Applying VSME: how to report sustainability information on a voluntary basis

TagsRisk & regulationEnvironmental, social and governanceInsights

The European landscape for sustainability reporting is undergoing profound changes as a result of the increase in mandatory reporting thresholds enacted by the recently adopted Omnibus I simplification package. Voluntary sustainability reporting for companies outside the scope of the Corporate Sustainability Reporting Directive (CSRD), particularly small and medium-sized enterprises (SMEs), is thus taking on unprecedented importance.

However, the European Union has nearly 32 million SMEs, representing 99% of all businesses in the EU. SMEs therefore play a central role in the European economy. In this context, the European Commission is encouraging SMEs to apply the VSME standard now, pending the adoption of a voluntary standard in 2026 that will be based on VSME.

To support SMEs, our experts have developed a guide that outlines the regulatory context that led to the development of the VSME standard, details its main requirements and sets out the key steps to follow for successful implementation.

VSME standard: main objectives

The VSME standard provides a proportionate and simplified reporting framework for companies that are not subject to any sustainability reporting requirements. It is characterised by its modularity and accessibility.

It comprises two separate modules that companies can use to prepare their sustainability report:

a basic module that defines the minimum requirements for sustainability reporting.
a comprehensive module that is optional and defines additional data that is likely to be required by business partners and investors beyond the basic module.

VSME standard: main challenges for companies

Companies must first assess their ESG maturity level in order to select the appropriate reporting option, which range from a basic module only or a combination of the basic and comprehensive modules.

When implementing the VSME standard, companies can usefully rely on the tools developed by EFRAG to ensure the publication of accurate, consistent and high-quality information, which requires the establishment of robust data collection processes.

During this process companies are encouraged to go beyond mere compliance and adopt sustainability as a driver in the implementation of their transformation and value creation strategy.

Finally, although the VSME standard does not require the publication of the sustainability report, sharing progress and commitments can enhance transparency and demonstrate alignment with market expectations. Companies may also choose to have their sustainability reports certified to increase stakeholder confidence in the information published.

Next steps

The publication in the Official Journal of the EU of the “Content” Directive amending the CSRD is expected to take place in the first quarter of 2026, with entry into force twenty days after publication. This date will mark the start of the four-month period for the adoption of the delegated act on the voluntary sustainability reporting standard by the European Commission.

Although this future standard will be based on the VSME standard it may differ in substance, in particular to align with the new set of European Sustainability Reporting Standards (ESRS) applicable to companies within the scope of the revised CSRD (see our analysis of the EFRAG technical advice on the revised draft standards here).