VSME – the Smart Path into Sustainability Reporting for Small and Medium-sized Enterprises

It has been specifically developed to help SMEs that want to work more systematically with sustainability data, but without getting caught up in the complexity that large companies often face under CSRD.

As the EU's Omnibus proposal changed the requirements under CSRD, the significantly simpler VSME standard became an important tool – both for companies looking to meet customer and investor expectations and for strengthening their competitiveness in a practical and straightforward way.

Why VSME is relevant right now

In early 2025, the EU's Omnibus proposal was presented, which among other things delays the reporting requirements for CSRD waves 2 and 3 by two years and raises the thresholds for which companies are covered. Many SMEs will therefore not be subject to the legal requirements – but the need for comparable and transparent sustainability information remains.

Customers, large companies, and financial actors still require visibility into suppliers' sustainability work. The simpler VSME reporting fits perfectly here as a voluntary but strategically valuable solution – a middle ground between the comprehensive CSRD standard and not reporting at all.

VSME vs ESRS – what's the difference?

VSME and ESRS (European Sustainability Reporting Standards) are both developed by EFRAG, but target entirely different audiences. ESRS is the detailed standard that large companies report under CSRD – it is comprehensive, complex, and requires significant resources to comply with. VSME, on the other hand, is designed specifically for SMEs and is voluntary. It covers the same fundamental sustainability areas – environment, social responsibility, and governance – but in a far more manageable format. Where ESRS may require hundreds of data points, VSME focuses on what matters most and gives companies a reasonable starting point without needing to build an entire sustainability department.

What does VSME involve?

VSME is a voluntary sustainability reporting standard developed by EFRAG, the same organization that develops the European sustainability standards under CSRD. It is designed to help SMEs focus on what is truly material, without getting lost in detail.

By using VSME, companies can:

• Demonstrate responsibility and transparency
• Work systematically with sustainability issues
• Meet requirements from customers, investors, and other stakeholders
• Collect and use sustainability data in a way that strengthens the business

This means that even smaller companies can build a solid foundation for decision-making and communication, while also preparing for future reporting requirements.

Benefits of using VSME reporting

Even without legal requirements, there are strong reasons to use VSME and produce a report:

• Meet increasing demands from large companies and the value chain
• Strengthen trust with investors, customers, and banks
• Gain a clear structure for sustainability work
• Help the company build a foundation for future CSRD reporting
• Make it easy to communicate sustainability data to stakeholders

For many SMEs, this represents a first step toward systematizing their sustainability work – on their own terms and at their own pace.

How VSME is structured

The standard currently consists of two modules:

• Basic Module – a simple and quick start for small companies wanting to get going
• Comprehensive Module – more detailed reporting for slightly larger companies or those with higher ambitions

Unlike the full CSRD standards (ESRS), the VSME standard does not require a formal double materiality assessment (DMA). Instead, VSME operates on an 'if applicable' principle – you report on the sustainability areas that are actually relevant to your business.

This means the reporting provides a holistic picture and helps the company understand risks, opportunities, and impacts in its sustainability work.

What does a VSME report actually include?

A VSME report covers a company's sustainability work across three main areas: environment, social responsibility, and governance. The Basic Module includes foundational information on topics such as energy consumption, emissions, working conditions, and business ethics. The more comprehensive module – the Comprehensive Module – goes deeper and includes more detailed data points for companies that want to report on a more complete picture of their sustainability work. Which parts are relevant depends on the company's size, industry, and the issues that are material to its specific operations – something that is mapped out in a materiality assessment.

How do you produce a VSME report?

Producing a VSME report does not have to be complicated. The process begins with identifying which sustainability issues need to be reported on for your business, followed by data collection across relevant areas such as energy, emissions, employment conditions, and the supply chain. The information is then compiled according to the standard's structure and presented in a report that can be shared with customers, investors, and other stakeholders. With the right tools, a large part of the data collection can be automated directly from existing accounting and invoice data – making the process significantly smoother for SMEs.

How to prepare your company for VSME reporting – step by step

1. Map your current position – Which sustainability issues are relevant to your business and value chain?
2. Choose your module level – Start with the Basic Module if you are a small company new to sustainability reporting, or go straight to the Comprehensive Module if you are slightly larger and already have some data in place.
3. Collect data – Connect your systems to automate the collection of energy, emissions, and supplier data where possible. There is no point spending manual time on things that can be automated.
4. Compile and publish the report – Share it with relevant stakeholders and use it as a basis in customer dialogues, procurement processes, and financing discussions.
5. Follow up and improve – Sustainability reporting is a process, not a one-off project. Build on it incrementally each year.

Summary

Reporting according to the VSME standard is not just a way to meet expectations – it is a strategic investment in the future. For SMEs, it is a smart and straightforward way to start working systematically with sustainability data, build trust, and prepare for upcoming requirements.

Do you need help getting started with VSME or creating a professional VSME report? Contact us – we help SMEs find a solution that suits their needs, ambition level, and resources.

Read more and get your VSME-report here.