The VSME (Voluntary Sustainability Reporting Standard for SMEs) is a voluntary sustainability reporting standard. The standard is a simplified version of the mandatory ESRS standards for large companies and was developed primarily to help SMEs meet the increasing data demands of large customers and financiers.
Although SMEs are not subject to mandatory sustainability reporting, in practice the reporting requirements of large companies are also reflected in smaller contractors. Large companies need more and more information about the sustainability of their own value chain and, consequently, the performance of their own subcontractors in the areas of environmental responsibility, social responsibility and good governance.
On 30 July 2025, the European Commission issued an official recommendation that voluntary sustainability reporting by SMEs should be based on the VSME standard. At the same time, the Commission encourages large companies and financiers to base their requests for information from SMEs on the content of the VSME standard.
A modular approach that takes into account the company's starting situation
VSME is made up of two modules; the Basic module and the Comprehensive module. The Basic module is intended as an entry level module and focuses on the most important key performance indicators. The Comprehensive module expands on the Basic module and is suitable for companies whose stakeholders require more detailed sustainability information.
The basic module consists of 11 topics. The reporting basis section reviews information on the starting points of the report, such as basic company information. The environmental section reports on, among other things, energy consumption, the company's own greenhouse gas emissions (Scope 1 and 2), water consumption and the amount of waste. Social responsibility themes include, among other things, the number of employees, gender distribution and types of employment relationships, as well as occupational safety and health indicators. Regarding governance practices, convictions and fines related to corruption and bribery are reported.
The extended module expands the basic module with nine disclosure requirements, including climate risks, emission reduction targets and transition plans.
The benefits of VSME go beyond just producing a report
Sustainability reporting should not be an additional burden, but an opportunity to strategically review a company's business and communicate to key stakeholders. VSME provides the framework and foundation for sustainability reporting and monitoring progress.
VSME is designed to lower the threshold so that even the smallest companies can participate in promoting sustainable development. The information in the basic module in particular is often found in the company directly from existing sources, such as accounting or management system reporting. The key is to get started and continuously improve over time. It is not worth striving for perfection the first time.
Sustainability reporting offers opportunities such as developing internal processes, increasing collaboration between different functions of the company, strengthening risk management, improving stakeholder communication, and finding savings by monitoring energy and water consumption and waste. This transforms sustainability work from an expense into an investment that strengthens the company's long-term competitiveness.
How to get started with VSME-compliant reporting?
The following steps can help your company get started with sustainability reporting:
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- Define the purpose of the reporting. Is it a customer requirement, the transparency required by the financier, or the company's own desire to communicate sustainability work to stakeholders?
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- Decide on the format of the report. Choose the report format (e.g. Excel-based internal company database or visual public report) according to the target group and purpose.
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- Select the topics to report on. Consider which sustainability themes are most important to your company and key stakeholders. Appendix B of the standard will help you identify the themes.
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- Assemble a project team and agree on the rules of the game. If possible, form a team with representatives from different functions. Agree on clear roles, responsibilities and a schedule.
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- Learn about the disclosure requirements and collect the information. Familiarize yourself with the VSME requirements and start collecting data. The standard and supporting material for its implementation are available free of charge on the EFRAG website. Record data sources for possible verification and the next reporting cycle.
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- Implement quality assurance. Ensure the reliability and accuracy of the report, either through an internal audit process or an external expert. The VSME standard does not require independent assurance like the Sustainability Reporting Directive, but external assurance is worth considering if the company is new to collecting sustainability data or if you want to increase the credibility of the report in the eyes of stakeholders.
Would you like to hear more about the content of the VSME standard and its use?
Bureau Veritas discussed the content and use of the VSME standard in an RT webinar on September 25, 2025.
The member pages also include a carbon footprint emissions calculator that can be used to calculate a company's emissions (B3 energy and greenhouse gas emissions).
EU sustainability legislation is changing
EU sustainability legislation is in a state of flux. In previous years, the EU has tightened regulation by launching several legislative initiatives supporting the goals of the Green Deal. Now, the EU is aiming to make the operating environment for businesses easier by easing both existing and future regulations.
The “Green Omnibus” legislative package published in early 2025 included proposed changes to, among other things, the Sustainability Reporting Directive. The most significant proposed changes concern its timetable, scope and reporting requirements.
As the VSME is intended to be aligned with the Sustainability Reporting Directive, any changes to the Directive will also affect the VSME in the future. In particular, it is worth following the update of the ESRS standards. EFRAG is due to present the final updated ESRS standards at the end of November. In addition, there is a political discussion on raising the CSRD application threshold from the current 250 employees to companies with more than 1000 employees, which would exclude a large part of the companies currently covered by the Directive.
Sources
- EFRAG 2024. Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME). Available: VSME Standard.pdf
- European Commission Recommendation 30.7.2025: Commission presents voluntary sustainability reporting standard to ease burden on SMEs – European Commission
- EFRAG materials and resources to support VSME reporting: Voluntary reporting standard for SMEs (VSME), Concluded | EFRAG
Article: Rosa Degerman, Sustainability Specialist, Bureau Veritas