First step toward a voluntary EU sustainability reporting standard for SMEs

First step for the European Commission to endorse the VSME standard for voluntary sustainability reporting for SMEs

 

As part of the Omnibus I simplification package, the European Commission proposed to adopt a voluntary reporting standard for SMEs. Yesterday, the Commission took the first step towards this by adopting a recommendation, which will serve as an input for the coming formal delegated act on a voluntary standard. The timing of the adoption will depend on the speed and conclusion of negotiations on the Omnibus I proposal.

 

What does the recommendation include?

 

The recommendations are organised into three groups: one aimed at SMEs, one at financial institutions, and one at member states. We have summarised these below.

• Non-listed SMEs and micro-enterprises that want to voluntarily report sustainability information should use the VSME standard[RV1]  (developed by EFRAG and published in December 2024). 
• Large companies should limit as far as possible their requests for sustainability information from SMEs to the VSME standard. 
• Member states should raise awareness among SMEs regarding the benefit of voluntarily reporting sustainability information in accordance with the VSME standard. Member states should also take appropriate measures to encourage large companies to limit as far as possible their requests for sustainability information from SMEs and micro-enterprises to the VSME standard.

 

Why should you use the VSME standard?

 

The VSME standard offers a solid foundation for SMEs looking to respond to growing sustainability information requests from banks, investors, and value chain partners. Its modular structure allows companies to start with essential disclosures and scale up as needed, making it both practical and future ready.

To make the most of the framework, our advice is to start by identifying the key users of the sustainability information and clarify the purpose of reporting-this could for example be to access finance, strengthen supplier relationships, or demonstrate ESG commitment. From there, develop a clear content plan aligned with your objective will ensure your report is focused, relevant, and valuable to both your business and your stakeholders.

 

What is the VSME standard?

 

EFRAG—the independent advisory body on financial and sustainability reporting standards—released a first version of the VSME standard in December 2024.

The VSME standard structured around two modules: a Basic Module and a Comprehensive Module. The Basic Module is designed for all SMEs, especially micro-enterprises and has 11 core disclosures on key topics like GHG emissions, workforce, and anti-corruption. The Comprehensive Module add nine more disclosures commonly requested by banks and investors, such as ESG practices, emissions targets, and value chain risks.

For more details, see our previous blog post on the VSME standard.