Voluntary Reporting Standard for SMEs (VSME): Simplified sustainability reporting for non-listed SMEs

Background and purpose of the VSME Standard

The Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) is an EU sustainability reporting standard developed by EFRAG under a mandate from the European Commission’s 2023 SME Relief Package and delivered as technical advice in December 2024. It provides a simplified, voluntary framework for non-listed micro, small and medium-sized enterprises that fall outside the scope of the Corporate Sustainability Reporting Directive (CSRD). Unlike the more detailed, mandatory ESRS for large companies, the VSME focuses on proportional, easy-to-use disclosures that respond to information requests from banks, investors and larger customers. The European Commission adopted the VSME in a 2025 Recommendation, encouraging companies and financial institutions to base their data requests to SMEs on this common template. The point of VSME is to cut reporting burden while still giving stakeholders comparable, decision-useful sustainability information from SMEs and helping smaller businesses access sustainable finance and investment over time.

What the VSME Standard asks SMEs to report

The VSME Standard is built around two modules that together cover environmental, social and governance topics.

• The Basic Module (B1–B11) - This is an entry-level module that asks SMEs to explain how the report was prepared and whether they have sustainability practices, policies, targets and future initiatives. It then requires a small set of core metrics including, among others, energy use and greenhouse-gas emissions, pollution, sites in or near biodiversity-sensitive areas, water use and consumption, circular-economy and waste indicators.

• The Comprehensive Module (C1–C9) - This module adds more detail for banks and larger customers, for example on business model and strategy, climate targets and risks, additional workforce and human-rights information, and revenues from sensitive sectors. Reports should be coherent with any financial statements and can be prepared on an individual or consolidated basis.

Together, these two modules let SMEs choose a level of disclosure that matches their size and stakeholders’ needs, while still using a common, comparable template that banks, investors and larger customers can easily understand and reuse.

Current status and future outlook

EFRAG delivered the final VSME Standard to the European Commission in December 2024 after consultation and field-testing with SMEs. In July 2025 the Commission adopted a Recommendation inviting Member States and market participants to use VSME as the preferred template for SME sustainability data requests. The standard remains voluntary, but the Commission plans to base a future EU voluntary standard under the Omnibus I simplification package largely on VSME. At the same time, EFRAG is building a wider “VSME ecosystem”, including digital templates, XBRL taxonomy and educational videos to support implementation and track market uptake. Over the next few years, VSME is likely to gain prominence as banks, investors and large CSRD-reporting companies converge on it, while remaining separate from, but aligned with, the more detailed ESRS requirements.

Resources

• European Commission Recommendation on VSME – Official Recommendation and annexes adopting the voluntary standard for SMEs and explaining its objectives and link to CSRD.

• European Commission Q&A on the VSME Recommendation – Explains how VSME was developed, its role in the Omnibus I package and future delegated act, and available support materials.

• EFRAG “SMEs and Sustainability Reporting” page – Plain-language introduction to VSME, its aims, key features, ecosystem and educational videos.

• Official VSME Standard – Full text of the Voluntary Sustainability Reporting Standard for non-listed SMEs, including definitions and detailed disclosure guidance.

• EFRAG VSME Project page – Background on the mandate, development timeline, consultation feedback, and links to the standard, Basis for Conclusions and digital template.