The VSME: An Accessible Reporting Standard
The Corporate Sustainability Reporting Directive (CSRD) requires large companies to report on sustainability. This also affects their customers and suppliers, who increasingly need to provide sustainability data.
Research from the New Finance research group, part of The Hague University of Applied Sciences’ Centre of Expertise Digital Operations & Finance, shows that by the end of 2024, 24% of Dutch SMEs already receive such data requests. For companies with more than 50 employees, this rises to 65%.
This highlights the growing demand for transparency in business relationships. The Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) provides companies with a valuable tool to respond efficiently to these data requests. But how does the VSME work in practice? Let’s walk through the key aspects.
What is the VSME?
The VSME is a voluntary sustainability reporting standard designed for non-listed small and medium-sized enterprises (SMEs). It helps businesses prepare sustainability reports and meet data requests from large corporations, investors, and banks.
The VSME covers the same sustainability topics as the European Sustainability Reporting Standards (ESRS) under the CSRD, but is tailored to the limited resources and staff capacity of smaller companies. This makes it a more accessible alternative.
How Does the VSME Work?
Unlike the CSRD, the VSME does not require a materiality assessment. Companies only report on sustainability issues they consider relevant, while other topics can be omitted without explanation.
The VSME consists of two modules:
- Basic Module – Provides a simple structure with minimal reporting requirements, ideal for micro-enterprises (fewer than 10 employees) and companies new to sustainability reporting. It includes basic information on:
- Energy consumption and greenhouse gas emissions (Scopes 1 & 2)
- Air, water, and soil pollution
- Biodiversity and resource use
- Circular economy and waste management
- Working conditions (health and safety) for employees
- Anti-corruption measures.
- Extended Module – Includes additional data points often requested by banks, investors, and large business partners, allowing companies to report in more detail on:
- Scope 3 emissions and reduction targets
- Climate risks and transition strategies
- Diversity and inclusion within the workforce
- Human rights policies and incidents
VSME vs. ESRS: Key Differences
Compared to the ESRS (the CSRD reporting standard), the VSME uses simpler language, making it more accessible to companies with limited ESG expertise. It provides practical support, including data templates, definitions, sample calculations, and references to relevant secondary sources. And it offers greater flexibility, as companies can choose relevant topics without mandatory reporting on all ESG factors.
What’s Next for the VSME?
The European Commission has announced that the VSME will be updated under the new Omnibus legislation. However, it remains valuable for companies to consider using the current VSME standard, especially those already preparing for CSRD compliance. We are closely monitoring these updates and will keep you informed!