The Double Materiality for non-listed SMEs: Evidence from the EFRAG Public Consultation

This study aims to explore how respondents interpret and reply to the concept of double materiality as outlined in the Exposure Draft published by the European Financial Reporting Advisory Group (EFRAG) for the Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME). After a descriptive analysis categorising the respondents by affiliation, geographic origin, and sector, an inductive qualitative content analysis was conducted to examine the responses about the concept of materiality. This process included a thematic coding and the development of a taxonomy of arguments. The findings reflect a generally positive perception of the inclusion of materiality within the VSME standard. Most of the respondents agreed with the language and approach to the principles of materiality, supported a materiality analysis, and approved the “if applicable” simplification mechanism. Nevertheless, both supportive and critical voices consistently raised concerns about the complexity of the language, lack of clarity, and limited operational guidance. Respondents emphasised the need for simplified terminology, practical tools, and concrete examples tailored to SMEs’ capacities. Despite this general support, the final standard for non-listed SMEs, which was published in the meantime, omitted the materiality principle, citing implementation challenges, particularly for small entities with limited resources.