On 30 July 2025, the European Commission has adopted the sustainability reporting standard ESRS VSME by releasing an official recommendation. The voluntary standard for small and medium enterprises (explaining the name VSME) is intended to help such companies with their burgeoning sustainability-related activities and reporting. The Commission’s recommendation encourages use of the VSME standard.
How has the VSME standard come about?
The reporting standard has been presented in its current form by EFRAG back in December 2024. Considering all the minor and major setbacks EU sustainability legislation has suffered since then – most prominently labelled the Omnibus process – one should appreciate that the VSME standard seems to now have made it over the line. As a voluntary standard the threshold for opponents of sustainability legislation to agitate against it was surely lower but in our current unforgiving political climate such agitation was not unimaginable.
The VSME standard has undergone its own rounds of review and revision. The original draft version of the VSME featured three different modules that users could choose to employ in different setups. We have written about it here. The old arrangement of Basic Module, Narrative-PAT Module, and Business Partners Module was deemed too demanding for the intended users after field testing and the internal review process. Especially regarding the narrative parts, we can confirm as much from projects employing the draft standards with clients. Small companies just starting out on their sustainability work tend to be short on refined internal policies and thus struggle to respond to narrative disclosures asking for precisely such a description of policies.
What is the VSME standard?
Accordingly, the December 2024 version now recommended by the European Commission reflects these shortcomings. The VSME remains a voluntary sustainability reporting standard for small and medium enterprises with up to 250 employees.
It has, however, cut down on the earlier version’s narrative parts in particular. The underlying architecture has also been revised, now featuring two modules instead of three: the Basic Module remains, now accompanied by a Comprehensive Module. Users employ either the first module only or both modules but once they have chosen a module the aim should be to complete all disclosures. The Basic Module forms a baseline for a company’s reporting on its environmental, social, and business conduct issues. The Comprehensive Module complements these issues with disclosures that support the information needs of other (larger) actors that are legally required to report on their sustainability efforts and that would benefit from information provided by VSME users. These actors include business partners in general, corporate clients, and financial market participants.
The most fundamental change besides the reworked arrangement of modules is the withdrawal of materiality assessment. It never had the scope of the double materiality assessment that is part of the ESRS but retained some of its elements. However, it was concluded to be too challenging for small companies to assess the materiality of single sustainability issues in their individual business context. EFRAG replaced the materiality assessment with the notion of applicability. Certain data points are marked with the phrase “if applicable”. This means that if some data point’s information is not relevant for a given company, it can decide to ignore it in its reporting and still complete the respective module.
Altogether, the VSME contains around 140 data points. This is a mere fraction of the 1.000+ data points in the “big” ESRS, a number that was thrown around as excessive ceaselessly by the CSRD’s opponents when the ESRS were first released. Around one third of the 140 data points corresponds directly to data points contained in the larger ESRS. Another third at least uses them as a point of reference. Yet another third has been developed exclusively for the SMEs that are applying the standard.
What does the future look like for the VSME standard?
Even though the VSME has so far survived the Omnibus process untouched, they are not unaffected by it. As said above, the VSME aim at companies with no more than 250 employees while the CSRD and the “big” ESRS, because of the Omnibus process, now apply to companies with no fewer than 1.000 employees. This leaves the range between 250 and 1.000 employees open for now. Going forward, the Commission will adopt a voluntary reporting standard for this scope of companies. It still needs to be developed but will use the VSME as a basis. This makes the VSME reporting standard an intermediary solution for these companies but nevertheless one that users can now rely on as it will not undergo further substantial changes.
How can ImprintX help SMEs?
ImprintX helps businesses with their sustainability reporting across standards, including the VSME, and responding to requests for sustainability data. Its user-friendly dashboard helps SMEs manage and track all data requests efficiently, while integrated step-by-step guidance and expert assistance minimise errors, ensure information accuracy, and support suppliers who may be new to the field. This enables SMEs to reduce their own administrative burden and focus on their core business while demonstrating transparent, trustworthy sustainability practices along their value chain and complying with the latest regulatory recommendations and marketplace expectations.
