As EU sustainability requirements increase, many companies have started to ask themselves the question: What is VSME reporting and how does it affect us?
Here we go through the basics, why it is relevant and how both small and large companies can benefit from it.
What is VSME?
VSME stands for Voluntary Standard for Sustainability Reporting by Small and Medium-Sized Enterprises. It is a framework developed by the European Financial Reporting Advisory Group ( EFRAG ) to facilitate sustainability reporting by small and medium-sized enterprises.
The aim is to provide companies with a simpler and proportionate way to report on their sustainability performance, without the same extensive requirements that apply under the Corporate Sustainability Reporting Directive ( CSRD ).
Why is VSME reporting needed?
More and more large companies are already subject to CSRD and they in turn have to report sustainability data from their entire value chain. This means that even smaller suppliers and partners often need to demonstrate their sustainability performance.
But VSME is not just for SMEs, following the recent relaxation of CSRD requirements, we see that even larger companies can use the VSME framework as a smart tool to gradually prepare for full ESRS reporting.
With the VSME standard, companies can:
- Demonstrate transparency on environmental, social and governance (ESG) issues.
- Meeting customer and investor demands for sustainability data.
- Strengthen its brand through clear communication on sustainability.
- Prepare for future ESRS reporting - regardless of size.
Difference between CSRD and VSME
- CSRD is a legal requirement for large companies and involves detailed reporting under the European Sustainability Reporting Standards (ESRS).
- VSME is voluntary, simpler and adapted for smaller companies - but can also be used by larger companies that want to test processes and build internal capacity for future requirements.
What does a VSME report cover?
A VSME report may include:
- Basic company information and sustainability policy.
- Environmental impacts, such as energy use, CO2 emissions and waste management.
- Social issues, such as working conditions, gender equality and diversity.
- Governance, such as business ethics, transparency and risk management
How to get started?
- Map the current situation - what sustainability data already exists in the business?
- Identify key areas - what is most relevant to your stakeholders?
- Collect and structure data - preferably with digital tools or AI support to reduce administration.
- Produce a report according to the VSME standard and use it both internally and externally.
Conclusion
VSME reporting is not only an opportunity for small companies to demonstrate accountability and meet customer requirements - it is also a valuable tool for larger companies that want to build up procedures and processes before full ESRS reporting becomes mandatory.
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