Simplified Sustainability Reporting for Small and Mid-Sized Enterprises in the EU

04 Jun 2026

On July 30, 2025, the European Commission adopted a recommendation promoting the use of the Voluntary Sustainability Reporting Standard for SMEs [1] (VSME) to facilitate access to environmental, social and governance (ESG) disclosures.

While certain large companies remain subject to the EU’s Corporate Sustainability Reporting Directive (CSRD), SMEs, though outside its mandatory scope, are increasingly asked by banks, investors, and supply chain partners to provide sustainability information. In the absence of a unified framework, these requests often become fragmented and burdensome.

To address this gap, the European Commission endorsed the VSME through a dedicated recommendation, encouraging its voluntary adoption by non-listed SMEs. Developed by the European Financial Reporting Advisory Group (EFRAG), this voluntary framework offers SMEs a practical and proportionate approach to disclosing their ESG performance.

Who Is the VSME Standard Designed For?

The VSME is originally aimed at SMEs and micro-undertakings that currently do not fall within the mandatory scope of EU’s Corporate Sustainability Reporting Directive (CSRD) to address sustainability information requests from larger companies and provide a common framework to reduce fragmented reporting requests. However, companies that may fall outside the scope of CSRD under proposed regulatory simplifications could also consider applying this standard.

The table below provides an indicative, non‑binding perspective on how different company categories may approach sustainability reporting in the current regulatory environment.

Company category	Indicative sustainability reporting approach
Companies remaining within the scope of CSRD following the Omnibus reforms (EU and non‑EU)	European Sustainability Reporting Standards (ESRS) and, where applicable, EU Taxonomy
Large companies relieved from revised CSRD scope under the Omnibus reforms	Voluntary adoption of selected ESRS topic disclosures, aligned with double materiality principles and, where relevant, EU Taxonomy (Or) Upcoming voluntary sustainability reporting frameworks for non-SME companies outside CSRD scope
SMEs and Micro-enterprises facing "trickle-down" ESG data requests	VSME as the primary framework; additional reference to frameworks such as GRI where required by stakeholders

 

For SMEs, VSME offers a proportionate starting point, credible enough for stakeholders without the complexity of full CSRD reporting.

How the VSME Standard Is Structured

Area	Key features
Modules of Reporting	Basic Module: Covers minimum information reported on ESG topics often requested by banks, buyers, and stakeholders. Comprehensive Module: An optional module provides additional disclosures for SMEs with more advanced sustainability practices or supply chain needs.
“If Applicable” Principle	Makes the reporting flexible: Companies are only required to disclose information when the related condition applies to them, allowing for more flexible and proportionate reporting.
Additional Information	Additional metrics may be included to address sector- or company-specific sustainability issues.
Assurance	Assurance under VSME is voluntary. Limited assurance may be considered, with reasonable assurance for mature metrics such as GHG emissions, as per stakeholders’ demands.

Key ESG Topics Covered by the VSME Standard

The VSME structure consists of two main modules: the Basic Module (11 disclosures) and the comprehensive module (9 additional optional disclosures).

Category	Basic Module - Fundamental	Comprehensive Module - Advanced
Purpose	Entry point to sustainability reporting and represents the minimum requirements. It comprises eleven disclosures covering ESG topics	Builds on the basic module with additional reporting requirements that are relevant for stakeholders such as banks and investors.
General Information	Company information and selection of report type (e.g. individual or consolidated) Information on existing practices, policies, and initiatives for a sustainable economy	Business model and strategy Detailed practices & transition plans
Environmental	Energy consumption GHG emissions (Scope 1 & 2) Pollution (Emissions to air, water and soil) Water usage Biodiversity Resource use, circular economy and waste management	Value chain emissions (Scope 3) GHG reduction targets Narrative disclosure of key physical and transition climate risks, where relevant.
Social	Key figures on Workforce Health & safety Remuneration, collective bargaining and training	Additional workforce data Human rights policies Human rights incidents
Governance	Convictions and fines for corruption and bribery	Revenues from certain activities and exclusion from EU reference benchmarks Gender diversity in governance body

Getting Started with VSME: A Practical Adoption Approach

A structured, step‑by‑step approach can significantly reduce complexity.

1. Select the appropriate module (Basic or Comprehensive): Based on your organization’s size, resources, and stakeholder expectations.
2. Conduct a Gap Analysis: A good starting point is to assess existing sustainability‑related information against the VSME requirements. In many cases, relevant data already exists across environmental management, quality systems, or health and safety processes. A gap analysis helps identify what can be leveraged and where additional information is needed.
3. Focus on Material Sustainability Topics: VSME reporting is designed to allow companies to concentrate on the sustainability issues most relevant to their operations and stakeholders. Unlike CSRD, a double materiality assessment is not mandatory for VSME reporting. However, applying the comprehensive module can support more robust risk identification and decision‑making.
4. Optimize data collection: One of the most common challenges faced by companies is fragmented or inconsistent data. VSME implementation is most effective when data‑collection processes remain lean and integrated into existing workflows. Where gaps exist, in-built or external software tools can support efficient data collection, improve consistency, and reduce manual effort.
5. Build a reporting structure: The final step is to create a reporting structure that meets VSME requirements while reflecting the organization’s size, maturity, and business model. A clear and proportionate framework supports compliance and provides a scalable foundation for future sustainability or regulatory reporting needs.

VSME as a Strategic Opportunity

The VSME Standard represents a strategic opportunity for companies seeking credible sustainability reporting without the complexity of full CSRD compliance. It enables organizations to structure existing sustainability information within a coherent and proportionate framework, improve data consistency, and reduce ad‑hoc information requests from customers and business partners. The key is selecting the approach that best reflects the company’s size, maturity, and ambitions whether voluntarily deepening alignment with selected ESRS disclosures over time or adopting VSME as a long‑term, fit‑for‑purpose alternative.

Need Support?

Intertek is here to support you, whichever path you choose, helping you move forward with clarity and confidence. Our experts help companies navigate VSME and CSRD from gap analysis and materiality scoping through data collection optimization, reporting structure design, and readiness assessments, while building trust, resilience, and competitiveness.

 

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[1] Commission recommendation on a voluntary sustainability reporting standard for small and medium-sized undertakings (VSME).