TheVSME standard (Voluntary Sustainability Reporting Standard for non-listed SMEs) is the newvoluntary sustainability framework for SMEsdeveloped at the European level to facilitate ESG (environmental, social, and governance) in a simplified manner that is proportionate to the company’s size.
If your company is part of a large corporation’ssupply chain, you’ve likely already receivedquestionnaires or requests for information regarding sustainability fromcustomers or business partners. The VSME standard is designed precisely to help you respond to these requests in a structured way, without the complexity associated with frameworks intended for large corporations.
More and more companies, especially small and medium-sized enterprises (SMEs), are receivingrequests for information on sustainability fromcustomers, banks, or business partners.
If your company is a supplier or part ofa large company’s supply chain,you’ve likely already received requests of this kind. The VSME standard was created precisely to help you respond to them in a structured way, without the complexity associated with frameworks designed for large corporations.
What is the VSME standard, and why was it created?
The VSME standard is avoluntary reporting frameworkdeveloped by EFRAG (Europe’s Voice in Corporate Reporting) at the request of the European Commission. Its aim is to provide unlisted SMEs with aharmonized model for reporting sustainability information in a simplified manner that isproportionate to their size.
Thissystem isdesigned to be a more accessible alternative to ESRS (European Sustainability Reporting Standards), featuring a modular structure tailored to the operational realities of SMEs. The VSME standard was approved inJuly 2025 aspart of the process to adapt the European regulatory ecosystem regardingsustainability.
Although many SMEs are not directly subject to regulations such as theCSRD(Corporate Sustainability Reporting Directive), they may be indirectly affected because they are part of the supply chains of large companies that are subject to these regulations. According to industry data, 81% of SMEs believe that sustainability gives them a competitive advantage.
In this context, the VSME standard serves as a framework thatreduces regulatory complexity,standardizes metrics and terminology, and facilitates responsesto requests for sustainability-related information throughout the value chain.
VSME Structure: Basic Module and Full Module
The VSME standard is organized into a modular structure with two reporting levels, designed to adapt to the operational realities of each company.
1. Basic module (Core Standard).
Designed as an entry-level program, specifically tailored for microenterprises (fewer than 10 employees). It includes 11 key disclosures focused on indicators relevant to value chain partners, including:
- Greenhouse gas emissions (Scope 1 and 2).
- Environmental indicators related to the company's own workforce.
- Anti-corruption policies.
2. Full module (Extended Standard).
It builds on the basic module and includes 9 additional disclosures commonly requested by banks, investors, and business partners. Notable disclosures include:
- Description ofESG practices.
- Emissions reductiontargetsandclimate transition plans.
- Confirmedhuman rightsincidents in the supply chain.
“If applicable” principle and absence of dual materiality
Akey featureof the VSME standard is thatit does not require a formaldouble materialityassessmentand allows companies to apply only those indicators relevant to them, basedon the “if applicable” principle. This flexibility aims to tailor the reporting to the operational reality of each SME, thereby preventing an excessive reporting burden.
The VSME standard and its relationship with the ESRS and European regulations
The standard VSMEdoes not replace theESRS or the CSRD Directive. It is specifically designed for unlisted SMEs that are not required to report under those standards. However,it remains structurally compatiblewith the ESRS and aligned with European sustainable finance regulations, such as the SFDR or banking ESG requirements.
This facilitatesinteroperability across frameworksandprevents duplicate reporting, which is particularly useful for companies that must respond to simultaneous requests from different stakeholders in the value chain.
What types of companies is the VSME standard intended for?
The standard VSMEisprimarily intended for:
- Unlisted SMEs
- Microenterprises
- Companies that are part of supply chains subject to ESG requirements
- Organizations interested in organizing their sustainability information.
How to Apply the Standard VSME in Practice: Key Steps
SMEs interested in adopting the VSME standard can follow these steps to implement it in an orderly manner:
- Assess yourexposure toenvironmental, social, and governance risks.
- Determine whichmoduleis more suitable: Core or Extended.
- Download and complete theforms recommendedby EFRAG.
- Systematically collectinternal dataacross three areas: governance and anti-corruption, environmental sustainability, and social sustainability.
- Integrate sustainability into thecompany's management model.
Benefits of adopting VSME in your company
Implementing the VSME standard can provide your company with concrete and tangible benefits that go beyond regulatory compliance:
- Meet the demands of clients and investors withoutadopting complex frameworks such as ESRS.
- Prepare yourself toaccesssustainable financingtied to ESG criteria.
- To improvecompetitiveness inmarkets where environmental and social factors influence purchasing decisions.
- Strengthen your position within thevalue chainrelative to large companies subject to the CSRD.
- OrganizeESG informationinternallyina structured and reusable manner.
Frequently Asked Questions Frequently Asked Questions
- No. The VSME is a completely voluntary standard designed for unlisted SMEs that wish to structure their sustainability reporting without being required to do so.
- No. The CSRD is mandatory for certain large companies. The VSME standard is designed specifically for those companies that are not subject to that directive, offering them a lighter and more proportionate framework.
- In general, the VSME standard does not require external verification. However, some financial institutions or large clients may request it as part of their own due diligence processes.
- Various stakeholders in the financial sector note that having a structured ESG report improves transparency and risk assessment, which can facilitate access to financing linked to sustainability criteria.
- The Core module is designed specifically for micro-enterprises and covers the 11 essential indicators. The Extended module adds 9 additional disclosures aimed at meeting the requirements of banks, investors, and major business partners.