Table of Content

1. Introduction to the VSME Reporting Standard

2. Purpose of the VSME Framework

3. Key Features of the VSME Standard

4. VSME Relevance Beyond SMEs

5. Strategic Advantages of Adopting VSME

6. How Metrikflow Supports VSME Implementation

   
   

1. Introduction

On 30 July 2025, the European Commission formally adopted the Voluntary Sustainability Reporting Standard for SMEs (VSME), developed by the European Financial Reporting Advisory Group (EFRAG).
This milestone marks a significant step toward simplifying and standardising ESG (Environmental, Social and Governance) reporting for non-listed small and medium-sized enterprises (SMEs) across the European Union.

While the VSME framework was initially designed for companies with fewer than 250 employees, upcoming changes under the Omnibus revision, notably the expected increase in the Corporate Sustainability Reporting Directive (CSRD) employee threshold, will broaden its strategic relevance. Many larger organisations no longer subject to CSRD requirements will still face sustainability disclosure demands from investors, financial institutions, major clients, and supply chain partners. For these entities, the VSME offers a proportionate, credible, and operationally feasible alternative.

2. Purpose of the VSME Standard

The VSME was conceived to address two persistent challenges in SME sustainability reporting:

• Disproportionate administrative burden created by complex regulatory frameworks.

• Fragmented and inconsistent ESG disclosures arising from ad-hoc data requests from multiple stakeholders.

Its objectives include:

• Establishing a voluntary, standardised reporting approach aligned with EU sustainability objectives.

• Ensuring proportionality through scaled requirements, particularly in data collection and disclosure.

• Providing practical implementation tools such as templates, guidance documents, and sector-neutral indicators.

3. Key Features of the VSME Framework

The VSME incorporates several characteristics that distinguish it from more complex frameworks such as CSRD:

3.1 Proportionality

• No mandatory materiality assessment, significantly reducing compliance complexity.

• Modular structure enabling organisations to report at a basic or extended level depending on stakeholder needs.

3.2 Standardised Tools

• Templates and guidance designed for operational teams with limited sustainability reporting experience.

• Clear indicator definitions to ensure comparability across reporting entities.

3.3 Enhanced Credibility

• Structured alignment with EU sustainability principles ensures stakeholders can rely on disclosed information.

• Improves access to finance by meeting ESG due diligence expectations of banks and investors.

3.3 Administrative Efficiency

• Reduces duplicated data requests from multiple stakeholders, particularly for suppliers operating in complex value chains.

3.4 Future-Oriented Design

• Enables organisations to build ESG management capacity in anticipation of future market and regulatory developments, without incurring the full costs of CSRD compliance.

4. Relevance Beyond SMEs

The Omnibus revision’s likely increase of the CSRD applicability threshold will exempt many large companies from mandatory CSRD reporting.

However, these companies remain exposed to ESG transparency requirements through:

• Investor and lender due diligence processes.

• Customer and supply chain ESG requests—particularly from CSRD-regulated buyers.

• Tender and procurement requirements in both public and private sectors.

For such organisations, the VSME offers a formalised, recognised, and lighter-weight reporting solution that preserves stakeholder confidence without replicating CSRD’s administrative demands.

5. Strategic Implications

Adoption of the VSME framework presents several strategic advantages:

• Market positioning as a transparent and sustainability-aligned organisation.

• Operational efficiency in ESG data collection, processing, and disclosure.

• Business development opportunities through strengthened credibility with ESG-focused partners and customers.

• Investor readiness, ensuring alignment with capital providers’ growing ESG expectations.

Early adoption may also provide competitive differentiation, particularly as ESG reporting becomes a de-facto market requirement regardless of regulatory scope.

6. How Metrikflow Supports VSME Implementation

Metrikflow enables SMEs, mid-sized companies, and larger non-CSRD organisations to meet VSME requirements rapidly and efficiently.

Our team of experts empowered by an all-in-one ESG platform offers:

• Centralised ESG data management across environmental, social, and governance indicators.

• Automated alignment with VSME templates and guidance.

• Secure data-sharing functionalities for stakeholders, including investors, customers, and partners.

By integrating VSME reporting into existing workflows, organisations can avoid the inefficiencies of manual ESG reporting while ensuring compliance with stakeholder expectations.

7. Conclusion

The adoption of the VSME standard marks a pivotal development in the EU sustainability reporting landscape.
For SMEs, it offers a practical and proportionate means to meet growing ESG expectations. For larger companies outside CSRD scope post-Omnibus, it provides a credible, resource-efficient alternative that safeguards market competitiveness and stakeholder trust.

Organisations that act early to implement VSME will be better positioned to navigate the evolving ESG environment—transforming compliance from an obligation into a strategic advantage.

To learn how Metrikflow can support your VSME readiness, contact our team for a consultation.