EFRAG VSME Updates: What EU Companies Should Know

As the Corporate Sustainability Reporting Directive (CSRD) continues to shape the sustainability landscape across Europe, EFRAG’s VSME standard is gaining traction as the go-to framework for small and mid-sized enterprises navigating ESG disclosures. In light of the Omnibus proposal published on 26 February 2025, the European Commission is gearing up to adopt the VSME standard, a move that carries important implications for EU-based companies with 251 to 1000 employees.

In this blog, we break down the most recent updates from the EFRAG SRB April 2025 meeting, with a focus on what it means for your VSME reporting journey. At Karomia, we welcome additional clarifications and support the need for a VSME that works for larger organizations, and we believe this latest development marks a step in the right direction.

What is the VSME standard?

The VSME standard, developed by EFRAG, refers to a voluntary sustainability reporting framework specifically designed for non-listed SMEs, initially targeting companies with fewer than 250 employees. However, the Omnibus proposal explicitly paves the way for its expansion to larger SMEs (251–1000 employees).

If your company falls into this bracket, you’re now in scope for VSME application, meaning VSME ESG disclosures are likely to become an expectation, even if not (yet) a legal obligation.

Key VSME Reporting Updates

1. The Commission will issue a recommendation soon

The European Commission is expected to recommend the VSME standard as early as June 2025, providing much-needed clarity for companies navigating voluntary sustainability reporting.

However, its adoption as a delegated act under the broader CSRD VSME framework will depend on the outcome of the ongoing Omnibus negotiations. If further adjustments are deemed necessary for companies with 251 to 1000 employees, a revised version (VSME v2) may be developed in 2026 before formal legal adoption.

💬 Karomia Insight:

We view this phased approach as both pragmatic and necessary. A VSME that works for more complex organizations is crucial, and the Double Materiality Assessment (DMA) remains, in our view, an essential tool to help determine the right scope.

2. New tools are coming — including digital templates and an XBRL taxonomy

The upcoming VSME tool, a digital Excel template, is expected by June 2025, alongside a converter to auto-generate XBRL-based reports. These tools aim to simplify VSME data entry, validation, and reporting.

3. Support guides will clarify disclosure requirements

Three VSME Support Guides are currently in development, targeting:

• - Disclosure C2: Sustainability practices & future initiatives
• - Disclosure C3: GHG emissions and climate targets
• - Disclosure C7: Severe human rights incidents

Scaling the VSME: Room for Sector-Led Innovation

As the VSME expands to mid-sized companies, we at Karomia also recognize the value of industry-led initiatives. There is no one-size-fits-all when it comes to ESG, especially in verticals with unique sustainability challenges.

The EFRAG VSME standard is a strong foundation. But to truly serve larger and more complex companies, sector-specific standards may need to complement the current framework.

Prepare for the Next Phase of VSME Reporting

With the VSME ecosystem rapidly taking shape, EU mid-sized companies need to start preparing for a voluntary but highly strategic phase of sustainability reporting. Whether you’re reporting under CSRD, starting your VSME journey, or exploring VSME standards that suit your business, now is the time to act.

At Karomia, we’re here to help you make sense of these developments and turn them into strategic opportunities, not just regulatory checkboxes.

Ready to explore VSME reporting options tailored to your company?

Get in touch with our team to talk about materiality, tools, or industry-specific ESG approaches that work for you.