What Is the VSME Standard?
VSME stands for Voluntary Sustainability Reporting Standard for non-listed SMEs. It was developed by EFRAG (the European Financial Reporting Advisory Group), published in December 2024, and recommended by the European Commission in July 2025.
The core idea is simple: large companies under the CSRD must report their sustainability data. As part of that reporting, they also need ESG data from their suppliers and partners. Most of those suppliers are SMEs. Without a common format, SMEs were drowning in one-off questionnaires from banks, customers, and investors, each asking for slightly different information.
The VSME standard fixes that. It gives SMEs one consistent, credible reporting format that satisfies the most common ESG data requests in one go.
It is voluntary. There is no legal obligation to adopt it. It also sets the maximum scope of sustainability information an SME can be required to report under EU law.
It is aligned with the ESRS, the mandatory CSRD standards, so the data you produce is directly useful to large-company partners.
It is proportionate, designed for SME resources, not for corporate sustainability teams.
Who Does the VSME Standard Apply To?
The VSME framework is designed for non-listed SMEs operating in the EU, specifically companies that fall outside the mandatory scope of the CSRD.
In practice, that means:
- Fewer than 1,000 employees
- Not listed on an EU-regulated stock exchange
- Typically: net turnover below €450 million
If your company is listed, or if it meets the large-company thresholds under the CSRD, the VSME is still relevant for your enterprise: as part of your CSRD reporting, you will have to collect ESG information on your stakeholders (suppliers, customers). The VSME is the legal maximum requirement against which your counterparties need to be aligned (typically, small SMEs). In other words, if you are subject to the CSRD, you should require your counterparties to order VSME medals instead of unaudited, hard-to-process VSME reports.
Why would an SME choose to report voluntarily?
The pressure is real, even if the obligation is not. Three situations push SMEs towards the VSME standard:
- A large customer asks for your ESG data as part of their own CSRD supply-chain disclosure — a growing driver of ESG compliance for SMEs.
- A bank or investor requests sustainability information before approving financing.
- You want to demonstrate ESG credibility to win contracts, attract talent, or build brand trust.
The VSME gives you a single, structured answer to all three — and ESG recognition for SMEs is how you make that answer visible to stakeholders.
What Does the VSME Standard Cover?
The EFRAG VSME framework is built around two modules: the Basic Module and the Comprehensive Module. You always start with the Basic Module. The Comprehensive Module is your next logical step. You add it when stakeholders need more detail.
Basic Module (B1–B11)
The Basic Module is the minimum viable VSME report. It covers 11 disclosure areas:
| Code | Topic |
|---|---|
| B1 | Basis for preparation (company info, reporting scope) |
| B2 | Sustainability practices, policies, and future initiatives |
| B3 | Energy consumption and GHG emissions (Scope 1 & 2) |
| B4 | Pollution (air, water, soil) |
| B5 | Biodiversity (proximity to sensitive areas) |
| B6 | Water withdrawal and consumption |
| B7 | Resource use, circular economy, and waste |
| B8 | Workforce characteristics (gender, contract type) |
| B9 | Health and safety (accidents, fatalities) |
| B10 | Remuneration, collective bargaining, and training |
| B11 | Convictions and fines for corruption or bribery |
Most SMEs will complete the Basic Module in a few weeks, especially if they already track energy bills, HR data, and basic environmental metrics.
Comprehensive Module (C1–C9)
The Comprehensive Module adds nine deeper disclosure areas for SMEs whose banks, investors, or corporate clients need more granular information:
| Code | Topic |
|---|---|
| C1 | Business model and sustainability-related initiatives |
| C2 | Detailed sustainability policies, actions, and future plans |
| C3 | GHG reduction targets and climate transition plan |
| C4 | Physical and transition climate risks |
| C5 | Additional workforce characteristics (diversity data) |
| C6 | Human rights policies and due diligence processes |
| C7 | Severe negative human rights incidents |
| C8 | Revenue exposure to high-impact sectors (fossil fuels, etc.) |
| C9 | Gender diversity in governance bodies |
The Comprehensive Module is reported on an "if applicable" basis. You only disclose what is relevant to your business. You don't need to fill in every field.
VSME Standard vs CSRD. What's the Difference?
This is the question we hear most. Short answer: they are built for different companies based on their size.
The key point: the VSME produces ESRS-compatible data, which is exactly why large companies and banks accept it. But the process is lighter than the CSRD.
If you are an SME and not listed, VSME is almost certainly the right framework. If you are in CSRD scope, you need ESRS.
How to Implement the VSME Standard
Implementing the VSME standard is more straightforward than most SMEs expect. Here is a practical step-by-step approach.
Step 1. Confirm VSME is the right fit
Check that your company is non-listed and has fewer than 1,000 employees. If yes, VSME applies.
Step 2. Define your purpose and reporting scope
Ask: Why are we doing this? Is it for a bank, a customer, internal management, or public disclosure? Set your reporting period (typically the calendar year) and decide whether you'll report as a standalone entity or include subsidiaries.
Step 3. Choose your module
- Start with the Basic Module if you want the minimum credible report.
- Add the Comprehensive Module if a bank, investor, or large customer is asking for more depth.
Once you commit to a module, you must report on all applicable disclosures within it.
Step 4. Audit your existing data
You likely have more data than you think. Map what you already have, energy bills, HR records, procurement data, health and safety logs, financial statements, against the VSME disclosure checklist. Identify the gaps.
Step 5. Collect data and draft the report
Gather the metrics, write the narrative sections, and structure the report around the module you have chosen. EFRAG's free VSME Digital Template (released May 2025) is a good starting point. It's structured, XBRL-ready, and available on the EFRAG website.
Step 6. Review and finalise
Check that all applicable disclosures are complete and internally consistent. Validate figures against source documents. If certain data is genuinely unavailable, VSME allows you to omit it with a clear explanation.
Get Formally Recognised for Your VSME Compliance
Completing a VSME report is a real achievement. But a PDF sitting in a folder doesn't signal much to the outside world.
VSME Medals is the third-party recognition system built specifically on the EFRAG VSME standard. We assess SMEs against the VSME framework and award a formal medal: a credible, independent signal that your sustainability reporting meets the standard.
The system uses a four-tier medal structure:
Bronze
Basic Module completed
Silver
Comprehensive Module completed
Gold
SRS Midcaps completed (based on We Are Europe)
Platinum
Gold plus sectoral comparative analysis and advanced governance
Each medal comes with a digital badge you can display on your website, in tenders, and in financing applications, turning your VSME report into visible proof of ESG credibility.
Because voluntary reporting without verification is easy.
An official VSME Medal serves as an immediate, reliable indicator for financial institutions and supply-chain partners, allowing them to verify your sustainability standing without manually analysing a multi-page disclosure.
Interested in seeing where your business stands?