The European Commission has officially adopted the Voluntary Standard for SMEs (VSME) — a new, simplified sustainability reporting framework designed to support micro-, small-, and medium-sized enterprises (SMEs) in disclosing ESG-related information. The standard aims to help these businesses meet rising data requests from financial institutions and larger companies, especially those monitoring sustainability across their supply chains.

Although the VSME was initially created for companies outside the scope of the EU’s Corporate Sustainability Reporting Directive (CSRD), it may become increasingly relevant due to the Commission’s Omnibus initiative, which proposes raising the CSRD threshold to companies with over 1,000 employees — potentially excluding 80% of previously covered entities.

Developed by the European Financial Reporting Advisory Group (EFRAG), the VSME forms part of a broader effort to make ESG reporting more accessible. It consists of two modules:

· A Basic module with 11 key disclosures, including Scope 1 and 2 emissions and anti-corruption measures, designed to address value chain partners’ core data needs.

· A Comprehensive module with 9 additional disclosures, such as GHG reduction targets, transition plans, and future ESG strategies — typically sought by banks and investors.

The standard targets businesses with fewer than 250 employees and offers a consistent yet flexible framework for voluntary reporting. It is intended not only to improve SMEs’ access to finance and market credibility but also to support more effective sustainability management internally.

The Omnibus package, published in February 2025, also mandates EFRAG to simplify the broader European Sustainability Reporting Standards (ESRS). Proposed updates may cut the number of required data points by up to two-thirds, significantly easing the reporting burden.

For companies excluded from the CSRD under the Omnibus reform, the VSME may become the baseline for voluntary reporting — and could also serve as a “value-chain cap,” limiting how much ESG information large companies can request from smaller suppliers.

In a related Q&A, the Commission stated that while the VSME is currently the reference point for future voluntary standards, changes may still be made depending on the final CSRD scope and ESRS revisions.

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