CSRD and VSME for Supply Chains
The VSME (Voluntary SME Standard) was designed specifically to help large CSRD companies collect sustainability data from their SME suppliers. Understanding how VSME works — and how to encourage your suppliers to adopt it — reduces your Scope 3 Category 1 data gap and improves supply chain ESG governance.
The VSME (Voluntary SME Standard) was designed specifically to help large CSRD companies collect sustainability data from their SME suppliers. CSRD Wave 1 and Wave 2 companies consistently identify Scope 3 Category 1 (purchased goods and services) as their biggest data gap.
How VSME solves the supplier data problem
CSRD Wave 1 and Wave 2 companies consistently identify Scope 3 Category 1 (purchased goods and services) as their biggest data gap. The reason: most tier 1 suppliers — typically SMEs with fewer than 1,000 employees — have no standardised sustainability reporting framework and respond to customer ESG questionnaires inconsistently.
The VSME solution: EFRAG designed VSME Module B to provide exactly the data that large CSRD companies need for their Category 1 Scope 3 calculations and ESRS S2 supply chain disclosures. A supplier reporting under VSME Module B provides: Scope 1 and 2 GHG emissions (the primary input to activity-based Category 1 calculation); energy consumption; basic labour standards compliance (no forced labour, no child labour); anti-corruption policy status.
Standardisation benefit: Instead of each large company sending different ESG questionnaires requiring different data in different formats, VSME provides a standard data set. A supplier with 20 large customers can respond to all their ESG data requests by pointing to a single VSME disclosure — dramatically reducing SME compliance burden.
For large CSRD companies: encouraging your key suppliers to adopt VSME Module B gives you higher-quality, verified supplier data than generic ESG questionnaire responses. The data is in a standardised format, can be compared across suppliers, and improves year-on-year as suppliers refine their data collection.
Building a supplier VSME adoption programme
For large CSRD companies wanting to improve Category 1 data quality through supplier VSME adoption:
Prioritise tier 1 suppliers: Focus VSME promotion on your highest-spend tier 1 suppliers — those who collectively represent 70–80% of your Category 1 emission estimate. For these suppliers, the quality improvement from spend-based to supplier-specific calculation is most valuable.
Supplier communication: Write to key suppliers explaining CSRD, your Category 1 data needs, and how VSME Module B satisfies your requirements. Provide the EFRAG VSME template and a simple guide. Many SME suppliers are willing to report if asked clearly — they simply have not known what to report or how.
Capacity building: Offer support to SME suppliers to complete their first VSME Module B — a supplier workshop, a calculation template for Scope 1 and 2, or access to a GHG calculation tool. CSDDD requires you to support SME suppliers rather than simply imposing requirements — combine VSME adoption support with CSDDD compliance.
Contractual encouragement: Include VSME adoption as a preferred supplier criterion in procurement evaluations — not a mandatory requirement (VSME is voluntary) but a positive scoring factor in supplier selection and annual review. Over 2–3 years, preferred supplier status drives adoption more effectively than mandates.
Timeline: Expect 20–30% voluntary adoption among top suppliers in year 1 with active engagement, growing to 50–60% by year 3. Build this trajectory into your Scope 3 improvement plan — showing investors the pathway from spend-based to supplier-specific Category 1 calculation.
VSME data integration into your CSRD report
Once suppliers begin providing VSME Module B data, integrate it into your CSRD Scope 3 Category 1 calculation — replacing spend-based EEIO estimates with supplier-specific emission intensities.
Calculation upgrade: For suppliers with VSME Module B GHG data, calculate Category 1 emission factor as: supplier Scope 1 + Scope 2 emissions ÷ supplier revenue = kg CO2e per € of spend. Apply this supplier-specific intensity to your spend with that supplier, replacing the generic EEIO factor.
Data quality improvement: ESRS E1-6 requires disclosure of the percentage of Scope 3 calculated using primary (supplier-specific) vs secondary (spend-based) data. As VSME adoption grows, your primary data percentage increases — demonstrating improving data quality to investors and assurers.
PCAF score improvement: For financial sector companies using PCAF for Category 15, supplier VSME data improves PCAF data quality scores from 4 (revenue-based estimate) toward 2 (company-reported unverified data) as suppliers provide actual GHG inventories.
Annual CSRD disclosure: Include in your ESRS E1-6 methodology note: the percentage of Category 1 calculated using VSME-standard supplier data; the number of suppliers providing VSME data; and the trend year-on-year. This narrative demonstrates proactive supply chain engagement — valued by ESG rating agencies and institutional investors assessing supply chain management quality.
Frequently asked questions
Can we require our suppliers to adopt VSME as a contract condition?
The VSME is voluntary — you cannot require VSME adoption specifically. However, you can contractually require suppliers to provide specific sustainability data (Scope 1 and 2 GHG emissions, basic labour standards information). If a supplier chooses to use VSME Module B to satisfy this contractual data requirement, that is their choice. Frame requirements around data provision, not framework adoption.
What if our suppliers use different sustainability frameworks and do not adopt VSME?
Accept equivalent data from other frameworks — GRI 305 GHG data satisfies the same Category 1 calculation need as VSME Module B GHG data. The key is obtaining supplier Scope 1 and 2 GHG inventory data in any verifiable format. VSME is the preferred standardised format for SME suppliers; for larger suppliers already reporting under GRI or CSRD, use their existing disclosures.
When should we expect meaningful VSME adoption among our suppliers?
VSME final delegated act adoption is expected mid-2026. Meaningful market adoption typically lags standard finalisation by 12–18 months as suppliers build awareness and capability. Expect growing adoption through 2027–2028 as Wave 2 CSRD data requests from large companies intensify. Plan your Category 1 improvement trajectory with 20% supplier-specific data by 2027 and 50%+ by 2029 as achievable targets.