What is the VSME Standard?
The Voluntary Sustainability Standard for SMEs (VSME) was developed by the European Financial Reporting Advisory Group (EFRAG) on behalf of the European Commission for SMEs that want to voluntarily report on their sustainability efforts. While it covers similar ESG metrics as the CSRD, it has been simplified to better align with the needs and resources of smaller companies. This makes it an attractive option for businesses that want to showcase their sustainability performance to customers, investors, banks, and regulatory authorities without the high complexity of other mandatory reporting systems.
Who benefits from the VSME Standard?
The VSME Standard is particularly beneficial for non-listed SMEs that are not required to provide mandatory reporting according to the Corporate Sustainability Reporting Directive (CSRD).
For these companies, the VSME Standard represents a pragmatic and resource-efficient approach to addressing sustainability issues. It allows them to report on key ESG metrics without bearing the effort and costs associated with full CSRD compliance. By choosing to report under the VSME Standard, SMEs not only demonstrate their active commitment to sustainability but also position themselves advantageously to meet the increasing expectations of investors, banks, customers, and regulatory authorities.
Benefits of Voluntary Reporting
There are several strategic reasons why an SME should choose the VSME Standard:
Meeting Customer Requirements in the Supply Chain: Even if SMEs are not directly covered by the CSRD, they are often involved in supplying larger companies that are required to report. Larger companies need sustainability data from all suppliers to fulfill their own reporting obligations. The VSME Standard offers SMEs a structured and recognized framework to meet exactly these requirements without having to develop their own complex reporting systems.
Increased Access to Capital and Partnerships: Investors and financial institutions increasingly value sustainability. The VSME Standard enables SMEs to provide the necessary transparency to secure financing and establish new partnerships. By aligning with recognized ESG metrics, SMEs demonstrate that they manage financial and environmental resources responsibly.
Future-Proofing Against Regulation: While the VSME Standard is voluntary, it represents the first step toward more comprehensive sustainability reporting. As sustainability requirements steadily become stricter, an already established reporting system ensures that SMEs are prepared for future compliance challenges.
Building Trust and Reputation: Even without legal obligation, transparent sustainability reporting can significantly enhance a company's reputation. Through their commitment to ESG issues, SMEs can attract environmentally conscious consumers and partners, thereby gaining a competitive advantage.
Internal Efficiency: The VSME Standard not only improves external reporting but also helps optimize internal sustainability processes. Companies that precisely manage their sustainability can reduce resource waste, decrease supply chain risks, and enhance employee well-being.
VSME vs. ESRS: Understanding the Key Differences
Both the VSME Standard and the European Sustainability Reporting Standards (ESRS), which are used for CSRD reporting, aim to promote transparency and strengthen sustainable business practices. However, there are significant differences in the application and complexity of the two standards. The ESRS require large companies to provide comprehensive reporting covering a variety of ESG factors. These reports are detailed, complex, and must be externally verified.
In contrast, the VSME Standard was specifically designed for SMEs and is more flexible and better adapted to the resources of smaller companies. Rather than requiring detailed and comprehensive disclosures, the VSME Standard offers a choice between two modules:
The Basic Module: It covers the fundamental sustainability metrics and is particularly suitable for micro-enterprises or companies that are at the beginning of their journey to sustainability reporting. It includes about 40 data points on basic ESG topics.
The Comprehensive Module: This module is intended for SMEs that are already more advanced and need more detailed metrics often required by investors, banks, or larger business partners. It includes about 35 additional data points on more specific sustainability topics.
By simplifying reporting, the VSME Standard makes sustainability more accessible for SMEs. They can report on sustainability without having to deal with the complexity of the ESRS. Unlike the ESRS with 466 mandatory data points and 191 voluntary data points, the VSME is significantly leaner and more resource-efficient with a total of about 75 data points.
How We Support VSME Reporting
At pacemaker.ai, we understand that SMEs often face significant challenges when it comes to sustainability reporting – especially without the resources and specialized teams typically found in larger companies. However, the introduction of the VSME Standard offers small businesses a valuable opportunity to demonstrate their commitment to sustainability.
Our WAVES® Sustainability Management Platform (SMP) was designed to make the VSME reporting process seamless, efficient, and scalable for SMEs. Here's how we support companies in implementing the VSME Standard:
Automated and Simplified Reporting: The VSME Standard was developed with a focus on practical implementation. Our WAVES® Sustainability Management Platform (SMP) supports this concept by automating and structuring the entire data collection process. The platform aggregates and processes the relevant ESG data specifically for the requirements of the chosen VSME module (Basic or Comprehensive). This significantly reduces manual effort and enables sustainability reporting without extensive prior knowledge or additional personnel resources.
Calculation of Indicators and Transparency: The SMP ensures that all necessary data, from transport emissions to product-specific CO₂ footprints, are calculated using certified methods. This allows SMEs to report on important sustainability metrics with full confidence, as the data is precise, transparent, and aligned with established sustainability standards.
Audit-Ready Data and Compliance: Unlike the CSRD, the VSME Standard does not require external auditing. Nevertheless, our platform delivers audit-ready reports that can be easily shared with auditors, investors, or regulatory authorities, ensuring that SMEs remain compliant and are prepared for future regulatory changes.
User-Friendly Interface: Many SMEs may not have the internal expertise to manage complex sustainability data. The SMP offers a user-friendly interface that guides companies through each step of the reporting process. Even companies with limited sustainability knowledge can easily track, manage, and report on their sustainability performance.
Scalability for Growing Companies: Whether your company is just beginning to engage with sustainability or is already advanced, the platform grows with your needs. As SMEs make progress on their sustainability journey, they can easily switch between the Basic and Comprehensive Modules, allowing their reporting to evolve in parallel with their company.
Conclusion
Now is the right time to implement voluntary reporting according to the VSME Standard. By adopting this simplified framework, companies not only align themselves with growing global sustainability expectations but also stand out in a crowded market by demonstrating their commitment to responsible business practices.
With the help of the WAVES® Sustainability Management Platform (SMP), we support SMEs in meeting the increasing demands for sustainability with minimal effort, while simultaneously increasing their overall efficiency and reducing operational costs. Our goal is to help companies not only meet today's expectations but also to be successful in a future shaped by sustainability.