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The Voluntary Sustainability Reporting Standard for Non-Listed SMEs (VSME) is a simplified ESG framework developed by EFRAG to help small and medium-sized businesses report on their sustainability performance.
Unlike larger corporations, SMEs often face challenges with complex reporting requirements. The VSME standard makes sustainability reporting more accessible, offering a proportional, practical, and flexible approach tailored for businesses outside the scope of CSRD (Corporate Sustainability Reporting Directive).
By adopting the VSME framework, SMEs can improve transparency, gain trust, and future-proof their operations in a fast-evolving regulatory environment.
The VSME reporting standard is designed for non-listed micro, small, and medium-sized enterprises (SMEs) across all sectors. Whether you’re in manufacturing, retail, or services, the VSME tool provides a structure to disclose your ESG performance in line with stakeholder expectations, without needing to fully adopt the ESRS (European Sustainability Reporting Standards).
While the VSME is sector-agnostic, it allows for industry-specific flexibility. For example:
The VSME ESG reporting framework includes two modular paths to suit businesses of different sizes and sustainability maturity: a Basic Module and a Comprehensive Module.
Ideal for micro and small enterprises or first-time reporters, the VSME basic module focuses on fundamental ESG metrics, like energy use, waste, and workforce policies. It keeps the barrier to entry low, while still aligning with common stakeholder requests.
The VSME comprehensive module is for medium-sized enterprises or those working with banks, investors, or larger corporate clients. It includes deeper disclosures, such as climate risk, value chain sustainability, and Scope 3 emissions.
Once a company selects a module, it must apply it in full, reporting only on topics that are relevant. This keeps VSME reporting flexible but focused.
Explore the VSME standard EFRAG published for a detailed overview of both modules.
Both VSME and ESRS are part of the EU’s sustainability reporting landscape, but they serve different purposes.
The European Sustainability Reporting Standards (ESRS) apply under the CSRD and are mandatory for large and listed companies. These require granular data across multiple topics, from biodiversity to climate transition plans.
The VSME standard by EFRAG is voluntary and focuses on proportional, relevant disclosures. It enables SMEs to participate in ESG efforts without the heavy lift of ESRS compliance.
The Omnibus regulation has reinforced VSME as the preferred ESG reporting tool for companies with fewer than 1,000 employees, encouraging its adoption across Europe.
VSME vs ESRS boils down to complexity: ESRS is deeper and broader, while VSME offers a lighter, focused entry point for SMEs just starting their ESG journey.
Even though the VSME ESG standard is voluntary, it’s quickly becoming a strategic tool for forward-thinking SMEs. Here’s why:
Under CSRD, large companies must collect ESG data from suppliers. Using the VSME tool, SMEs can speak the same language and avoid being excluded from procurement processes.
Banks and investors are increasingly focused on ESG data. The VSME reporting framework helps SMEs respond quickly and credibly to these requests, without starting from scratch.
VSME isn’t just about compliance. It helps SMEs identify risks, measure sustainability progress, and build a stronger, more resilient business.
Today’s buyers value transparency. VSME reporting allows SMEs to differentiate themselves, share ethical practices, and build trust.
VSME aligns with CSRD principles, making it a no-regret move if regulatory thresholds change. Start now, grow later. Learn more about preparing your VSME report and why early adoption matters.
VSME reporting doesn’t need to be overwhelming. With Karomia’s AI-powered platform, you can go from scattered documents to a structured, shareable VSME report, without getting lost in the regulation. Here’s how to get it done in five streamlined steps:
Before diving in, gather what’s already available. Karomia makes use of existing documents, invoices, utility bills, HR policies, or sustainability memos, to kickstart your VSME report. You probably have more data than you think.
Once your documents are uploaded, Karomia automatically defines your reporting scope based on your business profile. Using your inputs and publicly available data, the platform prefills a large portion of your VSME disclosures, saving time and ensuring nothing essential is missed.
You don’t need to go line by line. Just focus on what’s still incomplete.
Karomia’s AI assistant guides you through the rest, offering tips, examples, and sourcing suggestions for each missing data point.
Invite colleagues or external advisors directly into the platform. Use comments, tags, and status tracking to coordinate input and maintain quality control. You stay in charge of final validation. We make collaboration easy.
Once complete, generate your report in PDF, Excel, or via API, perfect for financial partners, customers, or internal stakeholders. You can even publish an interactive ESG dashboard on your website as your company’s sustainability passport.
Due to the Omnibus update, the VSME standard is quickly gaining ground. It’s being adopted by Wave 2 companies and SMEs responding to supply chain and investor pressure.
In the coming years, expect:
The VSME is here to stay, and adopting it now means staying ahead, not catching up later.
VSME is a voluntary, simplified ESG standard for SMEs, while ESRS is mandatory under CSRD for large and listed companies. VSME focuses on proportional disclosures, while ESRS requires detailed and comprehensive ESG data.
The VSME Basic Module is for small or first-time reporters and covers core ESG topics. The Comprehensive Module adds advanced disclosures like Scope 3 emissions and is ideal for SMEs working with investors or large clients.
No, VSME reporting is currently voluntary. However, it is recommended by the EU’s Omnibus regulation for companies with fewer than 1,000 employees and is increasingly expected by stakeholders.
Yes. Even low-impact sectors face ESG data requests from banks or clients. VSME helps all SMEs report clearly and efficiently, regardless of industry.
Yes. VSME is aligned with CSRD, offering a simplified framework based on ESRS topics, tailored for SMEs not in scope of mandatory reporting.
VSME reports should be updated annually, ideally aligned with your financial year. Reuse of data is allowed if no material changes occurred.