One of the consequences of the approval of the first Omnibus package has of course been a realignment of expectations concerning sustainability reporting. Over a period of several months, many companies went from a frenetic compliance attitude to sighing in relief at the prospect of not having to report on much at all.
Throughout all this, companies have also come to rediscover the VSME as a compromise solution, as a much lower effort alternative to CSRD, CSDDD or EU Taxonomy.
But what exactly is VSME and how might businesses use it to their advantage?
The European Sustainability Standard for SMEs and micro undertakings
95% of European companies are considered SMEs micro businesses: this means that regardless of the Omnibus, they would never be expect to comply with the full spectrum of sustainability obligations.
The VSME, though voluntary, was created by EFRAG as a manageable entry point for companies to become acquainted with reporting from a sustainability perspective.
How are undertakings classified according to their financial and sustainability reporting obligations?
The first thing to check for is whether the company is listed in an EEA stock exchange or not (listed companies must follow a different set of requirements).
Secondly, the business is categorised according to the following thresholds:
(a) An undertaking is considered micro if it does not exceed two of the following thresholds:
i. €450,000 in balance sheet total;
ii. €900,000 in net turnover; and
iii. an average of 10 employees.
(b) An undertaking is considered small if it does not exceed two of the following thresholds:
i. €5 million in balance sheet total;
ii. €10 million in net turnover; and
iii. an average of 50 employees.
(c) An undertaking is medium if it does not exceed two of the following thresholds:
i. €25 million in balance sheet total;
ii. €50 million in net turnover; and
iii. an average of 250 employees.
Source: EFRAG Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME)
The different modules in VSME
Following the principle of proportionality in reporting obligations, micro-undertakings do not have to report on all modules, but they do have to report on all required data points under that module, as long as they are considered material.
Basic Module: Disclosures B1 and B2 and Basic Metrics (B3 to B11). This module is the target approach for micro-undertakings and constitutes a minimum requirement for other undertakings; and
Comprehensive Module: this module sets datapoints in addition to disclosures B1-B11, which are likely to be requested by banks, investors and corporate clients of the undertaking on top of the Basic Module.
Overview of VSME modules
Topics on the basic module
B1 - General set of disclosures (refers to basic information of record about the undertaking, including business sector, geographical distribution, high level financial information).
B2 - Transition towards a more sustainable economy (if applicable, this module shall disclose any sustainable practices, policies, initiatives and targets that the undertaking might be contemplating in the future).
B3 - Energy and greenhouse gas emissions
B4 - Pollution of air, water and soil
B5 - Biodiversity
B6 - Water
B7 - Resource use, circular economy and waste management
B8 - Workforce (General characteristics)
B9 - Workforce (Health and safety)
B10 - Workforce (Remuneration, collective bargaining and training)
B11 - Convictions and fines for corruption and bribey
Topics on the comprehensive module
C1 - Strategy: Business model and sustainability - related initiatives
C2 - Description of practices, policies and future initiatives for transitioning towards a more sustainable economy
C3 - GHG reduction targets and climate transition
C4 - Climate risks
C5 - Additional (general) workforce characteristics
C6 - Additional own workforce information - Human rights policies and processes
C7 - Severe negative human rights incidents
C8 - Revenues from certain sectors and exclusion from EU reference benchmarks
C9 - Gender diversity ratio in the governance body
Conclusion: How VSME helps SMEs navigate sustainability reporting
Sustainability reporting might have had some setbacks for the past six months, but disclosure requirements will still affect most companies from 2027-28. Even in the 2025-26 period, SMEs might find they are still receiving information requests regarding their environmental, governance and sustainability practices. VSME is the perfect standard to work with and sharpen up your undertaking’s strategies in this intermediate period.
Book a meeting to learn how Factlines can help your company gather data for the VSME or the ESRS's.
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FAQ: VSME standard for SMEs
- What is the Voluntary Sustainability Reporting Standard (VSME)?
A voluntary sustainability reporting framework for small and medium-sized enterprises (SMEs), created by the European Financial Reporting Advisory Group (EFRAG) to simplify ESG reporting. - Who should use the VSME standard?
Micro, small, and medium-sized enterprises (SMEs) not listed on stock exchanges. - What’s the difference between the basic and comprehensive modules?
The Basic Module covers essential ESG topics, while the Comprehensive Module includes more detailed disclosures, such as climate risks and human rights. - Do SMEs need to report on all modules?
No, micro enterprises only need to follow the Basic Module; larger SMEs can choose the Comprehensive Module. - What topics are covered in the Basic Module?
Energy use, waste, workforce, pollution, and corruption risks. - What is EFRAG?
The European Financial Reporting Advisory Group (EFRAG) is responsible for creating the VSME standard to help SMEs begin their sustainability reporting journey. - How does VSME help SMEs?
It provides a simple, structured approach to ESG reporting that scales with business size. - Is VSME mandatory for SMEs?
No, it’s voluntary, but it prepares businesses for future compliance.
