Sustainability has ceased to be an “optional” matter and has become a central element of business competitiveness. With the entry into force of the CSRD and the European sustainability reporting standards (ESRS), thousands of large companies will have to report detailed information on their environmental, social and governance (ESG) impact.
This reality does not affect only large corporations, SMEs, which form part of their value chain, will start to receive more and more questionnaires, templates and information requests. To avoid a chaos of different forms and excessive administrative burdens, the European Union has asked EFRAG Europe’s Voice in Corporate Reporting | EFRAG to develop a common framework specific to SMEs. And this is where the VSME come in: Voluntary ESRS for non-listed SMEs.
VSME: What the voluntary sustainability standards are
The VSME are a set of European voluntary reporting standards designed for non-listed SMEs. The main objective is twofold:
- To help SMEs convey sustainability information clearly, simply and in alignment with Europe.
- To avoid the current dispersion of ESG forms that each large company sends to its suppliers.
Unlike the “large” ESRS, intended for companies subject to the CSRD Sustainable finance – Finance – European Commission, the VSME are designed with an approach that is proportionate and adapted to the size and capacity of small companies.
In short: it is the first time Europe has created sustainability standards designed specifically for SMEs. SMEs – Internal Market, Industry, Entrepreneurship and SMEs
VSME: Why they are important for SMEs
Although voluntary, the VSME stand a strong chance of becoming the de facto reference for SMEs working with large customers, banks or public administrations. Some of the reasons are:
1. Speaking the same language as large customers
Large companies need ESG information from their suppliers in order to comply with the ESRS. If an SME uses the VSME, it provides the information in the same language and structure as its customers, greatly easing the relationship.
2. Reduced administrative burden
Instead of answering dozens of different questionnaires, the SME can rely on a single standard European model VSME, which it can then reuse for each customer.
3. Better reputation and market access
An SME that reports with VSME shows a clear commitment to transparency and sustainability, which can help it to:
- win tenders,
- retain or attract new customers,
- improve its position with financial institutions.
The European Commission highlights on its SME portal that small companies that work on sustainability gain in competitiveness and resilience.
4. Preparing for the future
Although the VSME are voluntary, everything suggests they will become the reference that large companies, banks, investors and administrations will ask for.
VSME: How they are structured
The VSME follow a clear, simple, proportionate and useful philosophy
- A basic core of information that any SME can provide (company profile, main risks and opportunities, general approach to sustainability).
- Additional modules depending on the sector, risks or environmental/social impact.
- Limited and prioritised indicators, designed not to overwhelm small companies.
In addition, they are aligned with the «large» ESRS. This allows the information the SME delivers to connect directly with the obligations of its customer company.
VSME: How they fit with the other standards
The VSME do not come to replace other voluntary standards, such as:
- ISO 14001 (environmental management),
- ISO 50001 (energy),
- B Corp,
- SA8000,
- or reporting frameworks such as the GRI Standards.
In fact, they can be complementary. An SME can use ISO 14001 to manage its environmental impacts better and, at the same time, use the VSME to explain and report that information in a way aligned with the European framework.
The VSME are above all a reporting framework: a way of organising and communicating sustainability information in a form that the European market understands and demands.
Conclusion:
SMEs are at the centre of the sustainable transformation in Europe. With the CSRD and the ESRS, information pressure will clearly increase. EFRAG’s VSME were created precisely to prevent that pressure from turning into a maze and to offer small and medium-sized companies a clear, coherent and adapted compass.
Adopting them strategically can be the difference between experiencing sustainability as a burden or as an opportunity to consolidate and grow the business.
For many SMEs, hearing about CSRD, ERS or VSME may sound like more bureaucracy. At auma auma we support SMEs in translating European complexity into SME language and turning it into an opportunity.
In this respect, we support companies in:
- Understanding what is really relevant for them within the VSME framework.
- Carrying out a situation assessment: what sustainability information they already have and how they can organise it.
- Designing a VSME reporting scheme adapted to their reality.
- Connecting the VSME with other tools they already use (ISO, sustainability plans, internal reports, etc.).
- Preparing the company so that it can respond swiftly and consistently to customers requesting ESG information.
The aim is not to “fill in forms”, but to use this new European framework to strengthen customer relationships, improve internal processes and gain competitiveness.