VSME: ESG reporting made simple for SMBs

With sustainability now mainstream, SMBs across Europe are increasingly being asked to provide Environmental, Social and Governance (ESG) data. These requests often come from customers, financial institutions, and supply chain partners – but responding can be challenging.

Most existing sustainability reporting frameworks are complex, costly and resource-intensive, making them difficult for many smaller businesses to use effectively.¹

That’s where the new Voluntary Sustainability Reporting Standard for Non-listed SMEs (VSME) comes in. Compared to the mandatory sustainability reporting requirements for large companies, it offers a simplified, accessible way for smaller businesses to report on ESG topics in a structured, reliable, and credible way.

The VSME was formally adopted as a recommendation by the European Commission in July 2025, having been published by the European Financial Reporting Advisory Group (EFRAG) in December 2024.²

Here are three practical steps to help your business begin using the VSME.

• Do first – assess and choose your module

  Start by evaluating whether the VSME is appropriate for your business – such as whether it is receiving more ESG-related enquiries from stakeholders, or whether a standardised framework would reduce reporting burdens.⁷ Then, assuming it is, decide which module you will use. For beginners, it’s likely the basic module will be most appropriate, before progressing to the comprehensive module over time.⁸

  Another way of looking at it is to consider what you want to get out of the VSME. If you just want to meet general ESG expectations and simplify sustainability reporting, it’s the basic module you most likely want. If you are looking to secure financing from investors concerned about sustainability, or position yourself as a leader in the field, then consider the comprehensive module.⁹

  It’s also worth familiarising yourself with the requirements in advance, and considering whether you should appoint someone internally to manage your ESG reporting.¹⁰

• Do next – capture and organise your ESG data

  Start recording data on the key ESG metrics outlined in the VSME, and consider using a reporting tool to streamline the process. This can make it easier to track data and generate reports aligned with the VSME standard. EFRAG has developed a useful free, open source template to help SMBs with fewer than 250 employees to report ESG information in a structured format.

  You could also let your customers know that you are reporting under the VSME. This can build trust while mitigating unreasonable ESG information demands.

• Do afterwards – publish and refine your ESG report

  Once your report is ready, share it with stakeholders such as customers, suppliers and financial partners. Use this first report as a basis for improvement, updating ESG data regularly to maintain transparency, and refining your approach over time as your sustainability journey progresses.¹¹

The VSME standard provides SMBs with a practical, credible, and scalable way to meet growing demands for ESG transparency. It’s a strong step forward, whether you’re just getting started or looking to future-proof your business against evolving sustainability regulations. If you want to get ahead of the game where other sustainability regulations are concerned, don’t miss our article on Digital Product Passports. These will be a requirement for almost all products sold in the EU and, while implementation is still a little while away, it’s worth keeping on top of the likely expectations so you can prepare your business properly.

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