Unlocking VSME: Boost your ESG reporting edge 

“The VSME creates a bridge between voluntary sustainability reporting and the more demanding CSRD framework.” 

Current sustainability reporting landscape 

The EU’s sustainability reporting framework has developed at speed over the last five years. The EU Green Deal (2019) committed member states to climate neutrality by 2050. In 2023, the Corporate Sustainability Reporting Directive (CSRD) introduced corporate sustainability reporting duties for around 50,000 large and listed companies. 

To meet CSRD requirements, companies must use the new European Sustainability Reporting Standards (ESRS). These are extensive: they cover environmental, social and governance (ESG) topics in detail, and include more than 1,200 data points. 

For larger companies, ESRS opens the door to integrated reporting and transparency. But for smaller non-listed businesses, this level of disclosure is not feasible. Yet many still face ESG questionnaires from their customers, lenders, or investors. 

This is where the Voluntary Sustainability Reporting Standard for SMEs (VSME) comes in. Developed by EFRAG and officially recommended by the European Commission in July 2025, VSME allows SMEs with fewer than 250 employees to report in a standardised and credible way. 

Download our ESG reporting guide to understand your organisation’s scope and the best reporting pathway for you!

Introduction to the VSMEs 

VSME gives SMEs the means to structure their sustainability reporting without being overburdened by the full ESRS. 

The objectives are clear: 

• Provide SMEs with an ESG framework that standardises responses for supply-chain and financing requests 
• Cut admin load with a reduced set of around 92 data points 
• Ensure reporting is scalable for future legislative developments 

Boost stakeholder engagement by demonstrating transparency and accountability 

Importantly, VSME does not require external audit or assurance. However, organisations can voluntarily seek limited assurance to enhance trust in their disclosures. 

VSME structure 

The VSME structure is built around two modules: 

• Basic module: 51datapoints, targeted at the smallest entities (micro-enterprises, <10 employees). It covers company basics, energy use, greenhouse gas emissions, workforce profile, remuneration, and basic governance. 
• Comprehensive module: 42 additional datapoints on top of the basic set. This includes climate transition plans, climate risk reporting, human rights policies, and governance diversity. Designed for SMEs up to 250 employees, it reflects the data most frequently requested by investors, banks, and customers. 

How VSME compares to ESRS 

The ESRS framework has four broad categories: 

• Cross-cutting disclosures (general requirements, strategy, due diligence) 
• Environment 
• Social 
• Governance 

Within the broader ESRS framework: 

• VSME covers cross-cutting disclosures, but only at a simplified level. For example, ESRS requires detailed strategy, policies, risk management, and performance indicators. VSME requires a narrative description and limited disclosure. 
• All environmental topics in ESRS are represented in VSME (climate, pollution, biodiversity, water, circularity). However, the level of detail is dramatically reduced. Under ESRS E1, a company may need to disclose GHG emissions intensity, scope 1, 2 and 3 breakdowns, governance oversight, and expenditure plans. VSME requires just scope 1 and 2 emissions, and only scope 3 if relevant. 
• Social disclosures diverge significantly. ESRS requires detailed reporting on impacts to workers in the supply chain (S2), communities (S3), and consumers (S4). By contrast, VSME social metrics only cover the company’s own workforce, such as health and safety or training provisions. 
• Governance is simplified under VSME. ESRS demands full disclosure on business behaviour and corruption prevention. VSME requires companies to report any convictions, and to share brief information on policies. 

In short, VSME provides a simplified ESRS. For SMEs, it offers a credible route to disclose only the most material, directly relevant data. 

Important to know: The VSMEs do not require a materiality assessment, rather disclosures should only be provided when it is applicable and relevant to the undertaking. However, a (double) materiality assessment is still a best practice tool for sustainability strategy and reporting. 

Curious about (double) materiality assessments? Watch our on-demand video where our experts reveal best practices and actionable tips.

What does a VSME journey look like? 

Adopting VSME is not simply about filling in a template. It involves building a sustainability strategy that fits the organisation’s size, resources, and stakeholder expectations. 

The journey usually involves: 

1. Understanding the VSME standard : Assess which data points and disclosures are required. A materiality assessment is recommended to identify which topics are most impactful for your activities.
2. Conducting a gap assessment: Compare existing company data with VSME requirements. Identify missing data points or unreliable processes. 
3. Adding company-specific disclosures: Some customers or banks may request information beyond VSME – for example additional disclosures on value chain workers. Hybrid strategies can combine VSME with other reporting elements.
4. Designing a reporting strategy: Tailor reporting to your situation. Are you aiming for minimum credible disclosure, or positioning for future CSRD reporting? Making a fit-for-purpose approach to your reporting strategy to integrate company ambitions, stakeholder requests and expectations, and reporting maturity is key.
5. Drafting the report: The final step is to produce a structured sustainability report aligned to VSME, enriched with the narrative, policies, data, and context that stakeholders need. 

Case study: Manufacturing SME 

A client case from Nexio Projects demonstrates how VSME can work in practice. 

This manufacturing company, with under 250 employees, was initially in scope of CSRD. They prepared by conducting a double materiality assessment and an ESRS gap analysis. However, following the Omnibus reform they moved out of immediate scope. 

Despite this, they still faced increasing ESG reporting requests from their banking partners and corporate clients. To balance investment with flexibility, they adopted a VSME+ hybrid model. 

• Built their ESG reporting foundation on the VSME comprehensive module 
• Added selected ESRS disclosures, including climate transition planning and specific workforce KPIs 
• Designed reports that could easily expand towards full CSRD ESRS in future if they became in-scope again 

The approach meant they remained credible with clients, avoided over-investment, and aligned their reporting with both immediate and long-term stakeholder expectations. 

Explore our client testimonials and see success stories when it comes to ESG practices such as reporting, certifications, climate action and more.

Key takeaways 

• VSME simplifies reporting for SMEs, reducing disclosures from 1,200+ under ESRS to 92 key data points. 
• The comprehensive module ensures relevance to banks and client requests, making it more practical than the basic module in most cases. 
• Hybrid reporting approaches allow companies to add selected disclosures for stronger interoperability. 
• Performing a materiality assessment remains a best practice lens for prioritisation. 
• Future-proof reporting requires anticipating CSRD scope changes and maintaining flexibility. 

Q&A highlights from the webinar 

Q: If my company is already EcoVadis certified, do we still need a VSME report? 

A: EcoVadis is a sustainability rating system; VSME is a reporting framework. They serve different purposes but are complementary. Companies use ESG reports (and therefore potentially VSME disclosures) to improve EcoVadis results.

Q: Do all disclosures need to be filled in? 

A: No. VSME requires disclosure only where information is relevant and applicable. However, a materiality assessment is highly recommended to prioritise effectively. 

Q: Should we switch from GRI reporting to VSME? 

A: It depends on your strategic focus. GRI reporting standards are globally recognised, while VSME is specifically designed for EU SMEs in the CSRD context. Many organisations use both in tandem. 

Q: What about companies between 250–1,000 employees? 

A: The Commission has announced a new voluntary standard will be developed for this group, based on VSME. Drafts are expected by the end of this year. 

Q: Is there a benchmarking tool for VSME reports? 

A: At present, benchmarking is limited because reporting is new. However, the digital tagging introduced with VSME will soon allow comparability across companies. 

Q: How can very small firms measure scope 1 and 2 data? 

A: Start with utility bills and fuel consumption. Use recognised conversion factors to calculate emissions. This provides a simple yet credible basis for disclosure. 

Q: Are banks expected to require VSME from SMEs? 

A: Yes, the European Commission has encouraged large firms and lenders to base their requests on VSME. Individual banks may add requests, but VSME provides the recognised minimum baseline. 

Get ahead of the curve 

The VSME standard is an important step in bridging the gap between voluntary ESG practices and comprehensive reporting. It gives SMEs the tools to align with a recognised ESG frameworks, meet data requests efficiently, and scale their sustainability strategy when required. 

By using VSME to support stakeholder engagement and prepare for CSRD requirements, smaller organisations can avoid being left behind in the transition to sustainable business. 

Nexio Projects expertise 

Nexio Projects is a leading sustainability consultancy in the Netherlands, supporting organisations worldwide in navigating the fast-evolving ESG regulatory landscape. As a trusted sustainability consultant and sustainability expert, we guide companies through CSRD, ESRS, EU Taxonomy and international frameworks, delivering tailored solutions in ESG reporting, double materiality assessments and compliance strategies. Our strength lies in translating complex regulations into practical, credible reporting processes that enhance transparency and stakeholder trust. 

As a top-ranked boutique ESG advisory firm by Verdantix and a certified B Corporation, Nexio Projects empowers organisations to transition from compliance to purpose. We help companies design smart, scalable ESG reporting approaches – from VSME adoption to CSRD ESRS integration and GRI reporting standards alignment. Ready to lead the way? 

Book a free consultation call today and explore how our ESG reporting services can future-proof your organisation. 

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