What is the VSME standard?
VSME is the Voluntary Sustainability Reporting Standard for non-listed small and medium-sized undertakings, developed by EFRAG. It sets out what a smaller company should disclose about its environmental, social and governance performance, in a form that larger companies and financial institutions can rely on.
Its purpose is proportionality. Rather than applying the full reporting regime designed for large listed groups, a smaller company answers a defined and considerably shorter set of disclosures.
Two modules
The Basic Module (B1–B11)
The foundation of the standard and, for most companies, the scope actually requested. It covers general company information together with core environmental and social data.
- Basis for preparation and company profile
- Energy consumption and greenhouse gas emissions
- Pollution, water, biodiversity and land use
- Waste and circular economy practices
- Workforce characteristics, health and safety, pay
- Convictions and fines for corruption and bribery
The Comprehensive Module (C1–C9)
Additional disclosures for companies whose customers or lenders require a fuller picture, typically larger suppliers and those in sectors under closer scrutiny.
- Business strategy and business model
- Reduction targets and climate transition
- Climate-related risks
- Management of human rights matters
- Additional workforce and remuneration data
- Governance and stakeholder engagement
Why VSME now matters in practice
VSME is voluntary in the sense that no authority obliges a small company to publish such a report. In commercial terms, however, the position is different. Large companies subject to sustainability reporting requirements must describe their value chain, and the information can only come from their suppliers.
The 2026 Omnibus package established VSME as the value chain cap. Where a supplier has fewer than 1,000 employees, a buyer may not request sustainability information beyond the scope of the standard. This protects smaller companies from open-ended questionnaires, and it also means that a properly prepared VSME report is a sufficient answer.
In parallel, European banks have begun to use the Basic Module as a minimum data set when assessing SME lending. A company that has already completed its VSME reporting is therefore better placed in two separate conversations: with its customers and with its lenders.
Frequently asked questions
Is VSME mandatory for my company?
Not as a matter of law. It becomes necessary in practice when a customer, a group parent or a lender requests sustainability information from you, which is increasingly common for suppliers to the European market.
Which module should I complete?
Begin with the Basic Module, which meets most requests. Move on to the Comprehensive Module if your customer or bank has specifically asked for the additional disclosures it contains.
Does the report need to be audited?
The standard does not require assurance. Some buyers may ask for it separately as a condition of their own procurement policy; that is a matter between you and an assurance provider.
How often should it be prepared?
Annually, in line with your financial year. Once the first year is complete, subsequent years are considerably faster because the structure and much of the underlying information are already in place.
From the standard to a finished report
VSMESmart converts the standard into questions you can answer, with explanation and examples at every step.