Voluntary sustainability reporting standard - The pragmatic ESG reporting Standard for SMEs
Voluntary sustainability reporting standard - The pragmatic ESG reporting Standard for SMEs
Learn all about the VSME (Voluntary Reporting Standard for SMEs), the streamlined and practical ESG reporting standard for SMEs. Optimize your sustainability reporting and meet the requirements of banks, investors, and business partners. Get started now with BDO Switzerland!
The Importance of ESG Reporting for SMEs: Beyond Legal Requirements
SMEs rarely report out of obligation – existing sustainability reporting requirements mainly apply to large and listed companies. Nevertheless, SMEs already provide ESG data on an ongoing basis – to customers, banks and investors.
Why does ESG reporting matter?
The EU is pursuing ambitious climate targets with its Green Deal. To achieve the goal of climate neutrality by 2050, ESG data is needed along the entire value chain. Large companies and those subject to CSRD (Corporate Sustainability Reporting Directive) requirements must obtain ESG data from their suppliers and partners – and currently pass on the data requests directly to SMEs via their procurement processes. This is exactly where the VSME comes in: a voluntary, clearly structured standard that translates typical ESG requests into a single report.
How does this topic directly affect SMEs?
Companies that fall under the CSRD must obtain information from the value chain. This triggers the well-known ‘trickle-down’ effect, which places a heavy burden on SMEs: a flood of questionnaires, different templates, short deadlines – and, in the end, a lot of effort for limited benefit.
This is precisely why a proposal has been made at EU level to limit the data requirements for SMEs: the European Commission has adopted a recommendation encouraging SMEs to use the VSME reporting standard – and at the same time calling on banks and large companies to limit their requests to VSME content as far as possible. In future, SMEs should be able to ignore additional requests if they go beyond the data points covered by the VSME. The VSME will thus effectively become the upper limit for information that larger companies may request from their value chain partners for CSRD reporting.
What is the purpose of the VSME Standard?
The VSME is a reporting standard originally developed by the European Financial Reporting Advisory Group (EFRAG) for non-listed micro, small and medium-sized enterprises. The aim is to create a streamlined, comprehensible ESG data set that business partners will accept as a substitute for their own questionnaires.
Structure of the VSME Standard
The Standard is divided into two reporting modules:
The Basic Module:
The Basic Module covers the most important information and is a sensible starting point. It is aimed at companies that want to begin their sustainability journey by disclosing basic core data. This includes information on energy consumption and greenhouse gas emissions (Scope 1 and 2), a breakdown of the workforce by gender, and key health and safety data.
In total, the Basic Module comprises 11 disclosure requirements in the areas of environment, social and governance.
The Comprehensive Module:
The Comprehensive Module is aimed at SMEs that are already advanced in their sustainability work and want to meet additional requirements from customers, banks or investors. Depending on requirements, it includes information on Scope 3 greenhouse gas emissions (optional), climate risks and transition plans, and human rights due diligence.
In total, the Comprehensive Module contains nine (additional) disclosure requirements in the areas of environment, social and governance. The prerequisite is that all data points from the Basic Module are reported before reporting with the comprehensive module.
Benefits for SMEs reporting with the VSME Standard
Companies that adopt the VSME benefit from a wide range of strategic and operational advantages:
- Getting started without overwhelming demands:
A key advantage of the modular structure of the VSME standard is that companies can start with the basic module and then, once data quality and the recording process have matured, gradually transition to the ‘comprehensive module’.
- Voluntary rather than mandatory:
There is no obligation to publish the report, as it is sufficient to provide it to business partners upon request.
- No obligation to audit:
The standard does not require external auditing; however, depending on the stakeholders, an audit may still be useful.
- Less methodological baggage:
No materiality analysis is required, which reduces the time, effort and resources needed to apply the VSME standard. In addition, the VSME uses the term ‘if applicable’ for certain data points, meaning that these only need to be reported if the data point is relevant to the company’s business activities and sector.
- Intuitive and SME-friendly:
The standard is written in plain language and has a simple structure and guidelines, making it accessible to SMEs and protecting them from having to report on complex data points under the CSRD.
- Improved reputation with customers, banks and investors:
A good VSME report increases responsiveness to ESG enquiries, reduces the risk of being excluded from tenders, and can facilitate financing discussions and lower capital costs.
- One report instead of endless questionnaires:
The report serves as a single source of truth and saves time compared to uncoordinated individual requests. This frees up time and resources that would otherwise have to be spent processing numerous uncoordinated data requests from customers, banks and investors.
- Strategic focus:
SMEs can also identify future sustainability risks and opportunities and take early action to ensure their resilience in relation to sustainability issues.
- Better communication and branding:
Sustainability achievements can be consistently presented, which can strengthen reputation and competitiveness.
- Good alignment with CSRD:
Finally, the data points are defined in the standard in such a way that they align with CSRD reporting. If the company falls under CSRD reporting requirements in the future, it will have an easier transition to CSRD reporting with an existing VSME report than if it had to start from scratch when creating a new report.
The VSME standard offers SMEs a practical and simple way to get started with sustainability reporting in a structured manner. It was developed specifically for the needs, resources and expertise of SMEs.
In its statement of 30 July 2025, the European Commission explicity recommends the application of the VSME standard by non-listed SMEs and micro-enterprises. The aim is to strengthen resilience to sustainability risks and increase competitiveness in the respective industries.
BDO Switzerland helps you along the journey:
With our experience and the right tools, we help you identify relevant sustainability data, collect it systematically and present it in a clear way – as a VSME report or as a base for further requirements.
Get to know the VSME standard:
We are happy to offer you a compact workshop in which we will introduce you to the framework and show you how it can be implemented in your company.
Get in touch with us at sustainability@bdo.ch – we look forward to hearing from you.
Do you have questions about sustainability? Our experts are here to help you position your company sustainably and future-proof.
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