Sustainability is becoming a key issue even for small and medium-sized enterprises that are not yet subject to the CSRD directive. Nevertheless, they are increasingly confronted with ESG data requirements from business partners, banks and investors. In response to this situation, the VSME – Voluntary Sustainability Reporting Standard for SMEs – was created, a voluntary framework that allows companies to share relevant information without excessive administrative burden.
The standard was developed by EFRAG at the request of the European Commission and aims to make ESG reporting accessible to even the smallest businesses. VSME is designed to reflect the needs of companies of different sizes – from micro-enterprises to medium-sized companies – while taking into account their limited capacities. During the public consultation, it became apparent that the double materiality requirement was too complex and costly for small and medium-sized enterprises. It was therefore removed from the standard and replaced with an "if applicable" principle, which defines in advance the specific situations in which companies are required to disclose the information. This approach significantly reduces the complexity of reporting and is better suited to the capabilities of smaller companies.
At the same time, however, the assessment of materiality is not completely excluded. Some companies continue to engage in it – for example, if they already have internal processes in place, want to be prepared for future requirements, or if their business partners require it. In practice, companies also prioritise topics based on pressure from suppliers or customers. Within the VSME, materiality analysis is therefore not mandatory, but can be used voluntarily as a supplementary tool.
VSME is divided into two modules. The Basic Module is primarily intended for micro-enterprises and represents the minimum requirement for other small and medium-sized enterprises. This module is retained as the entry point for ESG reporting, with significantly simplified language. All information published in this module must be reported if it is relevant to the company. If the company's circumstances do not correspond to a situation that would require the disclosure of certain data, it is not necessary to provide that data. This approach significantly reduces complexity while ensuring consistency across companies.
The Comprehensive Module, formerly known as the Business Partner Module, is designed for companies that face more extensive requirements from banks, investors or corporate customers. It contains metrics required by financial markets, such as indicators from the SFDR (Sustainable Finance Disclosure Regulation), and other data that many medium-sized companies already have at their disposal. As in the basic module, the "if applicable" principle applies here, which means that the company only publishes information that actually concerns it.
The VSME reports specific data such as energy and water consumption or carbon footprint (at least Scope 1 and 2), as well as basic information about employees. This data not only increases transparency, but can also serve as a basis for identifying savings and improving operational efficiency. In addition, the simplified language of the standard lowers the barrier to entry and makes it easier to understand across companies.
The introduction of VSME is therefore a strategic step that helps companies build trust, manage risk, improve access to finance and prepare for future legislative requirements. Transparent ESG reporting strengthens the confidence of customers, investors and financial institutions. Companies that incorporate sustainability principles into their strategy and day-to-day operations can use this area as a competitive advantage – for example, in tenders or audits.
The European Commission also emphasises that the VSME can help companies better understand their own sustainability, thereby strengthening their resilience and competitiveness. Voluntary reporting is therefore not only about meeting market expectations, but also about strategic company management in the context of long-term sustainability.
Ultimately, VSME is not just a reporting tool. It is a framework that helps companies navigate sustainability, increase their competitiveness and prepare for the future. Small reporting can have a big impact – if done right.