Sustainability reporting applies also to unlisted SMEs – Leverage the simplified guidelines
The EU’s Corporate Sustainability Reporting Directive (CSRD) mandates large companies to transparently disclose material information about their sustainability. Because this obligation extends beyond the companies themselves to their value chains, sustainability reporting also becomes increasingly relevant for businesses that are not directly subject to the directive such as small and medium-sized enterprises (SMEs).
If your company falls into this category, it’s good to know that EFRAG, the organization responsible for drafting sustainability reporting standards for the European Commission, has published and submitted the finalized VSME – Voluntary Sustainability Reporting Standard for non-listed SMEs. This framework is designed to support SMEs in strengthening their sustainability efforts and generating the data that larger companies may require from their value chain partners to fulfill their own reporting obligations.
While compliance with the VSME standard is voluntary, adopting it is strongly recommended, as SMEs may face complex inquiries from partners. Sharing sustainability data can also be a key factor in maintaining competitiveness, as large companies are mandated by EU regulations to disclose such information.
Aligning sustainability efforts with the needs of large companies
With the VSME guidelines, SMEs can align their sustainability efforts and reporting with the requirements imposed on large companies. The guidelines address the same key sustainability themes as the European Sustainability Reporting Standards, ESRS, which serve as the foundation for CSRD-compliant reporting.
Reporting under the VSME does not require SMEs to achieve perfection; rather, it emphasizes transparency and a clear understanding of material sustainability aspects. While a separate materiality assessment is not included as a requirement in the standard, sustainability data is structured around two key perspectives:
- The company’s actual or potential impact on people and the environment—both positive and negative—across the short, medium, and long term.
- The influence of environmental and social factors on the company’s financial position, both current and anticipated, over the short, medium, and long term.
Lightweight and flexible structure
The guidelines are structured into two modules: a core module with 11 data requirements and an advanced module with 9 data requirements.
In the core module, companies disclose general information about their operations, sustainability practices, principles, future initiatives, and goals, along with key performance metrics. The advanced module provides a deeper dive into data that is most likely to be relevant for investors, banks, and large companies.
The data points within each module guide the reporting, and companies are generally expected to address all applicable data requirements relevant to their specific circumstances. Businesses can opt to report using either the core module alone or both modules..
Beyond fulfilling data requirements
Effective sustainability reporting goes beyond simply meeting mandatory data requirements—it’s an opportunity to use the guidelines strategically to strengthen your company’s sustainability efforts. The VSME provides SMEs with practical guidance to enhance sustainability practices, refine reporting processes, and monitor performance. At the same time, it supports businesses in responding to sustainability data requests from their partners.
At Brunnen, we guide you in interpreting the standard’s requirements and identifying the key strategic priorities for your company’s sustainability efforts. At the same time, we shape a clear narrative of your sustainability actions—ensuring you can communicate them confidently and transparently, without the risk of greenwashing.
Learn more about our comprehensive sustainability services here: Sustainability and CSRD
Read more: Voluntary reporting standard for SMEs (VSME), Concluded | EFRAG
