With the EU Commission's proposed Omnibus law creating regulatory uncertainty, many companies are questioning their next steps. Some organizations are midway through implementing sustainability initiatives and beginning their reporting journey. Others haven't started and are unsure how to proceed, while some have already invested heavily in reporting preparations and wonder how to take their effort forward.

A common question is how to move forward efficiently, maximizing existing investments while avoiding wasteful spending.

The answer lies in remembering that EU companies' competitiveness should remain the primary focus. Evidence shows that sustainability initiatives create competitive advantages: customers demand sustainable products, employees seek value-aligned employers, and investors prioritize sustainable ventures.

This leads to two key priorities:

1. Identifying and prioritizing high-impact sustainability initiatives to optimize resource allocation
2. Communicating your sustainability efforts transparently without getting bogged down in complex reporting requirements

There are two complementary tools, that can help you with minimal investment to reach both objectives: double materiality and VSME reporting.

Double materiality

The double materiality assessment is a valuable tool for evaluating your sustainability strategy. Beyond reporting, the double materiality assessment serves two essential purposes:

1. A prioritization tool that reveals major impacts, risks, and opportunities. It helps identify the most important initiatives for your company, informing your sustainability strategy and enabling better choices. This helps minimize negative impacts on the environment and people, maximize positive impacts, and protect your company from environmental risks.
2. A stakeholder engagement tool that, when implemented effectively, demonstrates your commitment to sustainability and helps you better understand stakeholders' needs, perspectives, and perceptions of your company. Experience shows that customers and employees respond positively to this approach. For investors, it provides transparency and showcases both risk management and your readiness to capitalize on emerging opportunities.

Modern technologies have made double materiality assessments highly efficient, requiring modest cost and effort. At Karomia, our advice remains: get one done.

VSME reporting

Given the uncertainty about who will need to report what and when, consider the lowest stable denominator: the VSME report.

1. It's a compact, proportionate, and comprehensive report. While it lacks some of the complexity of its bigger sibling (ESRS/ CSRD), it effectively contains all essential information needed to communicate and track initiatives concisely. The report becomes particularly valuable when completed in full, as it includes detailed descriptions of current initiatives, plans, and targets. The VSME content serves as the backbone of a sustainability dashboard, a central hub where SMEs can manage all sustainability matters, monitor progress, and identify opportunities.
2. It serves as an excellent first step toward more comprehensive reporting, whether that becomes necessary in the future or the VSME standard remains your reporting requirement.
3. It comes with a practical guarantee: this is the maximum information that your customers and banks or investor will request when they need data for their own reporting. By completing this report annually, you eliminate the need to fill out various customer or bank surveys, you're covered.

Like the double materiality assessment, the VSME report can be efficiently completed and maintained using AI tools, requiring minimal effort and cost. Karomia's advice is clear: start VSME reporting now and publish your content, your stakeholders will view your company positively, and you'll maintain a competitive edge.

Despite the current uncertainty, let’s move forward! Double materiality assessment and VSME reporting offer proven frameworks, and Karomia provides effective solutions for implementing them.