What is the VSME Standard?

The Voluntary Sustainability Reporting Standard for SMEs (VSME) is aimed at small and medium-sized enterprises (SMEs) that are not subject to the mandatory reporting requirements of the Corporate Sustainability Reporting Directive (CSRD). The aim of the VSME Standard is to reduce the information requirements for SMEs – without dispensing with essential ESG disclosures. It serves as a voluntary reporting framework for non-CSRD-liable SMEs.

The standard is based on a modular structure with two reporting options:

• Basic Module: minimum requirements for micro-undertakings
• Comprehensive Module: voluntary content for more in-depth information

The content focuses on environmental and social aspects. The Sustainability Code (in German ‘Deutscher Nachhaltigkeitskodex’, or ‘DNK’ for short) will integrate both modules into the new DNK database and offers an additional check for formal completeness. Furthermore, the DNK committee is currently working on a voluntary extension of its VSME module. This should ease the transition to the ESRS and give companies that wish to the opportunity to report additional content in a structured way.

What does the VSME Standard regulate for SMEs?

The VSME was developed by the European Financial Reporting Advisory Group (EFRAG) on behalf of the EU Commission. The aim is to enable practical sustainability reporting that is consistent across Europe for SMEs that are not subject to mandatory CSRD-compliant reporting. With the introduction of the CSRD for large enterprises come increased reporting expectations in the supply chain too. And SMEs that are not directly subject to reporting obligations are also compelled by customer requirements to provide sustainability information.

Who is the VSME suitable for?

The VSME is relevant for:

• SMEs that are not capital market-oriented but want to report voluntarily
• SMEs with ESG requests from banks, customers or business partners
• Owner-managed businesses with expected CSRD obligations
• Suppliers of large enterprises with ESRS requirements for SMEs

Structure and modules of the VSME

The standard comprises approx. 140 data points:

• 1/3 correspond to ESRS data points for SMEs
• 1/3 are simplified ESRS requirements
• 1/3 were specially developed for micro-undertakings

The data points are divided into two modules:

1. Basic Module (B1–B11): entry point for micro-undertakings, establishes the minimum requirements.
2. Comprehensive Module (C1–C9): voluntary content for more in-depth information 

Comparison: Basic vs. Comprehensive Module im VSME

Basic Module (B1–B11)

• Target group: Non-listed micro-undertakings, SMEs – especially owner-managed businesses, which must comply with ESG requirements without CSRD obligations.  
• Function: Entry-level module, minimum requirements
• Content (disclosures):
  o    B1: Basis für die Erstellung
  o    B2: Practices, policies and future initiatives
  o    B3: Energy and greenhouse gas emissions  
  o    B4: Pollution of air, water and soil 
  o    B5: Biodiversity
  o    B6: Water
  o    B7: Resource use, circular economy and waste management
  o    B8: General characteristics
  o    B9: Health and safety
  o    B10: Remuneration, collective bargaining and training
  o    B11: Convictions and fines for corruption and bribery

Comprehensive Module (C1–C9)

• Target group: Owner-managed businesses with higher stakeholder expectations (e.g. banks, major customers, investors) that require more in-depth ESG transparency.  
• Function: Supplementary to the Basic Module, for in-depth sustainability disclosures
• Content (disclosures):
  o    C1: Strategy: Business Model and Sustainability 
  o    C2: Description of practices policies and future initiatives  
  o    C3: GHG reduction targets and climate transition  
  o    C4: Climate risks
  o    C5: Additional (general) workforce characteristics 
  o    C6: Human rights policies and processes
  o    C7: Severe negative human rights incidents
  o    C8: Revenues from certain sectors and exclusion from EU reference benchmarks 
  o    C9: Gender diversity ratio in the governance body

Materiality in VSME

Unlike with the CSRD/ESRS, no double materiality assessment is required. Nevertheless, a simplified form of this is recommended for strategic orientation. The principle of double materiality is factored into the content, such as by reflecting on impacts on people, the environment and KPIs.

The VSME reduces complexity with:

• 11 disclosure topics in the Basic Module (instead of > 80 with ESRS)
• First materiality assessment in approx. one week
• Simple Excel template, no need for stakeholder survey

Publication & integration in the reporting for SMEs

VSME reports for SMEs can be used publicly or internally, separately or as part of the management report. If they are integrated in the management report, the time reference and coordination with financial data must be ensured. An annual update is recommended.

Current state of development

Initial information suggests that the current version of the VSME will probably appear as a delegated act in 2026 and thus be valid immediately. That said, the ECB has been critical, claiming that the VSME in its current form is not suitable for supervisory analyses.^1] Accordingly, changes are expected, primarily in the Comprehensive Module. There is currently no official mandate for revision.

The following links offer further support.

Explanations: 

^[1] ESG risks have long been financial risks. The European Central Bank (ECB) warns: Fewer reporting obligations mean less robust data – and thus increasing risks for investors, banks and oversight. As such, the ECT is calling for a balanced, but comprehensive ESG reporting system. For “significant institutions” in particular, it is a central instrument for trust and risk management.