The VSME Standard: What It Is and Who Should Report

The VSME, the Voluntary Sustainability Reporting Standard for non-listed small and medium-sized undertakings, is a free, voluntary ESG reporting framework developed by EFRAG at the request of the European Commission, giving non-listed SMEs a single standardised way to answer sustainability data requests from banks, insurers and large corporate customers. It was delivered to the Commission on 17 December 2024 and adopted as Commission Recommendation (EU) 2025/1710 on 30 July 2025.

In short:

• VSME is voluntary. No SME is legally required to publish a VSME report.
• It is structured in two modules. The Basic Module covers eleven disclosures, B1 to B11.
• It requires no double materiality assessment, the single biggest simplification versus CSRD reporting.
• Under Omnibus I it also functions as a ceiling: a limit on what larger companies may demand from you.

Why are SMEs being asked for ESG data at all?

Because the pressure comes from customers and lenders, not from regulators.

The Omnibus I package narrowed the Corporate Sustainability Reporting Directive to companies above roughly 1,000 employees. If you employ 50 to 500 people, CSRD almost certainly does not apply to you.

That changed nothing about the requests landing in your inbox. Your largest customer still needs supplier emissions data to compile its own report. Your bank still needs ESG indicators to price a loan. Your insurer still asks. None of those requests disappeared when the directive narrowed. They simply stopped being backed by a reporting obligation on your side, and started being backed by commercial leverage.

That is the gap VSME was built to close.

What is the Omnibus I value chain cap?

It is the rule that stops large companies from demanding unlimited ESG data from their smaller suppliers.

Before it existed, an SME supplying five large customers could receive five different questionnaires, in five formats, asking for overlapping data in incompatible units. Each one cost time. None of them was reusable.

Under Omnibus I, VSME becomes the reference point for how much sustainability information can be requested from companies below the CSRD threshold. In practice this turns VSME into something more useful than a disclosure format: a standard answer you prepare once and reuse. When the next questionnaire arrives, you send the report instead of starting over.

This is the part most SMEs miss. VSME is not only a reporting framework. It is also a defence against scope creep in your customer relationships.

Who is the VSME standard for?

It was designed and tested for non-listed undertakings with fewer than 250 employees, including micro-enterprises. EFRAG has been explicit that it was not tested on larger or more complex organisations.

In practice, adoption has run wider than the design brief. Companies in the 250 to 500 employee range use it because nothing better exists for their size, and because their customers accept it.

It fits you if:

• You are not inCSRD scope
• Customers, banks or insurers are asking for ESG data
• You want one structured answer instead of many ad-hoc ones

It does not fit you if you are already in CSRD scope. In that case you report under ESRS, and VSME is not a substitute.

What is in the Basic Module (B1 to B11)?

Eleven disclosures across general information, environment, social and governance.

The Basic Module is deliberately number-heavy and narrative-light. Most of what it asks for already exists somewhere in your business: electricity and gas invoices, fuel receipts, waste transfer notes, HR headcount records, payroll data.

A Comprehensive Module sits above it for companies whose banks or investors ask for more depth. Most SMEs do not need it in year one.

What VSME does not require

This section matters more than most people expect, because the reporting burden SMEs fear usually comes from things VSME leaves out.

• No double materiality assessment. The single heaviest exercise in CSRD reporting is absent. You do not need to map impacts, risks and opportunities across stakeholders before you can begin.
• No mandatory Scope 3 emissions. Value chain emissions are the hardest category to calculate and the easiest to get wrong. The Basic Module does not compel them.
• No assurance requirement. VSME reports do not have to be audited. Many companies still want them prepared to a standard that would survive scrutiny, which is not the same as being audited.
• No obligation to report everything. If a disclosure does not apply to your business, you state that it does not apply and move on. A software company in a city office is not required to invent biodiversity data.
• No fee. The standard and EFRAG's template are free.

What data do you actually need?

For a first Basic Module report, most of the effort sits in four places.

1. Energy. Twelve months of electricity, gas, district heating and fuel consumption, per site. Read from invoices, not estimates.
2. Emissions. Scope 1 from your own combustion and vehicles, Scope 2 from purchased energy. Both location-based and market-based figures where your supplier contracts allow.
3. Workforce. Headcount in full-time equivalents, gender breakdown, employment contract types, accident figures, training hours.
4. Waste and water. Quantities by type and destination, water withdrawal by site.

The most common first-year mistake is starting with a spreadsheet template and discovering in month two that half the invoices are missing. Gather the source documents first. The structure is the easy part.

How long does a first VSME report take?

Plan in weeks rather than days, and expect most of that time to be waiting rather than working.

The elapsed time is dominated by chasing: waiting for a utility to reissue an invoice, for a site manager to confirm a figure, for HR to reconcile headcount definitions between payroll and the org chart. Actual hands-on effort is far smaller than elapsed time suggests.

Second-year reports take a fraction of the first, because the collection routine already exists.

What is changing in 2026?

The framework is still moving, and anyone telling you it is settled is not reading the source documents.

EFRAG has stated that VSME was delivered as technical advice and will not be issued as a Delegated Act. It currently exists as a Commission Recommendation. You will find sources online claiming VSME has already been adopted as a delegated act. As of mid-2026 that is not accurate.

What is genuinely in motion: the Commission published a consultation draft on 6 May 2026 for a voluntary standard tied to the value chain cap. Compared with EFRAG's December 2024 text, the draft would extend scope up to 1,000 employees and simplify several disclosures, including removing GHG intensity from B3 and removing quantitative biodiversity datapoints from B5.

What this means for you: the direction of travel is toward less required data, not more. That is an argument for starting now rather than waiting. The disclosures most likely to be simplified are the ones SMEs find hardest, and nothing in the draft suggests the core energy, emissions and workforce metrics are going anywhere.

Frequently asked questions

Sources

• EFRAG, Voluntary reporting standard for SMEs
• EFRAG, SMEs and Sustainability Reporting
• EFRAG Knowledge Hub, interactive VSME
• Commission Recommendation (EU) 2025/1710 on the VSME standard, 30 July 2025

Last reviewed: July 2026.