VSME Standard Overview
The Voluntary Sustainability Reporting Standard for SMEs (VSME) is EFRAG's simplified sustainability reporting framework designed for small and medium-sized enterprises not in mandatory CSRD scope. As large companies require ESG data from their suppliers, the VSME provides a proportionate, practical reporting framework that SMEs can actually implement.
The Voluntary Sustainability Reporting Standard for SMEs (VSME) is EFRAG's simplified sustainability reporting framework designed for small and medium-sized enterprises not in mandatory CSRD scope. The VSME was developed by EFRAG in response to a fundamental tension created by CSRD: large companies in mandatory CSRD scope must report their Scope 3 Category 1 emissions and supply chain human rights performance — but most of their SME suppliers have no framework for reporting the required data.
What the VSME is and why it exists
The VSME was developed by EFRAG in response to a fundamental tension created by CSRD: large companies in mandatory CSRD scope must report their Scope 3 Category 1 emissions and supply chain human rights performance — but most of their SME suppliers have no framework for reporting the required data.
Without the VSME, SMEs face an uncoordinated flood of different ESG questionnaires from different customers — each asking for slightly different data in different formats. A manufacturing SME with 20 large corporate customers could receive 20 different sustainability questionnaires annually, each requiring weeks of data collection.
The VSME solves this by providing a standardised, lightweight reporting framework that: satisfies the data needs of large CSRD reporters for their Scope 3 and supply chain disclosures; is proportionate to SME capacity and resources; does not require third-party assurance; and is fully voluntary — no mandatory filing, no regulatory penalties.
Post-Omnibus relevance: The Omnibus package (February 2025) removed most SMEs from mandatory CSRD scope — reducing the employee threshold from 250 to 1,000. This makes the VSME more important, not less — more companies are now in the voluntary zone where VSME applies, and supply chain pressure from large CSRD reporters is the primary driver of SME ESG reporting.
The two VSME modules — Basic and Comprehensive
The VSME is structured in two modules of increasing detail:
Module B (Basic): The minimum viable sustainability disclosure for SMEs. Covers: general information about the company and its business model; key environmental metrics (Scope 1 and 2 GHG emissions, energy consumption, waste generated); basic social metrics (headcount, health and safety incidents, training hours); and a brief governance statement (anti-corruption policy, code of conduct). Module B is designed to be completable by a small business with 50–250 employees in 2–4 weeks of data collection.
Module C (Comprehensive): An expanded set of disclosures for SMEs that want to go beyond the minimum — either because large customers require more detail or because the SME wants to demonstrate ESG maturity to investors and stakeholders. Module C adds: Scope 3 emissions (material categories); water consumption; biodiversity impacts; detailed social metrics (diversity, pay gap, collective bargaining); value chain due diligence; and sustainability strategy and targets.
The modular approach allows SMEs to start with Module B and progressively expand to Module C as their data collection capability matures — without having to rebuild their reporting from scratch.
How VSME connects to CSRD large company reporting
The VSME was explicitly designed to provide the data that large CSRD reporters need from their SME suppliers. The data points in VSME Module B map directly to the ESRS disclosures that large companies must make about their supply chains.
Scope 3 Category 1 data: Large CSRD companies must report Scope 3 Category 1 (purchased goods and services) emissions. SME suppliers' Scope 1 and 2 emissions (disclosed in VSME Module B) are the primary input to Category 1 calculation using the supplier-specific method. An SME that reports under VSME Module B provides its customers with exactly the data they need.
ESRS S2 supply chain worker data: Large companies must disclose how they manage human rights risks in their value chains. VSME Module B's basic social metrics (health and safety, collective bargaining, no forced or child labour statement) provide the evidence that large customers need for ESRS S2 compliance.
ESRS G1 governance: Large companies must report on supply chain anti-corruption and governance. VSME Module B's governance statement provides the baseline evidence for supply chain governance assessment.
The efficiency for SMEs: By adopting VSME reporting, an SME can respond to all customer ESG questionnaires by pointing to a single standardised disclosure — eliminating the duplication of answering multiple different questionnaires from different customers.
Frequently asked questions
Is the VSME mandatory for any company?
No — the VSME is entirely voluntary. No company is legally required to report under VSME. However, supply chain pressure from large CSRD-reporting customers is making VSME de facto necessary for SMEs that want to retain contracts with large corporate buyers. Some large companies are already including VSME adoption in supplier qualification criteria.
When will the VSME be finalised?
EFRAG published a draft VSME in late 2023 and collected feedback through 2024. The final VSME standard is expected to be adopted as a European Commission delegated act in mid-2026 — following the Omnibus legislative process. Monitor EFRAG announcements for the exact timeline.
Do SMEs need third-party assurance for VSME disclosures?
No — VSME does not require third-party assurance. This is a key difference from CSRD which mandates limited assurance from the first reporting year. However, some large customers may request externally reviewed VSME disclosures — third-party review is voluntary and significantly less expensive than full CSRD assurance, typically €5,000–€20,000.