VSME: the ESG standard SMEs can no longer ignore

[INDICE]

1. What is VSME and why it is set to become a fundamental benchmark
2. Who is VSME for: size thresholds and eligibility
3. Why SMEs should adopt VSME, even without a legal obligation
4. How the VSME standard is structured and where to begin
5. VSME and the Omnibus Package: navigating the evolving regulatory framework
6. How to adopt the VSME without wasting resources: where to begin?
7. ImpACT: Ecoloop’s software for structured and effective VSME management

VSME (Voluntary Sustainability Reporting Standard for non-listed SMEs) is the ESG reporting framework developed by EFRAG under the European Commission’s mandate, with the final version released in December 2024.

It is specifically designed for non-listed SMEs (micro, small and medium-sized enterprises) which, until now, lacked a tool tailored to their scale for credibly communicating their environmental, social and governance performance.

In short: the VSME serves as the sustainability report for SMEs. It does not replace major frameworks like the ESRS (European Sustainability Reporting Standards) or the CSRD (Corporate Sustainability Reporting Directive); instead, it acts as their natural complement for businesses operating within the value chains of large organizations.

The VSME is intended for non-listed enterprises that do not exceed at least two of the three size criteria defined by Directive 2013/34/EU.

• Micro-enterprises: total assets up to €450K, net turnover up to €900K, fewer than 10 employees
• Small enterprises: total assets up to €5M, net turnover up to €10M, fewer than 50 employees
• Medium-sized enterprises: total assets up to €25M, net turnover up to €50M, fewer than 250 employees.

Large companies subject to sustainability reporting standards, such as VSME, ESRS and CSRD, must also account for the impacts generated by their suppliers. This means that any supplier unable to provide structured and verifiable ESG data faces a real risk of being excluded from the supply chain.

The same principle applies to the banking system: today, credit institutions use ESG data to access a company’s risk profile. Adopting the VSME standard can lead to more favorable credit terms and streamlined documentation for financing. The standard’s explicit goal is precisely this: to meet the needs of banks and investors, making it easier for SMEs to access capital.

One of the most significant features of the VSME is its modular approach, designed to avoid burdening companies with requirements that are disproportionate to their available resources.

The standard is structured into two levels:

Basic Module (B1-B11)

This serves as the mandatory starting point and covers 11 essential disclosure points across the three ESG pillars (Environmental, Social, Governance). On the environmental front, section B3 requires reporting on energy consumption and GHG emissions (Scope 1 and Scope 2). On the social front, it monitors occupational health and safety, workforce characteristics and the gender pay gap. Regarding governance, it focuses on transparency concerning anti-corruption. The primary simplification compared to full ESRS is the absence of a mandatory double materiality assessment: companies can begin the process without the need for highly complex preliminary analyses.

Full Module (C1-C9)

Aimed at companies facing more demanding stakeholders (large clients, investors or credit institutions), this module adds in-depth disclosures on climate risks, human rights within the value chain, GHG reduction targets and diversity in administrative bodies.

The Basic Module is a prerequisite for the Full Module: companies first establish their baseline and then preogressively expand their reporting.

The European regulatory landscape is evolving rapidly and within this context the VSME is emerging as a stable benchmark for SMEs. The “Omnibus Package” (February 2025) raised the CSRD threshold to 1000 employees, while the “Stop the Clock” initiative granted a two-year extension on reporting obligations for certain categories of companies.

Howeever, starting in July 2028, the CSDD (Corporate Sustainability Due Diligence Directive) will still require large corporations to collect ESG data from their suppliers. For all companies falling outside the scope of the CSRD, the European Commission explicitly points to the VSME as the voluntary standard of choice. It is not fallback option, but rather the officially recommended tool for maintaining a competitive edge within  global supply chains.

For SMEs approaching the VSME for the first time, a progressive approach is the most effective strategy. First, it is essential to clarify the strategic drivers behind adopting the standard , whether it’s a request from a lender, a key client or an investor, as this clarity will help define your operational priorities.

The next step is to implement the Basic Module, gathering the essential data needed to establish a reliable baseline. There is no need to tackle the entire process at once: the key is to begin the collection process, maintain rigorous documentation and focus incremental improvement year after year.

To support this journey, leveraging dedicated digital tools helps minimize errors and accelerates the calculation of more technical KPIs. In this regard, ImpACT – the cloud-based SaaS platform developed by Ecoloop – offers a practical solution for SMEs looking to structure their environmental performance reporting in an efficient and scalable way.

ImpACT features a dedicated VSME module that allows users to collect and organize all required disclosures, structure ESG KPIs and integrate data from other modules within the suite, such as LCA, Carbon Footprint and Ecodesign. This eliminates double data entry and potential errors. The result is reporting that is ready to meet the demands of clients, banks and supply chains, in full compliance with the European regulatory framework.