VSME: A pragmatic reporting alternative for SMEs
Yacin Bessas
5Min. reading time
Corporate Sustainability
According to the Omnibus Regulation, many companies are currently not subject to CSRD reporting obligations and are wondering how they can credibly and structuredly present their ESG performance. Small and medium-sized enterprises (SMEs) also increasingly need to provide ESG data but often find the requirements of the ESRS overwhelming. This is exactly where the new VSME standard comes in: as a voluntary, pragmatic framework for the sustainability reporting of SMEs.
The standard developed by the European Financial Reporting Advisory Group (EFRAG) follows a modular structure and significantly reduces reporting efforts compared to the European Sustainability Reporting Standards (ESRS). It is specifically aimed at companies with limited resources that want to document and communicate sustainability in a structured manner.
The key points at a glance: VSME
The VSME standard offers SMEs a voluntary ESG reporting option
Significantly leaner and more resource-saving than the ESRS
Companies can prepare early for upcoming reporting obligations and ESG inquiries from customers and investors
What is VSME?
VSME stands for Voluntary Sustainability reporting Standard for non-listed Micro and Small Enterprises. The goal is to provide small and medium-sized enterprises (SMEs) with a simple, practicable, and internationally recognized way to voluntarily report on their sustainability performance. VSME was developed by EFRAG, the same institution responsible for the ESRS.
Who is VSME intended for?
The VSME standard is aimed at companies that are currently not subject to CSRD reporting obligations. This primarily concerns SMEs that are not publicly listed and often do not have the resources for complex reporting processes. But companies that are no longer expected to be subject to CSRD reporting obligations due to the Omnibus Regulation also find a suitable standard for voluntary reporting in VSME.
ℹ️ More details about the changes to the CSRD Directive through the Omnibus proposal can be found here.
ESRS and VSME in comparison
Criterion | ESRS (CSRD) | VSME (voluntary) |
Binding Nature | Mandatory for CSRD-subject companies | Voluntary application |
Target Group | Large companies | Small and medium-sized enterprises (not publicly listed) |
Data Points | Approx. 500 data points | Approx. 75 data points |
Scope | High topic scope: Climate change, biodiversity, social issues, governance | More focused and less detailed scope |
Modularity | No, comprehensive report | Two modules: Basic & Comprehensive |
Materiality Analysis | Comprehensive materiality analysis | Simplified materiality analysis possible, but not mandatory |
Implementation | External audit, high complexity | Internal implementation possible, practical, low costs |
Flexibility | Rigid and fixed requirements | Companies decide on the scope of their reports |
Two modules: Basic & Comprehensive
The VSME standard consists of two modules, the Basic module and the extended Comprehensive module. The Basic module covers twelve central sustainability topics and forms the basis of reporting. The Comprehensive module complements the Basic module with additional information, such as on corporate policy, measures, or goals. This allows companies to flexibly decide how extensive their sustainability reporting should be, depending on individual needs and requirements.
Benefits of the VSME Standard for SMEs
Many SMEs are part of larger supply chains. Large customers increasingly require ESG data from their suppliers. Those who cannot provide verifiable information risk losing orders or not being considered at all.
Banks and investors are also increasingly focused on sustainability. Companies that cannot provide information on environmental or social issues find it more challenging to secure financing and during growth phases.
The VSME standard offers a concrete approach here. It helps companies credibly and structuredly present their ESG performance. This strengthens the trust of business partners, investors, and lenders. Especially in supply chains where ESG transparency is increasingly becoming a condition, this is a real advantage.
Internally, VSME also provides added value. By systematically collecting ESG data, resource consumption can be better analyzed and saving potentials can be specifically identified. This facilitates management and improves one's own risk and supply chain management. Companies that recognize ESG risks early on can respond more targeted and are more resilient in the long run.
The VSME standard is content-wise aligned with ESRS. This means that companies that currently work with VSME lay many foundations for possible CSRD reporting in the future. Adapting to mandatory reporting becomes significantly easier – for example, because relevant topics have been addressed and processes have already been established. Those who start now benefit double: from manageable effort today and less complexity tomorrow.
Another effect: A clear stance on sustainability strengthens the employer brand. This is becoming increasingly important in the competition for qualified professionals.
The path to the VSME report
The VSME standard can be translated into five clear steps, providing SMEs with a simple structure for their sustainability reporting.
First, it is determined which topics are relevant for the company and who are the main addressees of the report.
Then, the required data is collected, both quantitative figures and qualitative information.
In the third step, the collected data is analyzed to identify the key insights and impacts.
Subsequently, the report is prepared. The results are presented clearly and understandably.
Finally, the company ensures that the report is communicated and published to the relevant stakeholders.
This process allows for structured and transparent representation of sustainability – without excessive effort.
Frequently Asked Questions about the VSME Standard
What is the VSME Standard?
The VSME standard is a voluntary framework for small and medium-sized enterprises to report on their sustainability performance in a structured and practical way. It is leaner than the ESRS and specifically tailored to SMEs.
Who should use the VSME Standard?
Primarily SMEs that are not subject to CSRD reporting obligations but need to provide ESG data for customers, supply chains, or banks. Also, companies that want to prepare for future reporting obligations.
How does VSME differ from the ESRS?
VSME is significantly less extensive, with about 75 instead of over 500 data points. It is modular structured and allows for easier, cost-efficient internal implementation without external auditing.
What modules are available in VSME?
There is the Basic module with twelve central sustainability topics and the more comprehensive Comprehensive module, which allows additional information on policies, measures, and goals.
How demanding is the creation of a VSME report?
Reporting is designed to be resource-saving. SMEs can usually create the report internally and benefit from clear structures and reduced data requirements.
Why is the VSME standard economically worthwhile?
It facilitates access to financing and strengthens the trust of business partners. Moreover, it helps to recognize ESG risks early and utilize savings potentials.
Is the VSME report mandatory?
No, the application of the VSME standard is voluntary. It is intended to offer SMEs a practical alternative to the more complex ESRS.
How does VSME prepare for future CSRD reporting obligations?
The topics and processes addressed in VSME provide a good foundation for later mandatory sustainability reporting according to CSRD.
ℹ️ * This article is based on the status as of July 2025.
Sources (Access: July 2025)
EFRAG: VSME Standard
https://www.efrag.org/sites/default/files/sites/webpublishing/SiteAssets/VSME%20Standard.pdf
IHK Munich: 5 Steps to the VSME Report
https://www.ihk-muenchen.de/ratgeber/nachhaltigkeit-csr/nachhaltigkeitsberichterstattung/5-schritte-vsme-bericht/
DIHK: Is European sustainability reporting changing? https://www.dihk.de/de/themen-und-positionen/wirtschaftspolitik/corporate-social-responsibility/aendert-sich-die-europaeische-nachhaltigkeitsberichterstattung--129558
According to the Omnibus Regulation, many companies are currently not subject to CSRD reporting obligations and are wondering how they can credibly and structuredly present their ESG performance. Small and medium-sized enterprises (SMEs) also increasingly need to provide ESG data but often find the requirements of the ESRS overwhelming. This is exactly where the new VSME standard comes in: as a voluntary, pragmatic framework for the sustainability reporting of SMEs.
The standard developed by the European Financial Reporting Advisory Group (EFRAG) follows a modular structure and significantly reduces reporting efforts compared to the European Sustainability Reporting Standards (ESRS). It is specifically aimed at companies with limited resources that want to document and communicate sustainability in a structured manner.
The key points at a glance: VSME
The VSME standard offers SMEs a voluntary ESG reporting option
Significantly leaner and more resource-saving than the ESRS
Companies can prepare early for upcoming reporting obligations and ESG inquiries from customers and investors
What is VSME?
VSME stands for Voluntary Sustainability reporting Standard for non-listed Micro and Small Enterprises. The goal is to provide small and medium-sized enterprises (SMEs) with a simple, practicable, and internationally recognized way to voluntarily report on their sustainability performance. VSME was developed by EFRAG, the same institution responsible for the ESRS.
Who is VSME intended for?
The VSME standard is aimed at companies that are currently not subject to CSRD reporting obligations. This primarily concerns SMEs that are not publicly listed and often do not have the resources for complex reporting processes. But companies that are no longer expected to be subject to CSRD reporting obligations due to the Omnibus Regulation also find a suitable standard for voluntary reporting in VSME.
ℹ️ More details about the changes to the CSRD Directive through the Omnibus proposal can be found here.
ESRS and VSME in comparison
Criterion | ESRS (CSRD) | VSME (voluntary) |
Binding Nature | Mandatory for CSRD-subject companies | Voluntary application |
Target Group | Large companies | Small and medium-sized enterprises (not publicly listed) |
Data Points | Approx. 500 data points | Approx. 75 data points |
Scope | High topic scope: Climate change, biodiversity, social issues, governance | More focused and less detailed scope |
Modularity | No, comprehensive report | Two modules: Basic & Comprehensive |
Materiality Analysis | Comprehensive materiality analysis | Simplified materiality analysis possible, but not mandatory |
Implementation | External audit, high complexity | Internal implementation possible, practical, low costs |
Flexibility | Rigid and fixed requirements | Companies decide on the scope of their reports |
Two modules: Basic & Comprehensive
The VSME standard consists of two modules, the Basic module and the extended Comprehensive module. The Basic module covers twelve central sustainability topics and forms the basis of reporting. The Comprehensive module complements the Basic module with additional information, such as on corporate policy, measures, or goals. This allows companies to flexibly decide how extensive their sustainability reporting should be, depending on individual needs and requirements.
Benefits of the VSME Standard for SMEs
Many SMEs are part of larger supply chains. Large customers increasingly require ESG data from their suppliers. Those who cannot provide verifiable information risk losing orders or not being considered at all.
Banks and investors are also increasingly focused on sustainability. Companies that cannot provide information on environmental or social issues find it more challenging to secure financing and during growth phases.
The VSME standard offers a concrete approach here. It helps companies credibly and structuredly present their ESG performance. This strengthens the trust of business partners, investors, and lenders. Especially in supply chains where ESG transparency is increasingly becoming a condition, this is a real advantage.
Internally, VSME also provides added value. By systematically collecting ESG data, resource consumption can be better analyzed and saving potentials can be specifically identified. This facilitates management and improves one's own risk and supply chain management. Companies that recognize ESG risks early on can respond more targeted and are more resilient in the long run.
The VSME standard is content-wise aligned with ESRS. This means that companies that currently work with VSME lay many foundations for possible CSRD reporting in the future. Adapting to mandatory reporting becomes significantly easier – for example, because relevant topics have been addressed and processes have already been established. Those who start now benefit double: from manageable effort today and less complexity tomorrow.
Another effect: A clear stance on sustainability strengthens the employer brand. This is becoming increasingly important in the competition for qualified professionals.
The path to the VSME report
The VSME standard can be translated into five clear steps, providing SMEs with a simple structure for their sustainability reporting.
First, it is determined which topics are relevant for the company and who are the main addressees of the report.
Then, the required data is collected, both quantitative figures and qualitative information.
In the third step, the collected data is analyzed to identify the key insights and impacts.
Subsequently, the report is prepared. The results are presented clearly and understandably.
Finally, the company ensures that the report is communicated and published to the relevant stakeholders.
This process allows for structured and transparent representation of sustainability – without excessive effort.
Frequently Asked Questions about the VSME Standard
What is the VSME Standard?
The VSME standard is a voluntary framework for small and medium-sized enterprises to report on their sustainability performance in a structured and practical way. It is leaner than the ESRS and specifically tailored to SMEs.
Who should use the VSME Standard?
Primarily SMEs that are not subject to CSRD reporting obligations but need to provide ESG data for customers, supply chains, or banks. Also, companies that want to prepare for future reporting obligations.
How does VSME differ from the ESRS?
VSME is significantly less extensive, with about 75 instead of over 500 data points. It is modular structured and allows for easier, cost-efficient internal implementation without external auditing.
What modules are available in VSME?
There is the Basic module with twelve central sustainability topics and the more comprehensive Comprehensive module, which allows additional information on policies, measures, and goals.
How demanding is the creation of a VSME report?
Reporting is designed to be resource-saving. SMEs can usually create the report internally and benefit from clear structures and reduced data requirements.
Why is the VSME standard economically worthwhile?
It facilitates access to financing and strengthens the trust of business partners. Moreover, it helps to recognize ESG risks early and utilize savings potentials.
Is the VSME report mandatory?
No, the application of the VSME standard is voluntary. It is intended to offer SMEs a practical alternative to the more complex ESRS.
How does VSME prepare for future CSRD reporting obligations?
The topics and processes addressed in VSME provide a good foundation for later mandatory sustainability reporting according to CSRD.
ℹ️ * This article is based on the status as of July 2025.
Sources (Access: July 2025)
EFRAG: VSME Standard
https://www.efrag.org/sites/default/files/sites/webpublishing/SiteAssets/VSME%20Standard.pdf
IHK Munich: 5 Steps to the VSME Report
https://www.ihk-muenchen.de/ratgeber/nachhaltigkeit-csr/nachhaltigkeitsberichterstattung/5-schritte-vsme-bericht/
DIHK: Is European sustainability reporting changing? https://www.dihk.de/de/themen-und-positionen/wirtschaftspolitik/corporate-social-responsibility/aendert-sich-die-europaeische-nachhaltigkeitsberichterstattung--129558
