list of estimation methods the most suitable one for the specific process under
evaluation, the information available, and the measuring tools that can be acquired to get the data
that is needed; 4) gather the data required for each method; and 5) calculate emissions. The
manuals provide several formulas and examples for each emissions’ calculation method.

Page 26 of 66
 VSME Standard

132. A list of emission factors for air pollutants can be found at the dedicated webpage of the EEA.
Although emission factors are more commonly used for air pollution, certain ones for surface water
discharge and land disposal for specific processes were made available by the WHO. Additional
emission factors for POPs may be consulted here.
133. It is to be noted that the requirements under paragraph 32 are only applicable to SMEs operating
in specific sectors. Undertakings that are involved in the provision of services (e.g. operating in co-
working or shared facilities or remotely), for instance, are typically not included in the scope of this
disclosure. By contrast undertakings carrying out production activities (e.g. chemicals) generally
have impacts in terms of pollution and are, therefore, expected to report under this disclosure.
The table below (adapted from the EMAS User Guide) provides examples of sectoral impacts,
including for office services, for which pollution-related aspects may not be significant.

Activity Environmental aspect Environmental impact

Transport - consumed machine oils, fuel consumption - soil, water, air pollution
- vehicle emissions - greenhouse effect, noise
- tyre abrasion (fine dust)

Construction - primary raw material (resource) consumption - raw material availability

- air emissions, noise, vibrations, etc. From - noise, soil, water, air
construction machinery pollution
- land consumption - destruction of ground cover
- biodiversity loss

Office services - consumption of materials, (e.g. paper, toner) - generation of mixed municipal
waste
- electricity consumption (leads to indirect CO 2
emissions) - greenhouse effect

Chemical - primary raw material (resource) consumption - raw material availability

industry
- wastewater - water pollution
- emissions of volatile organic compounds - photochemical ozone
- emissions of ozone-depleting substances - destruction of the ozone
layer

Documentation Sources:

Data Documentation Source

EMAS User Guide https://green-

business.ec.europa.eu/document/download/98357f3d
-f891-416e-81ea-
a26f3ff3c61f_en?filename=PDF%20version%20C_20
23_7207EN_annexe_acte_autonome_cp_part1_0.pdf

A Practical Guide For Business: Air Pollutant https://www.ccacoalition.org/sites/default/files/resourc

Emission Assessment es/files/CCAC%20SEI%20-
%20A%20Practical%20%20Guide%20For%20Busine
ss%20-%20Updated_Final%202023.pdf

Page 27 of 66
 VSME Standard

Regulation (EU) 2024/1244 (IEPR) https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=OJ:L_202401244

Directive 2010/75/EU (IED) & amendment in https://eur-lex.europa.eu/legal-

Directive (EU) 2024/1785 (IED 2.0) content/EN/TXT/?uri=CELEX%3A02010L0075-
20110106
https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=OJ%3AL_202401785#d1e40-
42-1

Calculating emissions to water – a simplified https://www.eionet.europa.eu/etcs/etc-

method icm/products/etc-icm-reports/calculating-emissions-to-
water-a-simplified-method

Emission Estimation Technique Manual https://www.dcceew.gov.au/sites/default/files/docume

(Australia) nts/softdrink.pdf

A guide to reporting and estimating https://sawic.environment.gov.za/documents/297.pdf

emissions for the integrated pollutant and
waste information system

EMEP/EEA air pollutant emission inventory https://efdb.apps.eea.europa.eu/?source=%7B%22qu

guidebook 2023 ery%22%3A%7B%22match_all%22%3A%7B%7D%7
D%2C%22display_type%22%3A%22tabular%22%7D

Summary of techniques for estimating https://www.oecd.org/content/dam/oecd/en/publicatio

releases of chemicals from products ns/reports/2017/01/resource-compendium-of-prtr-
(OECD) release-estimation-techniques-part-4-summary-of-
techniques-for-estimating-releases-of-chemicals-from-
products_a3b37c3f/29018220-en.pdf

B5 – Biodiversity

Guidance on how to identify sites in or near biodiversity sensitive areas

134. Paragraph 33 stipulates that the undertaking shall disclose the sites it operates in that are located
in or near biodiversity-sensitive areas. Biodiversity sensitive areas are defined as such by
special nature protection regulation at European or international level. These comprise areas
belonging to the Natura 2000 network of protected areas, UNESCO World Heritage sites and Key
Biodiversity Areas (‘KBAs’) as well as other protected areas designated as requiring special
protection by governmental authorities (e.g. forest-protected areas or areas lying within river basin
districts).
135. To identify protected areas and biodiversity sensitive areas, the undertaking may refer to
databases such as the World Database on Protected Areas (WDPA) (a global database to help
identify marine and terrestrial protected areas), the World Database on Key Biodiversity Areas,
and the IUCN Red List of Threatened Species. The undertaking may also use tools such as the
Integrated Biodiversity Assessment Tool (IBAT).
136. Near, in the context of B5 – Biodiversity, shall refer to an area that is (partially) overlapping or
adjacent to a biodiversity sensitive area.
137. The following table shows how information on sites in or near biodiversity sensitive areas can
be presented.

Location Area Biodiversity sensitive Specification

Area
(hectares)

Page 28 of 66
 VSME Standard

(located in/near
biodiversity sensitive
areas)
Country –
Site name 1

Country –
Site name 2

Country –
Site name 3

...

Documentation Sources:

Data Documentation Source

Natura 2000 Network of protected areas https://natura2000.eea.europa.eu/

Key Biodiversity Areas – IUCN https://www.keybiodiversityareas.org/sites/searc

h

UNESCO – World Heritage Centre https://whc.unesco.org/en/list/

Guidance on how to calculate and report land-use

138. A ‘sealed area’ is to be understood as an area where the original soil has been covered (e.g.
roads, buildings, parking lots), making it impermeable and resulting in an impact on the
environment.
139. Green area or ‘nature-oriented area’ is an area that primarily preserves or restores nature. Near
natural/green areas may be located on the organisation’s site and may include roofs, facades,
water-drainage systems or other features designed, adapted or managed to promote biodiversity.
Near-natural areas may also be located off the organisation’s site if they are owned or managed
by the organisation and primarily serve to promote biodiversity.
140. When disclosing according to paragraph 34, the undertaking shall not only consider local impacts
but also direct and indirect impacts on biodiversity (e.g. through raw material extraction,
procurement, supply chain, production and products, transportation and logistics, and marketing
and communications).
141. The following table shows how information on how land-use may be presented.

Area

Land-use type (hectares or m2)

Previous year Reporting year % change

Total sealed
area

Page 29 of 66
 VSME Standard

Total nature-
oriented area
on-site

Total nature-
oriented area
off-site

Total use of
land

Documentation Sources:

Data Documentation Source

EMAS Guidance EU Commission Regulation 2018/2026

https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:32018R2026
&rid=2
User's guide
https://green-
business.ec.europa.eu/document/download/983
57f3d-f891-416e-81ea-
a26f3ff3c61f_en?filename=PDF%20version%20
C_2023_7207EN_annexe_acte_autonome_cp_
part1_0.pdf

B6 – Water

Guidance on how to calculate and report on water withdrawals and water consumption
142. Water withdrawal relates to the amount of water an undertaking draws into its organisational
boundaries from any source during the reporting period. In practice, for most undertakings this
relates to the amount of water taken from the public water supply network as indicated in the utility
bills. However, where applicable, water withdrawal also includes amounts of water taken from other
sources such as groundwater from own wells, water taken from rivers or lakes or water received
by other undertakings. In the specific case of undertakings operating in agriculture, water
withdrawal would include rainwater if collected directly and stored by the undertaking.
143. Water withdrawal data can be retrieved from measurements using flow meters or water bills;
indeed, in practice for most undertakings water withdrawal relates to the amount of water taken
from the public water supply network as indicated in the utility bills. In cases in which direct
measurements are not feasible or are deemed not sufficient and therefore need to be
complemented, data on water withdrawal can be estimated using, for example, calculations
models, and industry standards.
144. For example, in the case of a shared office or coworking space, a possible method to calculate the
water withdrawal could be to retrieve the overall water withdrawal of the building from the water
bill and calculate the water withdrawal per employee with the following equation:
Water withdrawal per employee daily (L) = annual water withdrawal (L) / (n. of employees in the whole
shared building x n. of working days).
The undertaking could then multiply the water withdrawal per employee for the number of its
employees and the days they worked in the reporting year to obtain the final number required in
the datapoint.
To make a numerical example applying the proposed formula, the annual water withdrawal
retrieved from the water bill of a coworking space is 1296 m3 (corresponding to 1296000 L),

Page 30 of 66
 VSME Standard

coworking space where 100 employees of different companies work together for an assumed
number of 240 days a year. The assumption on the average number of days worked can be
based on national statistics, for example. The water withdrawal per employee daily would be in
this case:
water withdrawal per employee daily = 1296000 L / (100x240) = 54 L
145. Assuming now that that the employees of the reporting undertaking are 25 and that they use the
coworking space for 220 days a year, the yearly water withdrawal of the undertaking in the
coworking space would be the water withdrawal per employee multiplied for the number of its
employees and the days worked, therefore 54Lx25x220 = 297000 L (corresponding to 297 m3).
146. This calculation could be useful when it is possible to access the water bill of the shared building.
This simple calculation method has some limitations, as it does not consider, for example,
differences in use between different parts of the building (e.g. a seven-floor building could have six
floors dedicated to offices and one floor with a canteen or a restaurant), which the undertaking
might be able to overcome if additional data are available, further refining the basic calculation
provided above as an example.
147. An alternative way to obtain water withdrawal data in the example of shared offices when it is not
possible to retrieve the water bill could be to calculate it using fixture flow rates and occupancy
data as primary inputs. A possible formula could be:
Total water withdrawal =
∑(Flow Rate×Number of Uses per Day×Number of Days per Year×Occupancy)
where:
(a) flow rates or each fixture can be retrieved from the project documentation or labels of the
fixtures, for example, or estimated basing on average data publicly available if more accurate
information is not retrievable;
(b) the number of uses per day can be estimated based on averages publicly available;
(c) ‘number of days’ stands for the number of operational days for the reporting undertaking in
a year;
(d) ‘occupancy’ represents the number of employees of the undertaking using the office; it is
often calculated as full-time equivalent (FTE); and
(e) the sign ∑ indicates that the calculations for each fixture should be summed up to obtain the
total water withdrawal of the reporting undertaking operating in a shared office.
148. An additional possible source that could support the reporting of water withdrawal for
undertakings operating in shared offices is the JRC Level(s) indicator 3.1: Use stage water
consumption user manual as well as additional related documents and calculation sheets (see PG
Section Documents | Product Bureau (europa.eu)). Furthermore, the undertaking could consult
EMAS Reference Document for the Public Administration sector and EMAS Reference Document
for the Construction sector as well as rating systems like the National Australian Built Environment
Rating System (NABERS) and certifications like the Building Research Establishment
Environmental Assessment Method (BREEM), the Leadership in Energy and Environmental
Design (LEED) and the German Sustainable Building Council (DGNB) System for Buildings In Use,
which might provide useful indications in their methodologies on how to further refine the
calculation for water withdrawal in offices and shared spaces.
149. The provided examples to obtain water withdrawal data in the case of shared offices can be
transposed to and applied by undertakings operating in different sectors, with adjustments that
might be necessary for the sectoral and entity-specific situation the undertaking operates in. EMAS
Sectoral Reference Documents (SRDs) could be consulted for sector-specific methodology and
indicators on water withdrawal as well as industry standards and benchmarks.
150. Water consumption is the amount of water drawn into the boundaries of the undertaking that is
not discharged or planned to be discharged back into the water environment or to a third party.
This typically relates to water evaporated – e.g. in thermal energy processes like drying or power
production – water embedded in products – e.g. in food production – or water for irrigation purposes
– e.g. used in agriculture or for watering company premises.

Page 31 of 66
 VSME Standard

151. Water discharge means, for example, the amount of water transferred directly to receiving water
bodies such as lakes or rivers, the public sewer or to other companies for cascading water use. It
can be seen as the water output of the undertaking.
152. Water consumption can therefore be calculated as:
Water consumption = Water Inputs – Water Outputs
or in other words:
Water consumption = (Water withdrawal) – Water discharges.
For undertakings that solely withdraw water from the public water network and discharge it
into the sewer, water consumption will be close to zero and can therefore be omitted from
the report.
More broadly, the applicability of the disclosure requirement on water consumption relates to
information already requested by law, already reported, and/or appropriate for the sector.
153. A schematic view of the relationship between water withdrawal, water consumption and water
discharge can be seen in the image below.

154. The undertaking may provide additional explanatory information to contextualise its water
withdrawals or consumption. For example, the undertaking may highlight if rainwater is collected
and used as a replacement for tap water or if water is discharged into other parties for cascading
use.
155. Below can be found an example of how undertakings may present quantitative information on their
withdrawals, discharges and consumption of water divided by site location.

Water withdrawal Water consumption

E.g. m³ E.g. m³ (if applicable)

All sites

Sites in areas with water stress

Guidance for determining whether the undertaking operates in an area of high-water stress
156. The undertaking can consult local (e.g. national, regional) water authorities of the place(s) it
operates in to inform its assessment of water resources for the specific location(s), including the
identification of areas of high-water stress. The undertaking can also consult publicly available and
free tools that map out water scarcity globally. One such tool is the WRI’s Aqueduct Water Risk
Atlas, which provides an interactive map of a water stress indicator (the ‘baseline water stress’,
which measures the ratio of total water demand to available renewable surface and groundwater
supplies) at sub-basin level. With the help of this tool, undertakings can consult the water stress
baseline set for different river basins globally. Values of the baseline water stress indicator above
40% indicate an area of high-water stress.
157. By way of illustration, the map below shows the main Iberian River basins and their water stress
classification according to the WRI Aqueduct.

Page 32 of 66
 VSME Standard

In this image several water basins in the Iberian Peninsula, along with their water stress
classification, can be observed. Most of the southern part of the peninsula sits in an area of
significant high-water stress – with the exception of the Guadiana basin (in yellow). Thus, if the
undertaking has operations within the Guadalquivir basin (e.g. the Andalucia region, which has
a significant high-water stress level), the undertaking would have to disaggregate its water
consumption for that region/water basin. But if its operations take place within the southern part
of the Guadiana river basin (where there is low water stress), then it would not be necessary to
disaggregate its water consumption for that region/water basin.
158. Other possible tools that undertakings can consult to determine their location in water stressed
areas are the static map (and related dataset) provided by the European Environment Agency
(EEA) Water Exploitation Index plus (WEI+) for summer and Urban Morphological Zones (UMZ)
and the interactive map Water exploitation index plus (WEI+) for river basin districts (1990-2015),
both presenting the water stress indicator WEI+ that measures total water consumption as a
percentage of the renewable freshwater resources at sub-basin level. WEI+ values equal or greater
than 40% generally indicate situations of high-water stress. It is worth underlining that WRI
Aqueduct bases its baseline water stress indicator on water demand, while the EEA indicator of
water stress WEI+ is based on water consumption.

Documentation Sources:

Data Documentation Source

Water withdrawal in shared offices ‘Water use in your business’, South Staff Water
(measurement)

Water withdrawal in shared offices Level(s) indicator 3.1: Use stage water
(measurement, estimation) consumption user manual: introductory briefing,
instructions and guidance (Publication version
1.1), JRC

Water withdrawal (general) EMAS User Guide

Water withdrawal in SMEs EMAS "easy" for small and medium enterprises

Water stress – WRI Aqueduct Technical Note - Aqueduct 4.0: Updated

decision-relevant global water risk indicators,
WRI

Page 33 of 66
 VSME Standard

Water stress – WEI+ Water scarcity conditions in Europe (Water

exploitation index plus) | European Environment
Agency's home page (europa.eu)

B7 – Resource use, circular economy and waste management

Guidance on circular economy principles

159. When disclosing information on its products, material use and waste management, the undertaking
may provide information in relation to circular economy principles. Circular economy principles
are articulated in the paragraphs below. The key principles outlined by the Ellen Macarthur
Foundation are underlined below while the key principles considered by the European Commission
are italicised.
Eliminate waste and pollution – this can be done through process improvements and also through
design considerations at the level of usability, reusability, repairability, disassembly and
remanufacturing.
Circulate products and materials (at their highest value) – reusability and recycling are key for
product circulation, but this is enhanced if special consideration is given to circularity at the design
phase for issues such as usability, reusability, repairability, remanufacturing and disassembly.
Factors such as the incorporation of biomaterials and their recirculation via the biological cycle
can also be considered, for example using biodegradable crop covers instead of plastics in
agriculture.
Regenerate nature – whenever possible, human activities should seek to regenerate nature and
improve or restore key ecological functions (i.e. drainage, habitat provision, thermal regulation,
etc.) that may have been lost due to previous human activities.

Guidance on total waste generation and waste diverted to recycling or reuse

160. The requirements in paragraph 38 may be omitted by undertakings that generate only household
waste. In such cases, the undertaking will only state that it generates this type of waste.
161. When reporting on hazardous waste according to paragraph 38(a), the undertaking fulfils the
requirements on radioactive waste of indicator number 9 from Table #1 of Annex 1 of the
Sustainable Finance Disclosure Regulation (SFDR) 10. This SFDR indicator (ratio between tonnes
of radioactive and hazardous waste) can be computed by using the numerator and denominator
that the undertaking provides when reporting according to paragraph 38(a).
162. SMEs must disclose hazardous and radioactive waste if their operations involve generating such
waste. Applicability depends on the presence of hazardous or radioactive materials in business
processes.
163. Undertakings are recommended to classify their hazardous waste using the European Waste
Catalogue (EWC), which categorises waste by type. Any waste marked with an asterisk (*) is
classified as hazardous in the EWC, normally with reference to ‘containing hazardous substances’.
For example:
(a) medical sector: contaminated sharps like needles and syringes used in medical settings
(‘wastes whose collection and disposal is subject to special requirements in order to prevent
infection’ EWC Code 18 01 03*), cytotoxic and cytostatic medicines (EWC Code 18 01 08*),
spent radiopharmaceuticals, and certain diagnostic equipment containing radioactive
materials;
(b) manufacturing sector: used lubricants and oils classified as hazardous (EWC Code 13 02
05*);

10 Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on
sustainability-related disclosures in the financial services sector (Sustainable Finance Disclosures Regulation) (OJ
L 317, 9.12.2019, p. 1).

Page 34 of 66
 VSME Standard

(c) construction sector: asbestos-containing materials (EWC Code 17 09 03*), soil and stones
containing hazardous substances (EWC Code 17 05 03*), and
(d) batteries and accumulators: lead batteries (16 06 01*), Ni-Cd batteries (16 06 02*), batteries
containing mercury (16 06 03*).
164. Nevertheless, a waste is considered hazardous if it displays one or more of the hazardous
properties listed in Annex II of the Waste Framework Directive. For easier reference, these are
presented below together with the respective pictograms to help identify hazardous properties such
as flammability, toxicity and corrosiveness, which may lead to waste being classified as hazardous.
165. Radioactive waste also has or can have hazardous properties that render it hazardous, namely
carcinogenic, mutagenic or toxic for reproduction. Nevertheless, radioactive substances are
subject to separate regulations within the EU 11. Companies using radioactive materials with the
ability of generating radioactive waste subject to EU regulation should be aware of it. Radioactive
waste should be identified based on the presence of radionuclides at levels above regulatory
clearance thresholds.
166. Radioactive waste can be present in a variety of items such as medical, research and industrial
equipment, smoke detectors, or sludges.
167. Hazard Pictograms for each hazard class are presented below.

Hazard pictogram Pictogram What does it mean?

statement,
symbol and
class

‘Gas under
• Contains gas under pressure; may explode if heated
pressure’
• Contains refrigerated gas; may cause cryogenic burns or
Symbol: Gas injury
cylinder

Physical Hazard

‘Explosive’
• Unstable explosive

Symbol: • Explosive; mass explosion hazard

Exploding bomb
• Explosive; severe projection hazard

Physical Hazard • Explosive; fire, blast or projection hazard

• May mass explode in fire

‘Oxidising’
• May cause or intensify fire; oxidiser.

Symbol: Flame • May cause fire or explosion; strong oxidiser.

over circle

Physical Hazard

11EU's Radioactive Waste and Spent Fuel Management Directive (2011/70/Euratom). For more information see
the EU’s webpage on Radioactive Waste and spent fuel.

Page 35 of 66
 VSME Standard

‘Flammable’
• Extremely flammable gas

Symbol: Flame • Flammable gas

• Extremely flammable aerosol

Physical Hazard
• Flammable aerosol

• Highly flammable liquid and vapour

• Flammable liquid and vapour

• Flammable solid

‘Corrosive’
• May be corrosive to metals

Symbol: • Causes severe skin burns and eye damage

Corrosion

Physical Hazard
/ Health Hazard

‘Health
hazard/Hazard • May cause respiratory irritation
ous to the
ozone layer’ • May cause drowsiness or dizziness

• May cause an allergic skin reaction

Symbol:
Exclamation • Causes serious eye irritation
mark
• Causes skin irritation
Health Hazard
• Harmful if swallowed

• Harmful in contact with skin

• Harmful if inhaled

• Harms public health and the environment by

destroying ozone in the upper atmosphere

‘Acute toxicity’
• Fatal if swallowed

Symbol: Skulls • Fatal in contact with skin

and Crossbones
• Fatal if inhaled

Health Hazard • Toxic: if swallowed

• Toxic in contact with skin

• Toxic if inhaled

Page 36 of 66
 VSME Standard

‘Serious health
hazard’ • May be fatal if swallowed and enters airways

• Causes damage to organs

Symbol: Health
Hazard • May cause damage to organs

• May damage fertility or the unborn child

Health Hazard
• Suspected of damaging fertility or the unborn child

• May cause cancer

• Suspected of causing cancer

• May cause genetic defects

• Suspected of causing genetic defects

• May cause allergy or asthma symptoms or breathing

difficulties if inhaled

‘Hazardous to
the • Very toxic to aquatic life with long-lasting effects
environment’
• Toxic to aquatic life with long-lasting effects

Symbol:
Environment

Environmental
Hazard

Pictograms that indicate hazardous properties, Annex V, from the Classification, Labelling and
Packaging (CLP) Regulation (EC) No 1272/2008.
168. When presenting information on its waste generation or diversion from disposal, the undertaking
should preferably report such information in units of weight (e.g. kg or tonnes). Nevertheless,
should the units of weight be considered an inappropriate unit by the undertaking, they may
alternatively disclose the aforementioned metrics in volumes (e.g. m3) instead.
169. When disclosing information on the total annual waste diverted to recycling or reuse, the
undertaking should consider the waste that is sorted and sent to recycling or reuse operators (e.g.
the amount of waste put into recycling container or sorting of waste into certain categories of
materials and their delivery to waste treatment facilities) rather than the waste that gets effectively
recycled or reused.
170. When disclosing information on waste, the undertaking may adopt the following tables.

Waste generated (e.g. tonnes)

Total waste generated, of which:

Waste Waste
diverted to directed
recycle or to
reuse disposal

Page 37 of 66
 VSME Standard

Non-hazardous waste

Type of waste1

Type of waste2

...

Hazardous waste

Type of waste1

...

171. Examples of hazardous wastes that small businesses may generate include batteries, used oils,
pesticides, mercury-containing equipment and fluorescent lamps.
172. The undertaking may provide further breakdowns specifying further types of non-hazardous and
hazardous wastes. In doing so, it may consider the list of waste descriptions found in the
European Waste Catalogue’s social metrics.

Guidance on the annual mass-flow of relevant materials used

173. The annual mass-flow is an indicator aligned with the EMAS requirements on efficiency of material
consumption, and it illustrates an undertaking's dependency on specific materials in its operations
(e.g. wood and steel for the construction industry). The undertaking is here required to provide
information on the materials it uses, including both the materials acquired from suppliers and those
sourced internally from production. To compute the annual mass-flow of the relevant materials it
has used, the undertaking will need to first identify the specific key materials on which its operations
are dependent and for which material efficiency needs to be evaluated (e.g. material efficiency of
wood). If different types of materials are used, the undertaking will need to provide separately the
annual mass-flow (i.e. total weight for each relevant material used, e.g. tonnes of wood purchased)
for each key material in an appropriate manner, for example by breaking it down by the use to
which they are put (EMAS, 2023). The mass flow of relevant materials used will result from the
sum of the weight of all used materials, including raw materials, auxiliary materials, input materials,
semi-finished products or others (excluding energy sources and water) and provide the total weight
for each relevant material used (e.g. tonnes of wood purchased). The mass flow of relevant
materials used will result from the sum of the weight of all used materials, including raw materials,
auxiliary materials, input materials, semi-finished products, or others (excluding energy sources
and water).This indicator is to be preferably expressed in units of weight (e.g. kilograms or tonnes),
volume (e.g. m³) or other metric units commonly used in the sector.

Guidance on how to identify manufacturing, constructions and /or packaging processes

174. To identify manufacturing, construction and/or packaging processes, the undertaking may refer to
the activities that fall under Section C – Manufacturing, Section F – Construction as well as Class
N82.92 ‘Packaging activities’ of Annex I to Regulation (EC) No 1893/200612.

Basic Module Guidance – Social Metrics

B8 – Workforce – General characteristics
175. Full-time equivalent (FTE) is the number of full-time positions in an undertaking. It can be
calculated by dividing an employee’s scheduled hours (total effective hours worked in a week) by
the employer's hours for a full-time workweek (total hours performed by full-time employees). For
example, an employee who works 25 hours every week for a company where the full-time week is
40 hours represents a 0,625 FTE (i.e. 25/ 40 hours).

12 L_2006393EN.01000101.xml (europa.eu).

Page 38 of 66
 VSME Standard

176. Headcount is the total number of people employed by the undertaking at a given time.

Guidance on how to present information about employees’ contract types

177. The following table shows how information on employees may be presented by type of
employment contract.

Type of contract Number of employees (headcount or full-time equivalents)

Temporary contract
Permanent contract
Total employees
178. The following table shows how information on employees may be presented by gender.

Gender Number of employees (headcount or full-time equivalents)

Male
Female
Other
Not reported
Total employees
179. In some European Union Member States, it is possible for people to legally register themselves as
having a third gender, often neutral, which is to be categorised as ‘other’ in the table above. If the
undertaking is disclosing data about employees where this is not possible, it may explain this and
indicate that the ‘other’ category is not applicable. The ‘not reported’ category applies to employees
who do not disclose their gender identity.
180. The following table shows how information on employees may be presented by countries.

Country (of Number of employees (headcount or full-time equivalents)

employment
contract)
Country A
Country B
Country C
Country D
Total employees
181. Definitions and types of employment contracts may vary depending on the country. If the
undertaking has employees working in more than one country, it shall use the legal definitions
stipulated in the national laws of the countries where the employees are based in to calculate
country-level data. Such country-level data shall then be added up to calculate total numbers,
disregarding differences in national legal definitions.
182. Employee turnover refers to employees who leave the undertaking voluntarily or due to dismissal,
retirement or death in service.
183. In order to calculate the turnover rate, the formula below should be used.
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 𝑤ℎ𝑜 𝑙𝑒𝑓𝑡 𝑑𝑢𝑟𝑖𝑛𝑔 𝑡ℎ𝑒 𝑟𝑒𝑝𝑜𝑟𝑡𝑖𝑛𝑔 𝑦𝑒𝑎𝑟
𝑥 100
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 𝑑𝑢𝑟𝑖𝑛𝑔 𝑡ℎ𝑒 𝑟𝑒𝑝𝑜𝑟𝑡𝑖𝑛𝑔 𝑦𝑒𝑎𝑟
B9 – Workforce – Health and safety

Guidance on the rate of recordable work-related accidents

184. Based on the assumption that one full-time worker works 2,000 hours per year, the rate indicates
the number of work-related accidents per 100 full-time workers over a yearly time frame. If the
undertaking cannot calculate directly the number of hours worked, it may estimate this on the basis
of normal or standard hours of work.
185. In order to calculate the rate of recordable work-related accidents of employees, the formula
below should be used.

Page 39 of 66
 VSME Standard

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑜𝑟𝑘 𝑟𝑒𝑙𝑎𝑡𝑒𝑑 𝑎𝑐𝑐𝑖𝑑𝑒𝑛𝑡𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑟𝑒𝑝𝑜𝑟𝑡𝑖𝑛𝑔 𝑦𝑒𝑎𝑟

𝑥 200,000
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 ℎ𝑜𝑢𝑟𝑠 𝑤𝑜𝑟𝑘𝑒𝑑 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟 𝑏𝑦 𝑎𝑙𝑙 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠

Example
186. Company A reported three work-related accidents in the reporting year. Company A has 40
employees, and a total number of 80,000 hours (40 x 2,000) worked in a year.
The rate of recordable work-related accidents is 3/80,000 x 200,000 = 7.5.

Guidance on the number of fatalities resulting from work-related injuries and work-related ill health
187. Work-related injuries and work-related ill health arise from exposure to dangers at work.
188. In case of teleworking, injuries and ill health are work-related if the injury or ill health is directly
related to the performance of work rather than the general home environment.
189. In case of injuries and ill health that occur while a person is travelling for work, these are considered
work-related if the employee was performing work activities in the interest of the employer at the
time of the injury or ill health. Accidents taking place when travelling, outside of the undertaking’s
responsibility (i.e. regular commuting to and from work), are subject to the applicable national
legislation, which regulates their categorisation as to whether they are considered work-related or
not.
190. Mental illness is considered work-related if it has been notified voluntarily by the relevant worker
and if an evaluation from a licensed healthcare professional stating that the illness in question is
indeed work-related has been issued and notified, too. Health problems resulting from smoking,
drug and alcohol abuse, physical inactivity, unhealthy diets and psychosocial factors not connected
to work are not considered work-related.
191. The undertaking may present separately fatalities resulting from work-related injuries and those
resulting from work-related ill health.
B10 – Workforce – Remuneration, collective bargaining and training

Guidance on remuneration: minimum wage

192. ‘Minimum wage’ refers to the minimum compensation of employment per hour or another unit of
time. Depending on the country, the minimum wage might be set directly by law or through
collective bargaining agreements. The undertaking shall refer to the applicable minimum wage
for the country it reports on.
193. For the lowest pay category, excluding interns and apprentices, minimum wage serves as the
foundation for calculating entry-level wage. Therefore, entry-level wage includes pay equal to
minimum wage as well as any additional fixed payments guaranteed to employees in that
category.

Guidance on remuneration: percentage gap between female and male employees

194. The metric for the percentage gap between female and male employees addresses the principle
of gender equality, which stipulates equal pay for equal work. The pay gap is defined as the
difference of average pay levels between female and male employees expressed as the
percentage of the average pay level of male employees.
195. In order to compute this metric, all employees shall be included in the calculation. In addition,
there should be two separate average pay calculations for female and male employees. See the
formula below:

(𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑔𝑟𝑜𝑠𝑠 ℎ𝑜𝑢𝑟𝑙𝑦 𝑝𝑎𝑦 𝑙𝑒𝑣𝑒𝑙 𝑜𝑓 𝑚𝑎𝑙𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 − 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑔𝑟𝑜𝑠𝑠 ℎ𝑜𝑢𝑟𝑙𝑦 𝑝𝑎𝑦 𝑙𝑒𝑣𝑒𝑙 𝑜𝑓 𝑓𝑒𝑚𝑎𝑙𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠)
𝑥 100
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑔𝑟𝑜𝑠𝑠 ℎ𝑜𝑢𝑟𝑙𝑦 𝑝𝑎𝑦 𝑙𝑒𝑣𝑒𝑙 𝑜𝑓 𝑚𝑎𝑙𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠

196. Depending on the undertaking’s remuneration policies, gross pay refers to all of the following
elements:

Page 40 of 66
 VSME Standard

(a) base salary, which is the sum of guaranteed, short-term, non-variable cash compensation;
(b) benefits in cash, which constitute the sum of the base salary and cash allowances, bonuses,
commissions, cash profit-sharing and other forms of variable cash payments;
(c) benefits in kind such as cars, private health insurance, life insurance and wellness programs;
and
(d) direct remuneration, which is the sum of benefits in cash, benefits in kind and the total fair
value of all annual long-term incentives.
197. The gross pay is the sum of all the applicable elements listed above.
198. The average gross hourly pay is the weekly/annual gross pay divided by the average hours worked
per week/year.

Example
199. Company A has X male employees and Y female employees in total. Male employees’ gross
hourly pay is €15 and female employees’ gross hourly pay is €13.
200. The average gross hourly pay level of male employees is the sum of all their gross hourly
payments divided by the total number of male employees. The average gross hourly pay level of
female employees is the sum of all their gross hourly payments divided by the total number of
female employees.
201. The formula used to calculate the percentage pay gap between male and female employees is
15 − 13
𝑥 100 = 13.3%
15

Guidance on collective bargaining coverage

202. The employees covered by collective bargaining agreements are those individuals to whom the
undertaking is obliged to apply the agreement. If an employee is covered by more than one
collective bargaining agreement, it only needs to be counted once. If none of the employees are
covered by a collective bargaining agreement, the percentage is zero.
203. The percentage of employees covered by collective bargaining agreements is calculated by
using the following formula.
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 𝑐𝑜𝑣𝑒𝑟𝑒𝑑 𝑏𝑦 𝑐𝑜𝑙𝑙𝑒𝑐𝑡𝑖𝑣𝑒 𝑏𝑎𝑟𝑔𝑎𝑖𝑛𝑖𝑛𝑔 𝑎𝑔𝑟𝑒𝑒𝑚𝑒𝑛𝑡𝑠
𝑥 100
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠
204. The information required by this disclosure requirement may be reported as coverage rates if the
collective bargaining coverage is between 0-19%, 20-39%, 40-59%, 60-79% or 80-100%.
205. This requirement is not aimed at obtaining the percentage of employees represented by a works
council or belonging to trade unions, which can be different. The percentage of employees covered
by collective bargaining agreements can be higher than the percentage of unionised employees
when the collective bargaining agreements apply to both union and non-union members.

Basic Module Guidance – Business Conduct Metrics

B11 – Convictions and fines for corruption and bribery
206. Corruption and bribery fall under the business conduct sustainability issue.
207. Under paragraph 43, the undertaking shall report on the total number of convictions and the total
amount of fines incurred for violating anti-corruption and anti-bribery laws.

Guidance on convictions
208. Convictions for the violation of anti-corruption and anti-bribery laws refer to any verdict of a criminal
court against an individual or undertaking in respect of a criminal offence related to corruption
and bribery, for example where these court decisions are entered in the criminal record of the
convicting European Union Member State.

Page 41 of 66
 VSME Standard

Guidance on fines
209. Fines issued for the violation of anti-corruption and anti-bribery laws refer to mandatory monetary
penalties resulting from violations of anti-corruption and anti-bribery laws imposed by a court,
commission or other government authority, which are paid to a public treasury.

Page 42 of 66
 VSME Standard

Comprehensive Module: Guidance

210. The guidance below is intended as part of an ecosystem that will include also the development of
further support guidance by EFRAG, further digital tools and implementation support (educational
activities, stakeholders’ engagement and so forth), aiming to facilitate some of the technical
elements present in the guidance.
211. This guidance is intended to support the preparation of metrics in the Comprehensive Module.

Comprehensive Module Guidance – General information

C1 – Strategy: Business Model and Sustainability – Related Initiatives
212. When describing the main consumers and supplier relationships under paragraph 47 (c), the
undertaking shall disclose the estimated number of suppliers, and their related sectors and
geographies (i.e. countries).
C2 – Description of practices, policies and future initiatives for transitioning towards a more
sustainable economy
213. Undertakings may use the following template to report on C2 datapoints.

If you answered YES to existing

practices/ policies/ future
You may indicate the
initiatives in disclosure B2, If you answered YES
highest senior level in
please briefly describe them to future initiatives/
the undertaking
along with their consequent targets in disclosure
accountable for
actions. (In case the practice/ B2, please specify
implementing them [if
policy/ future initiative covers them.
any]
suppliers or clients, the
undertaking shall mention it)

Climate
Change

Pollution

Water and
Marine
Resources

Biodiversity
and
Ecosystems

Circular
Economy

Own
Workforce

Workers in
the Value
Chain

Affected
Communities

Page 43 of 66
 VSME Standard

Consumers
and end-
users

Business
conduct

Comprehensive Module Guidance – Environmental Metrics

Consideration when reporting on GHG emissions under B3 (Basic Module)
214. When determining whether disclosure of Scope 3 is appropriate following paragraph 50, the
undertaking may screen its total Scope 3 GHG emissions based on the 15 Scope 3 categories
identified by the GHG Protocol using appropriate estimates and report by incorporating this
information by reference. This allows for the identification and disclosure of its significant Scope 3
categories based on the magnitude of their estimated GHG emissions and other criteria provided
by the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard
(Version 2011, p. 61 and 65-68) or EN ISO 14064-1:2018 Annex H.3.2, such as financial spend,
influence, related transition risks and opportunities or stakeholder views.
215. SMEs operating with manufacturing, agrifood, real estate construction and packaging processes
are likely to have significant Scope 3 categories (CDP, 2024), which may be considered relevant
for reporting in the undertaking’s sector.
C3 – GHG reduction and climate transition
216. Emission reductions can prove to be both a challenge and opportunity for an undertaking, as it
often requires changes to the strategic and operational reality of the business. The goal of reducing
emissions may require a review of strategic and financial priorities. Decarbonisation may require
important initial investment in, for example, electrifying a fleet of vehicles, implementing new
technologies to reduce energy consumption or developing new product lines that are less reliant
on carbon-intensive materials. On the other hand, implementing low-carbon solutions to achieve
GHG emission reduction can significantly lessen the costs of purchased energy and materials.
Undertakings embarking on their decarbonisation journey are often facing important adjustments
to their business models or daily operations. For instance, a logistics and delivery services
undertaking may need to redesign its fleet management to minimise potential service disruptions
due to the need of regular vehicle charging. A consumer goods manufacturing undertaking
planning to replace a component of its product with a sustainable, low-carbon alternative may need
to allocate time and resources to product innovation and to searching for new suppliers. These
efforts can, in turn, result in reducing costs, accessing new markets, creating new workplaces and
attracting additional financing, making GHG emission reduction not only a challenge, but also a
strategic business opportunity. In this context, targets for GHG reductions are an important
measure of responding to the need for a sustainable transition, as they allow undertakings to
manage the change in a systematic, controlled and organised way.
217. A GHG emission reduction target is a commitment to reduce the undertaking’s GHG emissions in
a future year compared to the GHG emissions measured during a chosen base year. Actions that
may lead to emission reductions include, for instance, electrification, renewable electricity,
sustainable products development, etc. Disclosure C3 requires that the undertaking discloses
GHG emission reduction targets for its Scope 1 and Scope 2 emissions.
218. Removals and avoided emissions shall not be accounted as reduction of the undertaking’s gross
GHG emissions. This is due to the important distinction between accounting practices for gross
GHG emissions (inventory accounting) and GHG removals and avoided emissions (project-based
or intervention accounting). Gross GHG emissions of the undertaking are designed to track the
actual emissions released to the environment, providing a consistent and comparable baseline to
set up GHG targets. Avoided emissions and carbon removals, on the other hand, relate to specific
project activities of the undertaking, which means that their accounting is done separately from
gross GHG emissions.
219. To follow this practice, the undertaking needs to distinguish between its gross GHG emissions and
other impacts which are not captured in it, such as GHG removals and avoided emissions.

Page 44 of 66
 VSME Standard

Removals refer to the withdrawal of GHG from the atmosphere as a result of deliberate human
activities. Examples of such activities can include plant growth (transfer of atmospheric CO 2
through photosynthesis) and direct air capture of CO2 and are typically linked to the subsequent
storage of CO2. Avoided GHG emissions are typically referred to as emissions that would have
otherwise happened but that, as a result of the undertaking’s activities, did not happen. These may
include introducing new products and technologies that reduce demand for their carbon-intensive
equivalents, for example insulation solutions in a building that avoid the demand for energy
services therein. More information on the concepts related to carbon removals and avoided
emissions can be found in the GHG Protocol Land Sector and Removals Guidance13 as well as
the WBCSD guidance14.
220. A base year is a preceding year against which the undertaking’s current GHG emissions can be
measured. In general, the base year should be a recent and representative year of the
undertaking’s GHG emissions in which there are verifiable data.
221. The target year is the year in the future in which the undertaking aims to achieve a certain absolute
or percentage amount of GHG emission reductions. It should range over a period from one to three
years from the base year to a short-term target. Longer term targets may also be included, for
instance, for periods of twenty or thirty years (e.g. 2040 or 2050). Undertakings are encouraged to
include target values for the short-term target year of 2030 at the least and, if feasible, for the long-
term year of 2050. From 2030 onwards, it is recommended to update the base year and target
year for GHG emission reduction targets after every five-year period.
222. To set a target, undertakings should consider the existing scientific evidence on GHG mitigation.
The SBTi recommends a cross-sector target in GHG emissions reduction of -42% by the year 2030
and -90% by the year 2050 (base year 2020). The Stockholm Resilience Centre also proposes a
‘carbon law’ that sets out concrete steps to achieve full decarbonisation by 2050 based on a flexible
way of thinking about reducing carbon emissions by halving emissions every decade and
increasing renewable energy roll-out exponentially. The authors argued that this roadmap would
ensure a 75% chance of keeping the Earth below 2°C above pre-industrial temperatures – the
target set out in the Paris agreement15. SBTi also proposes a streamlined target-setting route for
small- and medium-sized undertakings16. Specific pathways also exist by sector and may be
considered by undertakings when setting their GHG emission reduction targets.
223. To achieve a quick reduction of both direct and indirect emissions, there are some simple actions
that the undertaking can take. Some actions may be easy but still able to deliver a notable emission
reduction and support the undertaking reaching its targets. For instance, electrification of the
vehicle fleet by replacing vehicles running on fossil fuel with electric vehicles will lead to emission
reduction as soon as the previous fleet is replaced. This can mean notable emission reduction
especially for a business that is reliant on transportation. Similarly, replacing commutes and
business travels by car with low carbon alternatives such as bicycles or public transport is an
effective, simple and achievable decarbonisation action. Another area of low-hanging fruit is to
review the internal energy management and update it to energy-efficient equipment and integrate
maintenance into routine business operations. By regularly maintaining equipment and machinery
and replacing these with more energy-efficient alternatives when and where possible, the
undertaking can reduce its energy consumption. Such equipment can include, for example, boilers,
telecommunication systems, heat pumps, air-conditioning etc. Through regular maintenance their
efficient operation can be ensured, wear and tear minimised and waste minimised. By also

13 GHG Protocol Land Sector and Removals Guidance (https://ghgprotocol.org/land-sector-and-removals-

guidance)
14 World Business Council for Sustainable Development (2023), Guidance on Avoided Emissions.
(https://www.wbcsd.org/wp-content/uploads/2023/09/Climate-Avoided-Emissions-guidance_WBCSD.pdf).
15 Rockström, J., Gaffney, O., Rogelj, J. et. al. 2017. A roadmap for rapid decarbonization. Science, Volume 355
Issue 6331. Available at: https://www.stockholmresilience.org/research/research-news/2017-03-23-curbing-
emissions-with-a-new-carbon-law.html.
16 SBTI https://sciencebasedtargets.org/small-and-medium-enterprise-sme-target-setting-process. SBTI offers
resources for SMEs to set science based targets: https://sciencebasedtargets.org/small-and-medium-enterprise-
sme-target-setting-process.

Page 45 of 66
 VSME Standard

automating systems and using timers to define periods of use, the undertaking is able to lower the
emissions of such equipment even further.
224. A climate transition plan for climate change mitigation is a set of present and future actions meant
to align the undertaking’s business model, strategy and operations with the key overarching global
goal of limiting global warming to 1.5°C. Underpinned by a GHG reduction target compatible with
that goal, the importance of having a transition plan in place lies in the ability of understanding the
means by which the undertaking will move towards a low-carbon economy while keeping track of
the progress made. A transition plan serves as a mechanism for accountability and transparency,
prompting undertakings to develop credible pathways for mitigating climate change through their
actions.
225. Establishing a credible transition plan for the undertaking is something that should be supported
by elements such as (a) identifying clear responsibilities and roles; (b) integrating the plan into the
undertaking’s business strategy and financial planning; (c) including information on
decarbonisation levers and pathways as well as quantifiable indicators that can be monitored
throughout predefined timeframes; (d) allowing for regular reviewing and updating after
stakeholder consultations when appropriate; and (e) covering the entirety of its own operations
and, to the largest possible extent, the value chain or else providing an explanation as to any
limitation.
226. Undertakings that are disclosing targets according to the EMAS Regulation Annex IV B (d) may
use its GHG reduction targets to fulfil the VSME requirement if it has set such targets. The
undertaking may also support this disclosure through its implementation of the EMAS
environmental management system and link to EN ISO 14001:2015 as set out by EMAS
Regulation Annex II B A.6.2.1 and B.5 (environmental objectives).

Guidance on how to identify manufacturing, constructions and /or packaging processes

227. To identify manufacturing, construction and/or packaging processes, the undertaking may refer to
these activities that fall under Section C – Manufacturing, Section F Construction as well as Class
N82.92 ‘Packaging activities’ of Annex I to Regulation (EC) No 1893/2006.
C4 – Climate risks
228. Climate-related hazards are drivers of climate-related physical risks that arise from the effects
that climate change has on the undertaking. They can be classified into acute hazards, which arise
from particular events (such as droughts, floods, extreme precipitations and wildfires), and chronic
hazards (such as changing temperatures, sea level rise and soil erosion), which arise from longer-
term changes in the climate (Commission delegated regulation 2021/2139). Physical risks are a
function of climate-related hazards, the exposure of the undertaking’s assets and activities to these
hazards, and how sensitive the undertaking is to these hazards. Examples of climate-related
hazards are heat waves, increased frequency of extreme weather events, sea level rise, glacial
lake outburst flood and change in precipitation and wind patterns. Climate-related physical risks
can be identified and modelled by using climate scenarios that consider high emissions trajectories
such as IPCC SSP5-8.5.
229. Climate-related transition events may be (according to TCFD classification) policy- and legal-
based (e.g. enhanced emission-reporting obligations), technology-based (e.g. costs of transition
to lower emissions technology), market-based (e.g. increased cost of raw materials) and
reputation-based (e.g. increased stakeholder concern).
230. Gross climate-related risks refer to gross physical risks and gross transition risks that may result
from exposure of the undertaking's assets and business activities to climate-related hazards.

Comprehensive Module Guidance – Social Metrics

C5 – Additional (general) workforce characteristics
231. To determine the gender ratio, divide the number of female employees by the number of male
employees at management level. This will yield the proportion of women to men in your company.
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑓𝑒𝑚𝑎𝑙𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 𝑎𝑡 𝑚𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 𝑙𝑒𝑣𝑒𝑙
𝐺𝑒𝑛𝑑𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑎𝑙𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 𝑎𝑡 𝑚𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 𝑙𝑒𝑣𝑒𝑙

Page 46 of 66
 VSME Standard

232. Management level is considered the level below the board of directors unless the undertaking has
a specific definition to use.
233. For example, if there are 28 female employees and 84 male employees at management level, the
gender ratio would be 1:3, meaning that for every woman at management level, there are three
men.
234. Relevant factors for an undertaking to consider in deciding whether or not to disclose the number
of self-employed workers and temporary workers under paragraph 60 would be: (1) the ratio of
employees to self-employed and temporary workers, especially in case of significant and/or
increasing reliance or (2) when the risk of negative social impacts on self-employed or temporary
workers is greater compared to the undertaking’s own employees.
235. The following table shows how information on self-employed people without personnel that are
working exclusively for the undertaking and temporary workers provided by undertakings primarily
engaged in employment activities may be presented.

Types of workers Number of self-employed people and temporary workers engaged in

employment activities
Total self-employed
without personnel
that are working
exclusively for the
undertaking
Total temporary
workers provided by
undertakings
primarily engaged in
employment
activities
236. Undertakings can refer to NACE Code N78 for temporary workers provided by undertakings
primarily engaged in ‘employment activities’.
C6 – Additional own workforce information - Human rights policies and processes
237. Undertakings that have a due diligence process for human rights in place can answer positively
(YES) and could clarify the contents of the policies and/or processes using the drop-down menu.
C7 – Severe negative human rights incidents
238. A “confirmed incident” refers to a legal action or complaint registered with the undertaking or
competent authorities through a formal process, or an instance of non-compliance identified by the
undertaking through established procedures. Established procedures to identify instances of non-
compliance can include management system audits, formal monitoring programs, or grievance
mechanisms.

Comprehensive Module Guidance – Business Conduct Metrics

C8 – Revenues from certain sectors and exclusion from EU reference benchmarks
239. Fossil fuels, as defined in Article 2(62), of Regulation (EU) 2018/1999 of the European Parliament
and the Council, are non-renewable carbon-based energy sources such as solid fuels, natural gas
and oil.
240. The production of chemicals refers to the activities listed under Division 20.2 of Annex I to
Regulation (EC) No 1893/2006, i.e. the manufacturing of pesticides and other agrochemical
products.
241. As defined by Article 12.1 and 12.2 of the Commission Delegated Regulation (EU) 2020/1818, the
companies excluded from EU Paris-aligned Benchmarks are the following:
(a) companies that derive 1% or more of their revenues from exploration, mining, extraction,
distribution or refining of hard coal and lignite;

Page 47 of 66
 VSME Standard

(b) companies that derive 10% or more of their revenues from the exploration, extraction,
distribution or refining of oil fuels;
(c) companies that derive 50% or more of their revenues from the exploration, extraction,
manufacturing or distribution of gaseous fuels; and
(d) companies that derive 50% or more of their revenues from electricity generation with a GHG
intensity of more than 100 g CO2 e/kWh.
C9 – Gender diversity ratio in governance body
242. The governance body refers to the highest decision-making authority in a company. Depending
on the jurisdiction the company is in and its legal entity classification, the governance body can
vary in format.
243. Based on the requirements in the SFDR, the gender diversity ratio of the governance body is
calculated as an average ratio of female to male board members.
𝑡ℎ𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑓𝑒𝑚𝑎𝑙𝑒 𝑚𝑒𝑚𝑏𝑒𝑟𝑠
𝐺𝑒𝑛𝑑𝑒𝑟 𝑑𝑖𝑣𝑒𝑟𝑠𝑖𝑡𝑦 𝑟𝑎𝑡𝑖𝑜 =
𝑡ℎ𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑎𝑙𝑒 𝑚𝑒𝑚𝑏𝑒𝑟𝑠

Example
244. The governance body of a certain SME is composed of six members, including three women. The
gender diversity ratio is one – for every female member there is one male member.

Page 48 of 66
 VSME Standard

Appendix A: Defined terms

This appendix is an integral part of this Standard.

Defined term Definition

Accident prevention Accident prevention refers to the policies and initiatives to prevent
workplace accidents and ensure the safety and well-being of employees.
This not only includes measures to reduce physical risks but also involves
fostering a safe and inclusive work environment free from discrimination
and harassment.

Actions Actions refer to (i) actions and actions plans (including transition plans)
that are undertaken to ensure that the undertaking delivers against
targets set and through which the undertaking seeks to address material
impacts, risks and opportunities; and (ii) decisions to support these with
financial, human or technological resources.

Affected communities People or group(s) living or working in the same geographical area that
have been or may be affected by a reporting undertaking’s operations or
through its upstream and downstream value chain. Affected communities
can range from those living adjacent to the undertaking’s operations
(local communities) to those living at a distance. Affected communities
include actually and potentially affected indigenous peoples.

Biodiversity sensitive Biodiversity sensitive areas include: Natura 2000 network of protected
Area areas, UNESCO World Heritage sites and Key Biodiversity Areas
(‘KBAs’), as well as other protected areas, as referred to in Appendix D
of Annex II to Commission Delegated Regulation (EU) 2021/2139.

Business Conduct The following matters are collectively referred to as ‘business conduct or
business conduct matters’:
(a) business ethics and corporate culture, including anti-corruption and
anti-bribery, the protection of whistleblowers, and animal welfare;
(b) the management of relationships with suppliers, including payment
practices, especially with regard to late payment to small and medium-
sized undertakings.
(c) activities and commitments of the undertaking related to exerting its
political influence, including its lobbying activities.

Child Labour Work that deprives children of their childhood, potential, and dignity and
harms their physical and mental development. It includes work that is
mentally, physically, socially, or morally dangerous and/or interferes with
their schooling (by preventing them from the opportunity to attend
school).

Collective bargaining All negotiations which take place between an employer, a group of
employers or one or more employers' organisations, on the one hand,
and one or more trade unions or, in their absence, the representatives of
the workers duly elected and authorised by them in accordance with
national laws and regulations, on the other, for: i) determining working
conditions and terms of employment; and/or ii) regulating relations
between employers and workers; and/or regulating relations between
employers or their organisations and a workers' organisation or workers'
organisations.

Corruption Abuse of entrusted power for private gain, which can be instigated by
individuals or organisations. It includes practices such as facilitation

Page 49 of 66
 VSME Standard

Defined term Definition

payments, fraud, extortion, collusion, and money laundering. It also
includes an offer or receipt of any gift, loan, fee, reward, or other
advantage to or from any person as an inducement to do something that
is dishonest, illegal, or a breach of trust in the conduct of the
undertaking’s business. This can include cash or in-kind benefits, such
as free goods, gifts, and holidays, or special personal services provided
for the purpose of an improper advantage, or that can result in moral
pressure to receive such an advantage.

Consumers Individuals who acquire, consume or use goods and services for
personal use, either for themselves or for others, and not for resale,
commercial or trade, business, craft or profession purposes.

Classified information EU classified information as defined in Council Decision of 23

September 2013 on the security rules for protecting EU classified
information (2013/488/EU) or classified by one of the Member States
and marked as per Appendix B of that Council decision.
EU classified information means any information designated by a EU
security classification, of which the unauthorised disclosure could cause
varying degrees of prejudice to the interests of the European Union or of
one or more of the Member States. Classified information may be
classified according to four levels: top secret, secret, confidential,
restricted (based on the definition from the Council Decision).

Circular economy The European circular economy principles are usability; reusability;
principles repairability; disassembly; remanufacturing or refurbishment; recycling;
recirculation by the biological cycle; other potential optimisation of
product and material use.

Climate change The process of adjustment to actual and expected climate change and
adaptation its impacts.

Climate-related Risks resulting from climate change that can be event-driven (acute) or
physical risks from longer-term shifts (chronic) in climate patterns. Acute physical risks
arise from particular hazards, especially weather-related events such as
storms, floods, fires or heatwaves. Chronic physical risks arise from
longer-term changes in the climate, such as temperature changes, and
their effects on rising sea levels, reduced water availability, biodiversity
loss and changes in land and soil productivity.

Direct GHG emissions Direct GHG emissions from sources that are owned or controlled by the
(Scope 1) undertaking.

Discrimination Discrimination can occur directly or indirectly. Direct discrimination

occurs when an individual is treated less favourably by comparison to
how others, who are in a similar situation. Indirect discrimination occurs
when an apparently neutral rule disadvantages a person or a group
sharing the same characteristics.

Employee An individual who is in an employment relationship with the undertaking

according to national law or practice.

End-users Individuals who ultimately use or are intended to ultimately use a

particular product or service.

Forced Labour All work or service which is exacted from any person under the threat of
penalty and for which the person has not offered himself or herself

Page 50 of 66
 VSME Standard

Defined term Definition

voluntarily according to the ILO Forced Labour Convention, 1930 (No.29).
The term encompasses all situations in which persons are coerced by any
means to perform work.

Grievance mechanism Any routinized, state-based or non-state-based, judicial or non-judicial

processes through which stakeholders can raise grievances and seek
remedy. Examples of state-based judicial and non-judicial grievance
mechanisms include courts, labour tribunals, national human rights
institutions, National Contact Points under the OECD Guidelines for
Multinational Enterprises, ombudsperson offices, consumer protection
agencies, regulatory oversight bodies, and government-run complaints
offices. Non-state-based grievance mechanisms include those
administered by the undertaking, either alone or together with
stakeholders, such as operational-level grievance mechanisms and
collective bargaining, including the mechanisms established by collective
bargaining. They also include mechanisms administered by industry
associations, international organisations, civil society organisations, or
multi-stakeholder groups. Operational-level grievance mechanisms are
administered by the organisation either alone or in collaboration with other
parties and are directly accessible by the organisation’s stakeholders.
They allow for grievances to be identified and addressed early and
directly, thereby preventing both harm and grievances from escalating.
They also provide important feedback on the effectiveness of the
organisation’s due diligence from those who are directly affected.
According to UN Guiding Principle 31, effective grievance mechanisms
are legitimate, accessible, predictable, equitable, transparent, rights-
compatible, and a source of continuous learning. In addition to these
criteria, effective operational-level grievance mechanisms are also based
on engagement and dialogue. It can be more difficult for the organisation
to assess the effectiveness of grievance mechanisms that it participates
in compared to those it has established itself.

Greenhouse Gases For the purposes of this Standard, GHGs are the six gases listed in the
(GHG) Kyoto Protocol: carbon dioxide (CO2); methane (CH4); nitrous oxide
(N2O); Nitrogen trifluoride (NF3); hydrofluorocarbons (HFCs);
perfluorocarbons (PFCs); and sulphur hexafluoride (SF6).

Governance The governance is the system of rules, practices and processes by

which a company is directed and controlled.

Gross greenhouse gas Gross greenhouse gas (GHG) emissions are total GHG emissions
(GHG) emissions released by the undertaking into the atmosphere, without considering
any deductions for carbon removals or other adjustments.

Hazardous waste Waste which displays one or more of the hazardous properties listed in
Annex III of Directive 2008/98/EC of the European Parliament and of the
Council on waste.

Human trafficking The recruitment, transportation, transfer, harbouring or reception of

persons, including the exchange or transfer of control over those
persons, by means of the threat or use of force or other forms of
coercion, of abduction, of fraud, of deception, of the abuse of power or of
a position of vulnerability or of the giving or receiving of payments or
benefits to achieve the consent of a person having control over another
person, for the purpose of exploitation.

Page 51 of 66
 VSME Standard

Defined term Definition

Incident A legal action or complaint registered with the undertaking or competent

authorities through a formal process, or an instance of non-compliance
identified by the undertaking through established procedures.
Established procedures to identify instances of non-compliance can
include management system audits, formal monitoring programs, or
grievance mechanisms.

Indirect GHG emissions Indirect emissions are a consequence of the operations of the
(Scope 2) undertaking but occur at sources owned or controlled by another
company. Scope 2 GHG emissions are indirect emissions from the
generation of purchased or acquired electricity, steam and heat, or
cooling consumed by the undertaking.

Impact Impact refers to the effect an organisation has or could have on the
economy, environment, and people, including effects on their human
rights, as a result of the organization’s activities or business
relationships. The impacts can be actual or potential, negative or
positive, short-term or long-term, intended or unintended, direct or
indirect, and reversible or irreversible. These impacts indicate the
organization’s contribution, negative or positive, to sustainable
development. The impacts on the economy, environment, and people
are interrelated.
The organization’s impacts on the environment refer to the impacts on
living organisms and non-living elements, including air, land, water, and
ecosystems. An organization can have an impact on the environment
through, for example, its use of energy, land, water, and other natural
resources.
The organization’s impacts on people refer to the impacts on individuals
and groups, such as communities, vulnerable groups, or society. This
includes the impacts the organization has on people’s human rights. An
organization can have an impact on people through, for example, its
employment practices (e.g. the wages it pays to employees), its supply
chain (e.g. the working conditions of workers of suppliers), and its
products and services (e.g. their safety or accessibility).

Land-use (change) The human use of a specific area for a certain purpose (such as
residential; agriculture; recreation; industrial, etc.). Influenced by land
cover (grass, asphalt, trees, bare ground, water, etc). Land-use change
refers to a change in the use or management of land by humans, which
may lead to a change in land cover.

Location-based Scope Emissions from electricity, heat, steam and cooling purchased or
2 emissions acquired and consumed by the reporting company, calculated using the
location-based ‘allocating’ method, which allocates generator emissions
to end-users. They reflect the average emissions intensity of grids on
which the energy consumption occurs and uses mostly grid-average
emission factor data. Typical sources of Scope 2 emissions relate to any
equipment that consumes electricity (electrical engines, lights, buildings,
etc.), heat (heating in industrial processes, buildings, etc.), steam
(industrial processes) and cooling (industrial processes, buildings, etc.).

Nature-oriented area A “nature-oriented area” is an area dedicated primarily to nature

preservation or restoration. They can be located on-site and include
elements like roof, façade, water drainages designed, to promote
biodiversity. Nature-oriented areas can also be located outside the
organisation site provided that the area is owned or (co-)managed by the

Page 52 of 66
 VSME Standard

Defined term Definition

organisation and is primarily dedicated to promoting biodiversity.
(Adapted from EMAS regulation)

Near (Biodiversity Near, in the context of B5 – Biodiversity, shall refer to an area that is
Sensitive Area) (partially) overlapping or adjacent to a biodiversity sensitive area.

Own workforce/own Employees who are in an employment relationship with the undertaking
workers (‘employees’) and non-employees who are either individual contractors
supplying labour to the undertaking (‘self-employed people’) or people
provided by undertakings primarily engaged in ‘employment activities’
(NACE Code N78).

Pay The ordinary basic or minimum wage or salary and any other
remuneration, whether in cash or in kind which the worker receives
directly or indirectly (‘complementary or variable components’), in
respect of his/her employment from his/her employer. ‘Pay level’ means
gross annual pay and the corresponding gross hourly pay. ‘Median pay
level’ means the pay of the employee that would have half of the
employees earn more and half less than they do.

Policy A set or framework of general objectives and management

principles that the undertaking uses for decision-making. A policy
implements the undertaking’s strategy or management decisions
related to a sustainability issue. Each policy is under the
responsibility of defined person(s), specifies its perimeter of
application, and includes one or more objectives (linked when
applicable to measurable targets). A policy is implemented
through actions or action plans.
For example, undertakings with less resources may have few (or
no) policies formalised in written documents, but this does not
necessarily mean they do not have policies.
If the undertaking has not yet formalised a policy but has
implemented actions or defined targets through which the
undertaking seeks to address sustainability issues, it shall disclose
them.

Radioactive waste Any radioactive material in gaseous, liquid, or solid form, for which no
further use is foreseen, as per Article 3(7) of Council Directive
2011/70/Euratom17.

Recordable work- A work-related accident is an event that leads to physical or mental harm
related accident / therefore to injury or ill health. It happens whilst engaged in an
Recordable work- occupational activity or during the time spent at work. Recordable means
related injury or ill diagnosed by a physician or other licensed health care professionals.
health
Work-related injury or ill health can result in any of the following: death,
days away from work, restricted work or transfer to another job, medical

17Council Directive 2011/70/Euratom of 19 July 2011 establishing a Community framework for the responsible and
safe management of spent fuel and radioactive waste.18Article 2(1) Directive (EU) 2018/2001 of the European
Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources
Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion
of the use of energy from renewable sources (OJ L 328, 21.12.2018, p. 82).19 This disclosure requirement is
consistent with the requirements included in Commission Implementing Regulation (EU) 2022/2453 - Template 5:
Banking book - Climate change physical risk: Exposures subject to physical risk.

Page 53 of 66
 VSME Standard

Defined term Definition

treatment beyond first aid or loss of consciousness. Injuries that do not
require medical treatment beyond first aid are generally not recordable.

Recycling Any recovery operation by which waste materials are reprocessed into
products, materials or substances whether for the original or other
purposes. It includes the reprocessing of organic material but does not
include energy recovery and the reprocessing into materials that are to
be used as fuels or for backfilling operations.

Renewable Energy Energy from renewable non-fossil sources, namely wind, solar (solar
thermal and solar photovoltaic) and geothermal energy, ambient energy,
tide, wave and other ocean energy, hydropower, biomass, landfill gas,
sewage treatment plant gas, and biogas 18.

Sealed area A sealed area means any area where the original soil has been covered
(such as roads) making it impermeable. This non-permeability can create
environmental impacts.

Sensitive information Sensitive information as defined in Regulation (EU) 2021/697 of the

European Parliament and of the Council of 29 April 2021 establishing the
European Defence Fund.
Sensitive information means information and data, including classified
information, that is to be protected from unauthorised access or
disclosure because of obligations laid down in Union or national law or in
order to safeguard the privacy or security of a natural or legal person.

Site The location of one or more physical installations. If there is more than
one physical installation from the same or different owners or operators
and certain infrastructure and facilities are shared, the entire area where
the physical installation are located may constitute a site.

Targets Measurable, outcome-oriented and time-bound goals that the SME aims
to achieve in relation to sustainability issues. They may be set voluntarily
by the SME or derive from legal requirements on the undertaking.

Time horizons When preparing its sustainability report, the undertaking shall adopt the
following time horizons:
(a) for the short-term time horizon, one year;
(b) for the medium-term time horizon, from two to five years; and
(c) for the long-term time horizon, more than five years.

Training Initiatives put in place by the undertaking aimed at the maintenance

and/or improvement of skills and knowledge of its own workers. It can
include different methodologies, such as on-site training, and online
training.

18Article2(1) Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on
the promotion of the use of energy from renewable sources Directive (EU) 2018/2001 of the European Parliament
and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (OJ L 328,
21.12.2018, p. 82).19 This disclosure requirement is consistent with the requirements included in Commission
Implementing Regulation (EU) 2022/2453 - Template 5: Banking book - Climate change physical risk: Exposures
subject to physical risk.

Page 54 of 66
 VSME Standard

Defined term Definition

Value Chain The full range of activities, resources and relationships related to the
undertaking’s business model and the external environment in which it
operates. A value chain encompasses the activities, resources and
relationships the undertaking uses and relies on to create its products or
services from conception to delivery, consumption and end-of- life.
Relevant activities, resources and relationships include: a) those in the
undertaking’s own operations, such as human resources; b) those along
its supply, marketing and distribution channels, such as materials and
service sourcing and product and service sale and delivery; and c) the
financing, geographical, geopolitical and regulatory environments in
which the undertaking operates. Value chain includes actors upstream
and downstream from the undertaking. Actors upstream from the
undertaking (e.g. suppliers) provide products or services that are used in
the development of the undertaking’s products or services. Entities
downstream from the undertaking (e.g. distributors, customers) receive
products or services from the undertaking.

Wage Gross wage, excluding variable components such as overtime and

incentive pay, and excluding allowances unless they are guaranteed.

Water consumption The amount of water drawn into the boundaries of the undertaking (or
facility) and not discharged back to the water environment or a third party
over the course of the reporting period.

Water withdrawal The sum of all water drawn into the boundaries of the undertaking from
all sources for any use over the course of the reporting period.

Worker in the value An individual performing work in the value chain of the undertaking,
chain regardless of the existence or nature of any contractual relationship with
the undertaking. In the ESRS, the scope of workers in the value chain
include all workers in the undertaking’s upstream and downstream value
chain who are or can be materially impacted by the undertaking. This
includes impacts that are connected to the undertaking’s own operations,
and value chain, including through its products or services, as well as
through its business relationships. This includes all workers who are not
in the scope of ‘Own Workforce’ (‘Own Workforce’ includes people who
are in an employment relationship with the undertaking (‘employees’)
and non-employees who are either individual contractors supplying
labour to the undertaking (‘self-employed people’) or people provided by
undertakings primarily engaged in employment activities (NACE Code
N78).

Page 55 of 66
 VSME Standard

Appendix B: List of possible sustainability issues

The appendix below is an integral part of this Standard and provides a list of possible sustainability
issues.

Topic Sustainability issue: Sub-topic Sustainability issue: sub-sub topic

Climate − Climate change adaptation
change − Climate change mitigation
− Energy

Pollution − Pollution of air

− Pollution of water
− Pollution of soil
− Pollution of living organisms and
food resources
− Substances of concern
− Substances of very high concern
− Microplastics

Water and − Water − Water consumption

marine − Marine resources − Water withdrawals
resources − Water discharges
− Water discharges in the oceans
− Extraction and use of marine resources

Biodiversity − Direct impact drivers of biodiversity − Climate Change

and loss − Land-use change, fresh water-use change
ecosystems and sea-use change
− Direct exploitation
− Invasive alien species
− Pollution
− Others

− Impacts on the state of species − Examples:

− Species population size
− Species global extinction risk
− Impacts on the extent and condition − Examples:
of ecosystems − Land degradation
− Desertification
− Soil sealing
− Impacts and dependencies on
ecosystem services

Circular − Resources inflows, including

economy resource use
− Resource outflows related to
products and services
− Waste

Own − Working conditions − Secure employment

workforce − Working time
− Adequate wages
− Social dialogue

Page 56 of 66
 VSME Standard

Topic Sustainability issue: Sub-topic Sustainability issue: sub-sub topic

− Freedom of association, the existence of
works councils and the information,
consultation and participation rights of
workers
− Collective bargaining, including rate of
workers covered by collective agreements
− Work-life balance
− Health and safety

− Equal treatment and opportunities −Gender equality and equal pay for work of
for all equal value
−Training and skills development
−Employment and inclusion of persons with
disabilities
− Measures against violence and harassment
in the workplace
− Diversity

− Other work-related rights − Child labour

− Forced labour
− Adequate housing
− Privacy

Workers in − Working conditions − Secure employment

the value − Working time
chain − Adequate wages
− Social dialogue
− Freedom of association, including the
existence of work councils
− Collective bargaining
− Work-life balance
− Health and safety

− Equal treatment and opportunities −Gender equality and equal pay for work of
for all equal value
−Training and skills development
−The employment and inclusion of persons
with disabilities
− Measures against violence and harassment
in the workplace
− Diversity

− Other work-related rights − Child labour

− Forced labour
− Adequate housing
− Water and sanitation
− Privacy

Affected − Communities’ economic, social and − Adequate housing

communities cultural rights − Adequate food
− Water and sanitation
− Land-related impacts

Page 57 of 66
 VSME Standard

Topic Sustainability issue: Sub-topic Sustainability issue: sub-sub topic

− Security-related impacts

− Communities’ civil and political rights − Freedom of expression

− Freedom of assembly
− Impacts on human rights defenders

− Rights of indigenous communities − Free, prior and informed consent

− Self-determination
− Cultural rights

Consumers − Information-related impacts for − Privacy

and end- consumers and/or end-users − Freedom of expression
users − Access to (quality) information

− Personal safety of consumers and/or − Health and safety

end-users − Security of a person
− Protection of children

− Social inclusion of consumers and/or − Non-discrimination

end-users − Access to products and services
− Responsible marketing practices

Business − Corporate culture

conduct − Protection of whistle-blowers
− Animal welfare
− Political engagement
− Management of relationships with
suppliers including payment
practices

− Corruption and bribery − Prevention and detection including training

− Incidents

Page 58 of 66
 VSME Standard

Appendix C: Background information for financial market participants that are

users of the information produced using this Standard (reconciliation with
other EU regulations)
245. This appendix is relevant for users of the sustainability report. The table below illustrates the
Sustainable Finance Datapoints that are present in different modules of this Standard that satisfy
the requests of multiple user types (banks, investors, large undertakings).
246. The column ‘DR number and Title’ identifies the disclosures present in the different modules (i.e.
Basic Module, and Comprehensive Module) that are Sustainable Finance datapoints. The column
SFDR Table 1 and/or EBA Pillar 3 and/or Benchmark Regulation illustrates how these disclosures
relate to these regulations that are relevant for users of the sustainability report (banks, other
investors).

Topic: DR number and Title SFDR Table 1

Environment /
Social / and/or
Governance EBA Pillar 3

and/or

Benchmark
Regulation

Basic Module

General B1 – Basis for preparation EBA Pillar 319

information
The undertaking shall disclose:

vii. geolocation of sites owned, leased or managed.

Environment B3 – Energy and greenhouse gas emissions SFDR20

The undertaking shall disclose its total energy consumption in

MWh, with a breakdown as per the table below, if it can obtain
the necessary information to provide such a breakdown:

Renewable Non- Total

renewable

Electricity
(as
reflected in
utility
billings)

Fuels

Total

19 This disclosure requirement is consistent with the requirements included in Commission Implementing
Regulation (EU) 2022/2453 - Template 5: Banking book - Climate change physical risk: Exposures subject to
physical risk.
20Regulation (EU) 2019/2088 (SFDR), mandatory indicator #5 in Table 1 of Annex I (“Share of non-renewable
energy consumption and production”).

Page 59 of 66
 VSME Standard

Environment B3 – Energy and greenhouse gas emissions SFDR21

The undertaking shall disclose its estimated gross Benchmark22

greenhouse gas (GHG) emissions in tons of CO2
equivalent (tCO2eq) considering the content of the GHG
Protocol Corporate Standard (version 2004), including:
(a) the Scope 1 GHG emissions in tCO2eq (from
owned or controlled sources); and
(b) the location-based Scope 2 emissions in tCO2eq
(i.e. emissions from the generation of purchased
energy, such as electricity, heat, steam or cooling).

Environment B3 – Energy and greenhouse gas emissions SFDR23

The undertaking shall disclose its GHG intensity calculated by Benchmark24

dividing ‘total GHG emissions’ disclosed under paragraph 30
by ‘turnover (in Euros)’ disclosed under paragraph 24(e)(iv).

Environment B4 – Pollution of air, water and soil SFDR25

If the undertaking is already required by law or other national

regulations to report to competent authorities its emissions of
pollutants, or if it voluntarily reports on them according to an
Environmental Management System, it shall disclose the
pollutants it emits to air, water and soil in its own operations,
with the respective amount for each pollutant. If this
information is already publicly available, the undertaking may
alternatively refer to the document where it is reported, for
example, by providing the relevant URL link or embedding a
hyperlink.

Environment B5 – Biodiversity SFDR26

The undertaking shall disclose the number and area (in

hectares) of sites that it owns, has leased, or manages in or
near a biodiversity sensitive area.

21Regulation (EU) 2019/2088 (SFDR), mandatory indicators #1 and #2 in Table 1 of Annex I (“GHG emissions”;
Carbon footprint”)
22 Regulation (EU) 2020/1816 Benchmark Regulation, Articles 5 (1), 6 and 8 (1).
23 This information supports the information needs of financial market participants subject to Regulation (EU)
2019/2088 because it is derived from a mandatory indicator related to principal adverse impacts as set out by
indicator #3 in Table I of Annex I of Commission Delegated Regulation (EU) 2022/1288 with regard to disclosure
rules on sustainable investments (“GHG intensity of investee companies”).
24This information is aligned with Commission Delegated Regulation (EU) 2020/1818 (Climate Benchmark
Regulation), Article 8 (1).
25Regulation (EU) 2019/2088 (SFDR) because it is derived from (a) an additional indicator related to principal
adverse impacts as set out by indicator #2 in Table II of Annex I of Commission Delegated Regulation (EU)
2022/1288 with regard to disclosure rules on sustainable investments (“Emissions of air pollutants”); (b) indicator
#8 in Table I of Annex I (“Emissions to water); (c) indicator #1 in Table II of Annex I ( “Emissions of inorganic
pollutants”); and (d) indicator #3 in Table II of Annex I (“Emissions of ozone-depleting substances”).
26Regulation (EU) 2019/2088 (SFDR), mandatory indicator #7 in Table 1 of Annex I (“Activities negatively affecting
biodiversity-sensitive areas”)

Page 60 of 66
 VSME Standard

Environment B7 – Resource use, circular economy and waste SFDR27

management

The undertaking shall disclose:

(a) the total annual generation of waste broken down
by type (non-hazardous and hazardous);

Social B9 – Workforce – Health and safety SFDR28

The undertaking shall disclose the following information Benchmark29

regarding its employees:
(a) the number and rate of recordable work-related
accidents; and
(b) the number of fatalities as a result of work-related
injuries and work-related ill health.

Social B10 – Workforce – Remuneration, collective bargaining SFDR30

and training

The undertaking shall disclose:

(b) the percentage gap in pay between its female and
male employees. The undertaking may omit this
disclosure when its headcount is below 150
employees noting that this threshold will be
reduced to 100 employees from 7 June 2031;

Governance B11 – Convictions and fines for corruption and bribery Benchmark31

In case of convictions and fines in the reporting period, the

undertaking shall disclose the number of convictions, and the
total amount of fines incurred for the violation of anti-
corruption and anti-bribery laws.

27 This information supports the information needs of financial market participants subject to Regulation (EU)
2019/2088 because it is derived from a mandatory indicator related to principal adverse impacts as set out by
indicator #9 in Table I of Annex I of Commission Delegated Regulation (EU) 2022/1288 with regard to disclosure
rules on sustainable investments (“Hazardous waste and radioactive waste ratio”).
28 This information supports the information needs of financial market participants subject to Regulation (EU)
2019/2088, as reflecting an additional indicator related to principal adverse impacts as set out by indicator #2 in
Table 3 of Annex 1 of the related Delegated Regulation with regard to disclosure rules on sustainable investments
(“Rate of accidents”)
29Benchmark administrators to disclose ESG factors subject to Regulation (EU) 2020/1816 as set out by indicator
“Weighted average ratio of accidents, injuries, fatalities” in section 1 and 2 of Annex 2.
30Regulation (EU) 2019/2088 (SFDR), mandatory indicator #12 in Table 1 of Annex I (“Unadjusted gender pay
gap”) and (EU) 2020/1816 Benchmark Regulation (EU), indicator “Weighted average gender pay gap” in section 1
and 2 of Annex II.
31Benchmark Regulation (EU) 2020/1816, indicator “Numbers of convictions and amount of fines for violations of
anti-corruption and anti-bribery laws” in section 1 and 2 of Annex II.

Page 61 of 66
 VSME Standard

Comprehensive Module

Environment Consideration when reporting on GHG emissions under SFDR32

B3 (Basic Module)
Benchmark33
When reporting its Scope 1 and Scope 2 emissions, if the
undertaking discloses entity-specific information on its Scope
3 emissions, it shall present it together with the information
required under B3 – Energy and greenhouse gas emissions.

Environment C3 – GHG emissions reduction target SFDR35

If the undertaking has established GHG emission reduction Benchmark36

targets, it shall disclose its targets in absolute values for
Scope 1 and Scope 2 emissions. In line with paragraphs 50 to EBA Pillar 337
53 above and if it has set Scope 3 reduction targets, the
undertaking shall also provide targets for significant Scope 3
emissions. In particular, it shall provide:
(a) the target year and target year value;
(b) the base year and base year value;
(c) the units used for targets;
(d) the share of Scope 1, Scope 2 and, if disclosed,
Scope 3 that the target concerns; and

(e) a list of main actions it seeks to implement to

achieve its targets.

If the undertaking that operates in high climate impact

sectors34 has adopted a transition plan for climate change
mitigation, it may provide information about it, including an
explanation of how it is contributing to reduce GHG emissions.
In case the undertaking operates in high-climate impact Benchmark38
sectors and does not have a transition plan for climate change
mitigation in place, it shall indicate whether and, if so, when it
will adopt such a transition plan.

32Regulation (EU) 2019/2088 (SFDR), mandatory indicators #1 and #2 in Table 1 of Annex I (“GHG emissions”;
Carbon footprint”)
33 Regulation (EU) 2020/1816 Benchmark Regulation, Articles 5 (1), 6 and 8 (1).
34 High climate impact sectors are those listed in NACE Sections A to H and Section L as defined in Annex I to
Regulation (EC) No 1893/2006.
35 This information supports the information needs of financial market participants subject to Regulation (EU)
2019/2088 (SFDR) because it is derived from an additional indicator related to principal adverse impacts as set out
by indicator #4 in Table II of Annex I of Commission Delegated Regulation (EU) 2022/1288 with regard to disclosure
rules on sustainable investments (“Investments in companies without carbon emission reduction initiatives”)
36Thisinformation is aligned with the Commission Delegated Regulation (EU) 2020/1818 (Climate Benchmark
Regulation), Article 6.
37This information is aligned with Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation
(EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics
38This information is aligned with the Regulation (EU) 2021/1119 of the European Parliament and of the Council
(EU Climate Law), Article 2 (1); and with Commission Delegated Regulation (EU) 2020/1818 (Climate Benchmark
Regulation), Article 2.

Page 62 of 66
 VSME Standard

Environment C4 – Climate risks Benchmark39

EBA Pillar 340
If the undertaking has identified climate-related hazards and
climate-related transition events, creating gross climate-
related risks for the undertaking, it shall:
(a) briefly describe such climate-related hazards and
climate-related transition events;
(b) disclose how it has assessed the exposure and
sensitivity of its assets, activities and value chain to
these hazards and transition events;
(c) disclose the time horizons of any climate-related
hazards and transition events identified; and
(d) disclose whether it has undertaken climate change
adaptation actions for any climate-related hazards
and transition events.
The undertaking may disclose the potential adverse effects of
climate risks that may affect its financial performance or
business operations in the short-, medium- or long-term,
indicating whether it assesses the risks to be high, medium,
low.

Social C6 – Additional own workforce information - Human Benchmark41

rights policies and processes

The undertaking shall disclose an answer to the following

questions. SFDR42

(a) Does the undertaking have a code of conduct or

human rights policy for its own workforce?
(YES/NO)
(b) If yes, does this cover:
i. child labour (YES/ NO);
ii. forced labour (YES/ NO);
iii. human trafficking (YES/NO);
iv. discrimination (YES/NO);

39
Benchmark Regulation (EU) 2020/1816 Annex II: Environmental factors to be considered by underlying assets
of the benchmark.
40EBA Pillar 3: ITS - Template 5: Banking book - Climate change physical risk: Exposures subject to physical risk
and EBA Pillar 3: ITS - Template 2: Banking book - Climate change transition risk: Loans collateralised by
immovable property - Energy efficiency of the collateral.
41This information supports the needs of benchmark administrators to disclose ESG factors subject to Regulation
(EU) 2020/1816 as set out by indicator “Exposure of the benchmark portfolio to companies without due diligence
policies on issues addressed by the fundamental International Labour Organisation Conventions 1 to 8” in section
1 and 2 of Annex II.
42 This information supports the information needs of financial market participants subject to Regulation (EU)
2019/2088 because it is derived from a mandatory indicator related to principal adverse impacts as set out by
indicator #11 in Table I of Annex I (“Share of investments in investee companies without policies to monitor
compliance with the UNGC principles or OECD Guidelines for Multinational Enterprises or grievance /complaints
handling mechanisms to address violations of the UNGC principles or OECD Guidelines for Multinational
Enterprises”) and by indicator #5 in Table III of Annex I (“Share of investments in investee companies without any
grievance/complaints handling mechanism related to employee matters”) and by indicator #9 in Table III of Annex
I (“Share of investments in entities without a human rights policy”) of Commission Delegated Regulation (EU)
2022/1288 with regard to disclosure rules on sustainable investments.

Page 63 of 66
 VSME Standard

v. accident prevention (YES/NO); or

vi. other? (YES/NO – if yes, specify).
Does the undertaking have a complaints-handling
mechanism for its own workforce? (YES/ NO)

Social C7 – Severe human rights incidents SFDR43

The undertaking shall disclose an answer to the following Benchmark44
questions:
(a) Does the undertaking have confirmed incidents in
its own workforce related to:
i. child labour (YES/ NO);
ii. forced labour (YES/ NO);
iii. human trafficking (YES/ NO);
iv. discrimination (YES/ NO); or
v. other? (YES/NO – if yes, specify).
(b) If yes, the undertaking may describe the actions
being taken to address the incidents described
above.
Is the undertaking aware of any confirmed incidents involving
workers in the value chain, affected communities, consumers
and end-users? If yes, specify.

Governance C8 – Revenues from certain sectors and exclusion from SFDR45

EU reference benchmarks
Benchmark46
If the undertaking is active in one or more of the following
sectors, it shall disclose its related revenues in the sector(s):
(a) controversial weapons (anti-personnel mines,
cluster munitions, chemical weapons and biological
weapons);

43 This information supports the information needs of financial market participants subject to Regulation (EU)
2019/2088 because it is derived from a mandatory and additional indicator related to principal adverse impacts as
set out by indicator #10 in Table I of Annex I and by indicator #14 in Table III of Annex I of Commission Delegated
Regulation (EU) 2022/1288 with regard to disclosure rules on sustainable investments (“Violations of UNGC
principles and OECD Guidelines for Multinational Enterprises” and “Number of identified cases of severe human
rights issues and incidents”)
44This information supports the information needs of benchmark administrators to disclose ESG factors subject to
Regulation (EU) 2020/1816 as set out by indicator “Number of benchmark constituents subject to social violations
(absolute number and relative divided by all benchmark constituents), as referred to in international treaties and
conventions, United Nations principles and, where applicable, national law” in section 1 and 2 of Annex II.
45This information supports the information needs of financial market participants subject to Regulation (EU)
2019/2088 because it is derived from an additional indicator related to principal adverse impacts set out by indicator
#14 in Table I of Annex I of Commission Delegated Regulation (EU) 2022/1288 with regard to disclosures rules on
sustainable investments (“Exposure to controversial weapons (anti-personnel mines, cluster munitions, chemical
weapons and biological weapons)”).
46
Benchmark Regulation (EU) 2020/1818 Article 12(1): "Administrators of EU-Paris aligned Benchmarks shall
exclude all of the following companies from those benchmarks: companies involved in any activities related to
controversial weapons; " and Benchmark Regulation (EU) 2020/1816 Annex II: Weighted average percentage of
benchmark constituents in the controversial weapons sector."

Page 64 of 66
 VSME Standard

(b) the cultivation and production of tobacco; EBA Pillar 347

Benchmark48

(c) fossil fuel (coal, oil and gas) sector (i.e. the SFDR49
undertaking derives revenues from exploration,
mining, extraction, production, processing, storage, EBA Pillar 350
refining or distribution, including transportation,
Benchmark51
storage and trade, of fossil fuels as defined in
Article 2, point (62), of Regulation (EU) 2018/1999
of the European Parliament and the Council17),
including a disaggregation of revenues derived
from coal, from oil and from gas); or

(d) chemicals production, if the undertaking is a SFDR52

manufacturer of pesticides and other agrochemical
products. EBA Pillar 353

The undertaking shall disclose whether it is excluded from any EBA Pillar 354
EU reference benchmarks that are aligned with the Paris
Benchmark55
Agreement as described in paragraph 241 of the guidance.

47 EBA Pillar 3: Template 1: Banking book - Climate change transition risk: Companies in the manufacturing of
tobacco products excluded from EU-Paris aligned Benchmarks in accordance with points (d) to (g) of Article 12.1
and in accordance with Article 12.2 of Climate Benchmark Standards Regulation
48This information supports the needs of benchmark administrators to disclose ESG factors subject to Regulation
(EU) 2020/1818 as set out by paragraph b) of article 12.1. and Benchmark Regulation (EU) 2020/1816 Annex II:
"Weighted average percentage of benchmark constituents in the tobacco sector."
49This information supports the information needs of financial market participants subject to Regulation (EU)
2019/2088 because it is derived from an additional indicator related to principal adverse impacts set out by indicator
#4 in Table I of Annex I of Commission Delegated Regulation (EU) 2022/1288 with regard to disclosures rules on
sustainable investments (“Exposure to companies active in the fossil fuel sector”)
50 EBA Pillar 3: Template 1: Banking book - Climate change transition risk: Companies in Mining and quarrying
excluded from EU-Paris aligned Benchmarks in accordance with points (d) to (g) of Article 12.1 and in accordance
with Article 12.2 of Climate Benchmark Standards Regulation
51 Benchmark Regulation (EU) 2020/1818 Article 12(1).
52This information supports the information needs of financial market participants subject to Regulation (EU)
2019/2088 because it is derived from an additional indicator related to principal adverse impacts set out by indicator
#9 in Table II of Annex I of Commission Delegated Regulation (EU) 2022/1288 with regard to disclosures rules on
sustainable investments (“Investments in companies producing chemicals”).
53 EBA Pillar 3: Template 1: Banking book - Climate change transition risk: Companies in Mining and quarrying
excluded from EU-Paris aligned Benchmarks in accordance with points (d) to (g) of Article 12.1 and in accordance
with Article 12.2 of Climate Benchmark Standards Regulation
54This disclosure requirement is consistent with the requirements in Commission Implementing Regulation
(EU) 2022/2453 - template 1 climate change transition risk.
55This disclosure requirement is aligned with Commission Delegated Regulation (EU) 2020/1818 (Climate
Benchmark Regulation), Article 12.1.

Page 65 of 66
 VSME Standard

Governance C9 – Gender diversity ratio in governance body SFDR56

Benchmark57
If the undertaking has a governance body in place, the
undertaking shall disclose the related gender diversity ratio.

56This information supports the information needs of financial market participants subject to Regulation (EU)
2019/2088 because it is derived from an additional indicator related to principal adverse impacts set out by indicator
#13 in Table I of Annex I of Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022 supplementing
Regulation (EU) 2019/2088 of the European Parliament and of the Council with regard to disclosures rules on
sustainable investments (“Board gender diversity”)
57
This information supports the information needs of benchmark administrators to disclose ESG factors subject to
Commission Delegated Regulation (EU) 2020/1816 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of
the European Parliament and of the Council as set out by indicator “Weighted average ratio of female to male
board members” in section 1 and 2 of Annex II.

Page 66 of 66