VSME

What it means

VSME is a voluntary sustainability reporting standard for SMEs that are not listed on a stock exchange and are not required to report under CSRD. It was developed by the European advisory body EFRAG as a simplified alternative to the ESRS standards.

The standard has a basic module covering key data on energy, emissions, waste, employees and governance, and a comprehensive module with more detail for companies whose banks or large customers ask for it. The company chooses which scope to use.

The aim of VSME is to give small companies a single way to respond to their partners’ requests. Instead of filling in dozens of different questionnaires from banks and customers, a company can prepare one report that everyone accepts.

How it works in practice

For clients receiving ESG questionnaires from banks or customers, we help prepare data under the VSME basic module. Much of it can be taken from the accounts and payroll: energy use from invoices, headcount, staff turnover or pay gaps.

For emissions we start with scopes 1 and 2, meaning direct emissions and emissions from purchased energy. These can be calculated from fuel and electricity consumption using public emission factors. Scope 3 is more demanding and not required in the basic module.

We recommend preparing the VSME report regularly, once a year alongside the financial statements. Data are then collected throughout the year, and year-on-year comparison shows whether the company is making progress, which banks and investors value.

What to watch out for

Voluntary does not mean quality does not matter. Banks and customers use the data in their own reporting, and inaccurate figures can affect loan terms or business relationships. The data should be verifiable.

EU sustainability reporting rules are changing and being simplified. What large companies may ask of their small suppliers is gradually being limited with reference to VSME, so we keep track of the current state of the rules.