VSME: A simple alternative to ESRS

February 28, 2025

minutes |

Elena Welsch

VSME significantly reduces the CSRD reporting burden for SMEs compared to the extensive ESRS requirements. With this simplified standard, you save valuable resources and still fulfill all regulatory obligations in compliance with the law.

3 minutes

EFRAG's Voluntary SME Standard (VSME) offers companies from the SME sector a simplified alternative to the ESRS standards. In this article, you will find out what the VSME standard is, how you can benefit from simplified sustainability reporting with VSME, where the differences to ESRS lie and how best to get started with implementation.

In brief

VSME standard: A voluntary framework for sustainability reporting by small and medium-sized enterprises (SMEs).
Relevance: Gains in importance through the Omnibus Regulation as an alternative to the CSRD.
Target group: Non-listed SMEs and companies formerly affected by CSRD that are looking for clear guidelines for their reporting.

Introduction to the VSME standard

The Voluntary Sustainability Standard for SMEs (VSME) was developed by the European Financial Reporting Advisory Group (EFRAG) to offer small and medium-sized enterprises a practicable and flexible option for sustainability reporting.

In contrast to the more comprehensive European Sustainability Reporting Standards (ESRS), the VSME is specifically tailored to the needs and resources of SMEs. This standard enables companies to present their sustainability performance transparently and to meet the increasing demands of investors, banks and business partners.

Main features of the VSME standard

Simplicity: Easy-to-implement reporting requirements for SMEs.
Relevance: Focus on the key sustainability issues for SMEs.
Flexibility: Adaptable to company size and resources

Structure of the VSME standard‍

The VSME standard consists of two main modules that enable companies to report according to their needs and resources:

1. basic modules: Serves as a target for micro-enterprises and as a minimum requirement for small and medium-sized enterprises.

2. comprehensive module: Extends the basic module with additional data points that are requested by banks, major customers and investors.

Basic Module	Comprehensive Module
B1 - Basic information	C1 - Strategy & Sustainability
B2 - Relevant policies & practices	C2 - Description of relevant policies & practices

Environment:

B3 - Energy and greenhouse gas emissions	Supplement B3 with Scope 3 emissions
	C3 - GHG reduction targets and climate transition
	C4 - Climate risks
B4 - Pollution of air, water and soil

B5 - Biodiversity

B6 - Water consumption and withdrawal

B7 - Resource use, circular economy and waste management

Social:

B8 - Own workforce	C5 - Supplementary information on the workforce
	C6 - Human rights policies and practices
	C7 - Serious human rights violations
B9 - Occupational health and safety

B10 - Remuneration, collective bargaining, training

Corporate policy:

B11 - Convictions and fines for corruption and bribery	C8 - Revenue from critical sectors

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VSME vs. ESRS - the most important differences

While ESRS represents comprehensive and mandatory requirements for large, listed companies, the VSME standard offers a simplified and voluntary alternative for non-listed SMEs. This enables smaller companies to present their sustainability performance without excessive administrative effort .

Aspect	ESRS	VSME
Area of application	Mandatory for large companies (subject to CSRD) in the EU	Voluntary for non-listed SMEs
Scope	Wide range of topics: Climate change, biodiversity, social issues, governance	More focused, less detailed requirements
Structure	More comprehensive structure with Set 1 of the Full ESRS	Basic and Comprehensive Modules
Materiality analysis	Requires a comprehensive double materiality analysis	Not required, but recommended ("if applicable" principle)
Data points	466 mandatory data points, 191 voluntary data points	Reduced number of mandatory data points (approx. 40 data points in the Basic and 35 in the Comprehensive module)
Resource expenditure	High expenditure, often with the use of external consultants	Developed for implementation with existing resources, lower costs
Flexibility	Strict requirements for companies subject to reporting obligations	Companies can decide whether and to what extent they report

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Significance of the VSME standard according to the Omnibus Regulation

The introduction of the Omnibus Regulation has changed the regulatory landscape for sustainability reporting. Many companies that were previously subject to the Corporate Sustainability Reporting Directive (CSRD) are now subject to new regulations. The VSME standard serves as a voluntary alternative and offers these companies clear and practicable guidelines for their reporting.

Timetable and current status of the VSME standard

EFRAG published the final draft of the voluntary sustainability reporting standards for non-listed SMEs on December 17, 2024.

Overview of the timetable for the VSME standard

Preparation for VSME reporting

To successfully implement the VSME, companies should consider the following steps:

Inventory: Examination of the extent to which existing processes comply with VSME requirements.
Team training: Ensure that all relevant employees understand the new requirements.
Process adaptation: Adaptation or introduction of processes for data collection and reporting in accordance with VSME.

How companies benefit from VSME

The VSME standard offers SMEs a structured, resource-saving option for sustainability reporting. As a result of the Omnibus Regulation, it is becoming increasingly important as an alternative to CSRD and makes it easier for SMEs to get started with ESG reporting.

At the same time, ESG remains a decisive competitive factor. Investors, banks and customers increasingly expect transparency on sustainability issues. Companies that focus on ESG now will benefit in the long term through better access to financing, a stronger market position and a positive corporate image.

With its AI-powered ESG software, Planted supports companies in implementing the VSME standard and accompanies you with an experienced team of experts at every step of your reporting. Book a free demo now.