EU Adopts Voluntary Sustainability Reporting Standard for SMEs

New VSME Framework Aims to Simplify ESG Disclosures and Support Small Businesses

The European Commission has officially adopted the Voluntary Sustainability Reporting Standard for SMEs (VSME), marking a significant step towards simplifying sustainability disclosures for non-listed micro, small, and medium-sized enterprises across the European Union.

Standard Now Available for Voluntary Use

The VSME, developed by the European Financial Reporting Advisory Group (EFRAG), is now accessible to SMEs seeking to streamline their environmental, social, and governance (ESG) reporting. While the new framework is not legally binding and is separate from the Corporate Sustainability Reporting Directive (CSRD), it comes as a recommended tool to help small businesses respond to growing ESG data requests.

Reducing the Reporting Burden

Officials say the VSME standard is designed to ease the complexities of sustainability reporting, allowing SMEs to address inquiries from large CSRD-listed companies, banks, and investors without facing the cost and confusion of multiple, uncoordinated questionnaires. By providing a simplified structure aligned with the European Sustainability Reporting Standards (ESRS), the VSME supports SMEs in standardizing their ESG disclosures.

Features and Accessibility

Key features of the new standard include coverage of vital ESG topics such as climate, workforce, and resource management. The reporting process is further simplified by a digital template and XBRL taxonomy, enabling companies to submit disclosures electronically. The VSME is available in various languages and is supported by educational materials from EFRAG.

Encouraging Adoption

The European Commission recommends that large companies and financial institutions reference the VSME when requesting ESG data from small businesses. SMEs may adopt the standard immediately to begin reporting on their sustainability performance.

Looking Ahead

Feedback from SMEs and market participants will inform future revisions and potential integration of the VSME into broader EU sustainability frameworks. The Commission hopes that the new standard will facilitate SMEs’ access to sustainable finance and raise their visibility within supply chains and investment portfolios.

For more details, interested parties can visit Commission presents voluntary sustainability reporting standard to ease burden on SMEs - European Commission.