Even if it feels like the reporting obligations for SMEs are changing month by month: What is certain is that they will also need some form of sustainability reporting – be it for customers, banks and investors or a good EcoVadis result. The VSME standard (Voluntary Sustainability Reporting Standard) provides a new, simplified format for this. We present the VSME standard and the free platform for it.
Free platform of the DNK
At the end of last year, we informed you that there is currently only one constant in the reporting obligations for SMEs: They change regularly. However, anyone hoping for a one-size-fits-all indulgence will certainly be disappointed. That is why we are presenting the Voluntary Sustainability Reporting Standard (VSME Standard), a way to fulfil this obligation in a meaningful format.
The EU Commission estimates that its omnibus proposal will reduce the number of companies subject to the Corporate Sustainability Reporting Directive (CSRD) by 80 per cent. However, companies exempt from the reporting obligation (up to 1,000 employees) can opt for voluntary reporting in accordance with simplified VSME standards.
The draft also states that large companies that continue to fall under the CSRD may only require their suppliers to submit reports in VSME format.
The German Sustainability Code (DNK) provides a free platform that simplifies this step.
Understanding VSME: A framework for strategic adaptation
The VSME is structured to provide SMEs with a practical and scalable approach to sustainability reporting.
- It recognises the specific operational and resource constraints of smaller companies and provides a simplified way to demonstrate their commitment to ESG factors.
- Depending on market acceptance, the VSME is expected to standardise the current diverse data requirements of business partners.
- In contrast to the comprehensive and often resource-intensive requirements of the CSRD, the VSME standard focuses on key ESG indicators that are directly relevant to the business activities of SMEs and their stakeholders.
- Companies decide which disclosures are relevant to their business activities according to the “if applicable” principle. Thanks to a modular approach, SMEs can organise their reporting according to their own needs or capabilities.
The two modules of the VSME
Like the European Sustainability Reporting Standards (ESRS), the VSME is divided into environmental, social and governance categories and consists of two modules:
- The basic module is mandatory for all VSME reporters. It comprises eleven simplified ESG disclosures, which are a prerequisite for the comprehensive module.
- The Comprehensive module is for SMEs that require more detailed reports for investors, banks and customers. This additional module includes nine further disclosures, including Scope 3 greenhouse gas emissions and climate risks.
The modular approach enables SMEs to strategically integrate sustainability reporting into their existing operational framework. Rather than imposing immediate and stringent requirements, the VSME promotes a flexible implementation process that allows companies to build capacity and develop robust reporting mechanisms over time.
Standard or requirement?
The EU Commission’s omnibus proposals come at a time when thousands of companies have already invested heavily in their ESG disclosure. As the mandatory requirements are being relaxed and postponed, these companies are now faced with a decision: stay on course, switch to the VSME or stop reporting altogether?
The market signals are clear: beyond mere compliance with regulations, structured sustainability reporting offers significant strategic advantages. Stakeholders such as customers, investors and business partners are increasingly focussing on companies that are committed to sustainability and can prove it.
By introducing the CSRD standards on the way to greater transparency or the VSME as a customised alternative, SMEs can differentiate themselves in a highly competitive market and are equipped to meet the changing (but ever-increasing) expectations of their business partners.
Whether in combination with an EcoVadis assessment or without: As BP Consultants, we will be happy to help you find the right report format for you.
