Officially adopted by the European Commission on 30th July 2023, the VSME consists of two practical modules:
While the VSME was initially targeted at SMEs, recent guidance suggests that companies falling outside CSRD scope due to the Omnibus Directive should also consider adopting it. This is because the VSME introduces a “value chain cap”, a mechanism that limits the sustainability information that banks and large companies (still within CSRD scope) can request from their business partners. This provides clarity and reduces the reporting burden for out-of-scope companies.
The VSME’s primary aim is to help SMEs efficiently address increasing sustainability data requests from stakeholders, facilitate access to sustainable finance, and reduce the administrative burden of uncoordinated ESG questionnaires. Although modelled on the more demanding European Sustainability Reporting Standards (ESRS), the VSME is tailored to SMEs’ needs, featuring less complex requirements and making sustainability reporting accessible, relevant, and pragmatic for smaller players.
Importantly, the European Commission has indicated that future voluntary sustainability reporting standards will be modelled after the VSME. As a result, early adopters will be ahead of the regulatory curve and better prepared for future developments. Furthermore, adoption of the VSME can potentially unlock greater access to sustainable finance and preferential interest rates, as financial institutions increasingly reward transparent and standardised sustainability disclosures.
Adoption of the VSME is entirely voluntary, offering a practical entry point to sustainable business for smaller enterprises without imposing legal obligations.
Content adapted from BDO Global