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On the 17th of December 2024, the European Financial Reporting Advisory Group (EFRAG) published the Voluntary Sustainability Reporting Standard (VSME) for non-listed Small and Medium-sized Enterprises (SMEs).
The VSME provides a simplified yet robust framework for sustainability reporting, aligning closely with the European Sustainability Reporting Standards (ESRS) while accommodating the unique business models of SMEs.
The structure of the VSME consists of a Basic Module which is focused on fundamental disclosures, including transition elements for a sustainable economy, energy and greenhouse gas emissions, biodiversity, workforce data, and other essential Environmental, Social, and Governance (ESG) information; and a Comprehensive Module that offers more detailed insights on policies, actions, emissions reductions, climate risks, human rights, workforce considerations, and other critical sustainability metrics.
This dual-module approach ensures flexibility, enabling SMEs to tailor their reporting according to their needs while maintaining alignment with the overarching principles of the ESRS and the Corporate Sustainability Reporting Directive (CSRD).
The VSME delivers significant value by providing a standardised reporting framework that enables SMEs to demonstrate a professional commitment to ESG topics, showcasing their strategies to stakeholders; enhance transparency for clients, employees, communities, and other key stakeholders; and increase opportunities to secure green financing, fostering a smoother transition to a sustainable economy.
Moreover, the VSME offers mutual benefits to both SMEs and CSRD-compliant companies. SMEs adopting the VSME will gain clarity on what is expected in terms of sustainability reporting, while larger CSRD-compliant companies can rely on the standardised and consistent data provided by SMEs, facilitating seamless integration into their own sustainability reports.
EFRAG is also committed to supporting SMEs through the development of tools and guidance designed to ease the adoption and implementation of VSME reporting.
The VSME’s added value lies in its ability to replace fragmented and inconsistent ESG data collection with a coherent and standardised approach. This simplifies the process for SMEs, enhances market acceptance, and ensures the delivery of reliable sustainability information for all stakeholders.
VSME, the ESRS tailored for SMEs.
