As sustainabilityreporting and requirements continue to evolve worldwide, small and medium-sizedenterprises (SMEs) are under growing pressure to measure, disclose, and enhancetheir sustainability performance. The Voluntary Sustainability Reporting forSMEs (VSME) standard aims to simplify and make the sustainability reportingprocess more accessible for smaller companies.
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VSME stands for Voluntary Small- and Medium Enterprises and is a tailored approach to sustainability disclosure designed to fit the size, resources, and capabilities of small and medium-sized businesses. Unlike large corporations that face mandatory and complex sustainability reporting under regulations like the EU’s CSRD (Corporate Sustainability Reporting Directive), VSME is designed to be practical, streamlined, and flexible for smaller companies.
The European Financial Reporting Advisory Group (EFRAG) is the key technical advisor to the European Commission on sustainability reporting standards. EFRAG is currently developing sustainability reporting standards within Europe, which includes the VSME standard as a simplified and proportionate framework to help SMEs disclose sustainability information without overwhelming complexity.
According to EFRAG’s mandate, the VSME standard is intended to:
You can find more about EFRAG’s work on VSME and the ESRS for SMEs on EFRAG’s official website.
1. Rising Stakeholder Expectations
Even if not legally required, SMEs are increasingly expected by customers, suppliers, investors, and regulators to demonstrate responsible business practices. Voluntary sustainability reporting through VSME helps SMEs build trust and credibility in their markets.
2. Simplifies Reporting for SMEs
Many SMEs lack the resources or expertise to comply with the full, detailed sustainability reporting frameworks. VSME offers a scaled-back, practical approach that provides meaningful insights without requiring exhaustive data collection or complex disclosures.
3. Supports Business Growth and Resilience
Engaging with sustainability reporting encourages SMEs to identify risks and opportunities related to environmental and social impacts. This leads to improved risk management, increased efficiency, and a stronger strategic position for the future.
4. Preparation for Future Regulation
As sustainability regulations tighten, the VSME framework serves as a stepping stone, helping SMEs gradually adapt to evolving requirements and develop internal capabilities for reporting.
Adopting VSME typically involves:
Because VSME is voluntary and flexible, companies can tailor their reporting scope and depth based on their unique context and resources.
While VSME lowers barriers, SMEs may still face challenges such as:
The VSME framework, developed under EFRAG’s guidance, is a timely and practical response to the growing sustainability expectations on SMEs. By embracing VSME, small and medium-sized businesses can improve transparency, strengthen stakeholder relationships, and future-proof their operations — all while managing the complexity and resource demands that often hinder sustainability reporting.
CEMAs employs a unique two-pronged approach to ensure you have everything needed to report on VSME. Through the application, you can report, communicate, and quality assure that everything aligns with EFRAG standards.
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