The landscape of sustainability reporting has shifted. With the April 2025 approval of the Omnibus package, the thresholds for CSRD compliance were raised, meaning many companies previously within its scope are no longer directly required to report.
So what to do if you no longer fall in the CSRD scope if you just started with sustainability reporting? The VSME offers the solution. The VSME is a voluntary sustainability reporting standard developed by European Financial Reporting Advisory Group (EFRAG) for non-listed micro, small, and medium-sized enterprises to help them communicate their sustainability efforts in a more simplified way. This article outlines what the VSME entails, who it is for, and how organisations can apply it effectively.
What is the VSME?
The VSME brief for Voluntary Sustainability Reporting Standard for Non-Listed Micro-, Small- and Medium-Sized Enterprises, is a voluntary reporting framework developed to support micro, small, and medium-sized enterprises that are not subject to CSRD requirements. It provides a standardised approach to ESG reporting, allowing companies to disclose relevant environmental, social, and governance information without the complexity of larger frameworks such as CSRD.
The standard aligns with the European Commission’s SME Relief Package from September 2023, aimed at easing regulatory pressure on smaller businesses while supporting the transition to a sustainable economy. With increasing expectations from stakeholders, financial institutions, and supply chains, the VSME helps SMEs respond to ESG requests in a consistent and credible way.
For who is it for?
Initially designed for Non-Listed SMEs not subject to CSRD, the VSME framework has gained traction following the Omnibus announcement, which narrowed the scope of CSRD, leading many companies to seek alternative solutions.
A KPMG study indicates the VSME framework's increasing adoption and significance, with 35% of companies engaged in voluntary sustainability reporting choosing it for its relevance and accessibility across various sectors.
The benefits of VSME for your organization
Here are three main benefits of adopting VSME:
- Flexibility - VSME offers a voluntary framework that establishes a clear minimum baseline for sustainability reporting, allowing your company to demonstrate its commitment without the legal obligation. It also provides the flexibility to add additional relevant content specific to your business context and stakeholder needs.
- A recognized, simplified approach - Seen as a simpler version of the CSRD, VSME helps smaller businesses follow EU rules with a short report. This avoids the big demands of double materiality assessments (which look at both the company's impact on the world and how the world affects the company) and the need for third party audits.
- Market differentiation - Early adoption can set your company apart in many industries, as it covers key sustainability data points increasingly requested by investors, customers, and business partners.
How is the VSME structured?
The VSME consists of two modules, allowing companies to tailor their approach to their ambition, available resources, and stakeholder expectations:
- A basic module (11 disclosures)
The minimum reporting requirements designed for companies taking their first steps in sustainability reporting and with low stakeholder expectations - A comprehensive module (additional 9 disclosures) On top of the Basic Module, for companies requiring a more detailed reporting framework, to meet specific business partner or sector requirements.
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In the VSME standard, the decision to report on certain data points often depends on the company's specific context and relevance to its operations, whereas the CSRD requires disclosures based on a double materiality assessment.
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How to apply the VSME framework – A step-by-step approach
1. Scoping
Understanding your specific context by considering the following:
- Do your business partners or investors request specific data?
- Are there any compliance obligations you need to meet?
- What sustainability initiatives are your competitors undertaking?
- What are your company's sustainability goals?
Answering these questions will help you choose the appropriate VSME module (Basic or Comprehensive) and assess which ESG topics are the most relevant for your reporting.
2. Gap assessment and roadmap
Begin by reviewing your existing datapoints, policies, KPIs, strategies on these key ESG topics. How do they align with the VSME framework? Also consider the requests (if any) received from other stakeholders. This will help you spot any gaps in your current reporting practices. Once identified, create a clear, feasible long term roadmap that includes all reporting expectations.
3. Implementation
Once you’ve developed your roadmap, it’s time to put your plan into action. Set clear, achievable objectives and gather the data needed to track progress. Actions may include writing policies, calculating your GHG emissions or retrieving data from HR systems. Ensure transparent roles and responsibilities in creating the data processes so that reporting is consistent and efficient.
4. Reporting
Finally, prepare your sustainability report, ensuring it aligns with VSME requirements. The report should be accessible, filling expectations of your stakeholders, and aligned with your commercial objectives, whether for investor relations or B2B tenders. Make sure to review and update the report annually, incorporating feedback to improve over time.
How Hedgehog can support you with VSME
As your sustainability partner, Hedgehog supports you from start to finish across each phase of your VSME journey:
- Benchmarking: we perform market research and organize workshops with your key internal stakeholders to identify and prioritize relevant ESG topics, ensuring you focus on what matters most.
- Gap analysis & roadmap creation: We facilitate workshops with topic experts to assess your current situation, draft a roadmap, and work with your leadership team to align on a long-term sustainability strategy.
- Implementation: we guide you in defining critical data points, setting up efficient data processes, and performing activities such as LCA, GHG foot printing, and creating transition plans to ensure consistent reporting.
- Reporting: we help prepare a sustainability report that meets the needs of both your company and stakeholders, aligning with VSME requirements while showcasing your sustainability progress.
Ready to take action? Book a free consult with one of our expert today!
