Sustainability reporting is no longer just for large corporations. With Europe’s new regulatory wave—driven by CSRD, ESRS, and supply-chain pressure—small and medium enterprises (SMEs) are increasingly being asked to disclose their environmental and social impact.

But many smaller businesses simply don’t have the resources, expertise, or time to navigate complex ESG frameworks. That’s exactly why the VSME (Voluntary SME) standard was created.

In this guide, we break down what VSME is, why it matters, and how your business can use it without drowning in paperwork.

What Is VSME?

VSME stands for Voluntary Standard for Small and Medium-Sized Enterprises, part of the European Sustainability Reporting Standards (ESRS) framework under the Corporate Sustainability Reporting Directive (CSRD).

Unlike the full ESRS—designed for large, public-interest companies—VSME is:

Simpler

Lighter

Easier to implement

Fully voluntary

It allows SMEs to respond to the rising demand for sustainability information without the burden of full-scale ESG reporting.

Think of VSME as the gateway standard that helps small businesses report only what really matters.

Why Was the VSME Standard Created?

Europe recognised a growing problem:

Large companies now required to report under CSRD need sustainability data from their suppliers—including SMEs—to calculate their Scope 3 emissions, social risks, and governance impacts.

But SMEs pushed back.

They were being flooded with bespoke ESG questionnaires, inconsistent templates, and confusing reporting requests.

VSME solves this by creating one standardised, lightweight template SMEs can use to satisfy most customer and investor requirements.

Who Is VSME For?

VSME is designed for:

Micro businesses

Small enterprises

Medium-sized companies

Startups and early-stage firms

Contractors or suppliers to CSRD-reporting companies

If your clients or partners are asking for sustainability data, VSME gives you a credible, recognised way to provide it—without needing a full ESG department.

What Does VSME Reporting Include?

VSME is intentionally concise. It focuses on the essentials:

1. Environmental Information

Greenhouse gas emissions (basic Scope 1, 2, and limited Scope 3)

Energy use

Waste and water

Environmental policies

Reduction actions taken

2. Social Information

Workforce numbers

Employee conditions and well-being

Diversity and inclusion

Social policies

Community impact

3. Governance Information

Leadership structure

Ethical business practices

Anti-corruption policies

Risk management

Instead of complex disclosures, VSME emphasises clarity and proportionality.

Reporting should fit the scale of the business—not overwhelm it.

How VSME Helps SMEs Compete and Grow

1. Win more tenders and contracts

Large clients increasingly require sustainability data. VSME gives SMEs a simple way to comply.

2. Reduce the reporting burden

Instead of answering dozens of ESG questionnaires, you can share your VSME disclosure once.

3. Stay ahead of market expectations

Sustainability reporting is rapidly becoming a competitive advantage.

4. Prepare for future regulation

SMEs may eventually fall under simplified mandatory ESG rules. VSME is a stress-free head start.

5. Demonstrate climate responsibility

Even basic emissions reporting helps SMEs identify cost-saving and reduction opportunities.

How Tools Like Emerald Power Support VSME Reporting

SMEs often struggle with the most time-consuming parts of sustainability reporting:

Collecting the right data

Calculating emissions

Preparing disclosures in the correct structure

Answering supply-chain ESG requests

Tools like Emerald Power streamline the entire process by:

Automating emissions calculations

Standardising data collection

Producing VSME-aligned outputs

Managing reporting for multiple clients (ideal for accounting firms)

It makes VSME adoption simple, accurate, and fast—even for SMEs without internal sustainability expertise.

FAQ: VSME (Voluntary Sustainability Reporting Standard) Explained

1. Is VSME mandatory for SMEs?

No. VSME is completely voluntary. It’s designed as a lightweight option for SMEs that want to respond to customer, investor, or supply-chain sustainability requests without undertaking full ESRS reporting.

2. Who should use the VSME standard?

Any small or medium-sized business that is asked for ESG or sustainability information—especially those supplying to companies reporting under CSRD—can benefit from using the VSME template.

3. Does VSME replace full ESRS reporting?

No. It provides a simplified alternative. Larger companies covered by CSRD must use the full ESRS, while SMEs can choose VSME to provide proportional, streamlined disclosures.

4. What kind of data does VSME require?

VSME focuses on essential disclosures: basic greenhouse gas emissions, energy use, waste, workforce details, governance policies, and high-level sustainability measures.

5. How difficult is VSME to complete?

Most SMEs can complete a VSME report with basic operational data. With tools like Emerald Power, the process becomes faster and more accurate, especially for emissions calculation.

6. Will clients accept VSME reporting instead of custom ESG questionnaires?

In many cases, yes. VSME was specifically designed to reduce the burden of receiving inconsistent ESG requests. It provides a standardised, credible format that many large customers prefer.

7. How often should an SME update its VSME report?

Annually is recommended. This allows businesses to demonstrate improvement and stay aligned with customer expectations and sustainability practices.

8. Is VSME recognised outside Europe?

While developed within the EU framework, VSME is gaining international attention among multinational supply chains looking for consistent SME-level sustainability information.

9. Does VSME include Scope 3 emissions?

Only basic Scope 3 data is included, and even then in a simplified form. The goal is proportionality—SMEs are not expected to perform complex value-chain analysis.

10. Can accounting firms or consultants deliver VSME reporting for clients?

Absolutely. VSME is a natural extension of accounting and advisory services. Firms can use software like Emerald Power to manage reporting across multiple SME clients efficiently.