What is VSME?

VSME, explained simply

VSME stands for Voluntary Sustainability Reporting Standard for SMEs, a reporting framework published by EFRAG, the same body that developed the mandatory ESRS standards used under the EU’s Corporate Sustainability Reporting Directive (CSRD).

Unlike CSRD, which is legally binding for large companies, VSME is voluntary. It was designed for a specific, common problem: small and medium-sized businesses that aren’t legally required to report on sustainability, but are being asked to anyway — usually by a bank assessing lending risk, a larger corporate customer managing its own CSRD supply-chain disclosures, or an investor doing due diligence.

Why it exists

Before VSME, an SME facing one of these requests had two bad options: build a report from scratch with no standard template to follow, or attempt to comply with the full CSRD/ESRS framework — built for large, listed companies and far more detailed than an SME actually needs. VSME closes that gap with a simplified, purpose-built standard.

What it covers

VSME is structured in two modules:

• Basic Module — a small set of core disclosures covering energy use, emissions, workforce data, and basic governance/business conduct information. Designed to be achievable without specialist sustainability staff.
• Comprehensive Module — additional, more detailed disclosures for companies that want to go further — often because a specific stakeholder (an investor, a large customer) has asked for more depth.

Most SMEs using VSME for the first time start with the Basic Module and only move to the Comprehensive Module if a specific relationship requires it.

Who actually needs it

Technically, no one is legally required to report under VSME — it’s voluntary by design. In practice, three groups tend to adopt it:

1. SMEs that supply larger companies subject to CSRD, and need to provide sustainability data upstream.
2. SMEs seeking financing, where lenders increasingly factor ESG data into credit decisions.
3. SMEs that fell out of CSRD’s scope after the EU’s Omnibus simplification package raised the mandatory reporting threshold, but had already begun preparing — VSME lets that work carry over rather than going to waste.

How software fits in

Because VSME is new, most SMEs have no in-house process for it. That’s the gap the vendors on this site fill — turning a fairly abstract disclosure standard into a guided, fillable workflow, usually without requiring a sustainability consultant.