The VSME (Voluntary Sustainability Reporting Standard for SMEs) is the voluntary sustainability reporting standard for small and medium-sized enterprises developed by EFRAG, the technical body that also produced the CSRD's ESRS. Its purpose is to give SMEs that fall outside the mandatory scope of the CSRD a simple, standardised way to report on their environmental, social and governance performance.
The underlying idea is to avoid two problems at once: SMEs being left without a common framework (with every customer or bank asking for data its own way) and SMEs being forced to apply the complexity of the full ESRS, designed for large companies.
What the VSME is and where it comes from
EFRAG delivered the VSME to the European Commission in late 2024. The Commission endorsed it through a Recommendation within the simplification package (Omnibus) and is working to give it legal standing through a delegated act based on that standard. At its core it is voluntary: no SME is legally required to apply it.
That is precisely where its value lies. Instead of improvising answers to each sustainability questionnaire, an SME can report once in a language recognised across Europe and reuse that information with customers, banks and investors. It is the tailored version of the sustainability report for smaller companies.
Who it is for
The VSME is designed for SMEs that do not fall within the CSRD's mandatory scope, in particular:
- Non-listed SMEs that want or need to communicate their sustainability performance.
- Companies that are part of the value chain of a large CSRD-bound company and receive requests for environmental and social data.
- SMEs seeking finance or access to tenders where ESG criteria are already valued.
It does not replace the CSRD or the ESRS: it is a framework proportionate to an SME's size and capacity. For large, in-scope companies, the reference remains the CSRD and the European Sustainability Reporting Standards (ESRS).
The VSME's modular structure
The VSME was designed so you can start with the basics and expand as needed. Its structure is modular:
| Module | For whom | What it covers |
|---|---|---|
| Basic module | The starting point for any SME | Essential information: general data, minimum environmental, social and governance practices, and a limited set of indicators |
| Comprehensive module | SMEs with more advanced information needs or heavy value-chain exposure | Extends the basic one with additional metrics and policies, meant to answer more demanding requests from customers, banks and investors |
This modularity is key: a micro or small company can cover the basic module with reasonable effort, while a medium-sized supplier to large groups can move to the comprehensive module when needed. The principle is proportionality, not exhaustiveness.
How to start with the VSME
Setting up a VSME report follows a simple logic:
- Gather your baseline data: energy, water and fuel consumption, waste and workforce data. Most of it is already in your bills and systems.
- Calculate your starting point: the most requested indicator is usually the carbon footprint. Measuring it first solves much of the basic module.
- Cover the basic module: complete the essential information and add the comprehensive module only if your customers or lenders ask for it.
- Reuse and update: once set up, the report is updated each year and serves multiple requests without redoing the work.
The VSME against the CSRD ripple effect
Although the CSRD only binds large companies directly, its demands pass downstream: those large companies need sustainability data from their suppliers to complete their own reports under the double materiality principle. This is the so-called ripple effect, which already affects thousands of SMEs without the law binding them directly. We develop it in the guide on CSRD for SMEs and the ripple effect in the supply chain.
Here the VSME plays a double role. On one hand, it gives the SME an orderly framework to answer those requests. On the other, under the Omnibus package the VSME becomes the reference cap for what a large company can demand from its SME suppliers: a kind of ceiling that protects small firms from endless, bespoke questionnaires. In practice, the information flowing through the value chain should not exceed what the VSME captures.
The VSME and the Omnibus simplification in 2026
The Omnibus package, whose directive was published in the Official Journal of the EU in February 2026, reduces the number of companies bound by the CSRD and raises the thresholds. This leaves many companies that were going to be in scope outside the mandatory regime.
In that context, the VSME gains prominence as the voluntary, proportionate route for companies that are no longer obliged but still need to communicate their sustainability, under pressure from customers, banks or markets. The Commission is working to give it legal form through a delegated act during 2026. You can see the full set of changes in the article on what the Omnibus package changes in the CSRD, ESRS and CSDDD. The practical takeaway is clear: sustainability reporting will stay relevant for SMEs, mandatory or not, and the VSME is the standard designed to do it without overcomplicating things.
Frequently asked questions
Is the VSME mandatory for SMEs?
No. The VSME is a voluntary standard. No SME is legally required to apply it, although in practice many use it to answer data requests from customers, banks and investors in an orderly way.
What is the difference between the VSME and the ESRS?
The ESRS are the CSRD's mandatory standards for large companies and are detailed and demanding. The VSME is a voluntary standard, much simpler and modular, designed to fit SMEs that fall outside the CSRD.
Does the VSME help me answer my large customers?
Yes. It is one of its main functions. Under the Omnibus, the VSME also becomes the reference cap for what a large company can ask of its SME suppliers, which protects small firms from disproportionate questionnaires.
Start your VSME report with Manglai
The first step of almost any VSME report is measuring your carbon footprint. With Manglai your SME calculates it from its bills and real data, with no manual entry, and generates the sustainability information it needs to answer customers, banks and investors.
