Market receives assertive and optimistic message from Commission's VSME recommendation

The European Financial Reporting Advisory Group (EFRAG) is currently working on simplifying the European Sustainability Reporting Standards (ESRS) for companies in scope of the Corporate Sustainability Reporting Directive (CSRD). In this context, SMEunited, a European association representing the interests of small and medium-sized enterprises (SMEs), has emphasized the need for the Voluntary Sustainability Reporting Standard (VSME) to reflect further simplification of datapoints and related guidance.

SMEs are currently grappling with numerous requests and questionnaires from business partners. Many of these questions are impossible to answer due to a lack of necessary data. The VSME, a standard for sustainability reporting specifically designed for SMEs, aims to address this issue by providing a clear and consistent framework.

Developed by EFRAG, the VSME is a compromise between large companies, banks, investors, and SMEs. It is a recommendation by the Commission for companies, banks, and investors, and is expected to streamline the process of sustainability reporting for SMEs. The VSME focuses on sustainability reporting, which includes environmental, social, and governance factors.

The German Sustainability Code (DNK) announced a dedicated VSME module in September 2025. This module offers a clear structure, understandable language, practical support, and a free digital reporting tool to simplify sustainability reporting for SMEs even further.

SMEunited has expressed strong support for the Commission's recommendation on the VSME. They urge Member States to work with national business organizations to reach a large number of SMEs and provide necessary training. SMEunited also suggests that the VSME template should form the basis for a unique digital system linked to calculation tools to simplify reporting further for SMEs.

It is important to note that the VSME is a voluntary standard, not a mandatory requirement. Companies, banks, and investors should not go beyond the datapoints of the VSME, as per the Commission's recommendation. The VSME has been designed to provide users with relevant data, considering what is feasible for SMEs.

The Recommendation on the VSME is a significant step towards simplifying the sustainability reporting process for SMEs. Despite the Omnibus 1 proposal and 'stop the clock' legislation, SMEs are still being asked to report on sustainability. The VSME offers a practical solution to this challenge, making sustainability reporting more manageable for SMEs.

In conclusion, the VSME is a valuable tool for SMEs in their sustainability reporting journey. Its simplified datapoints and clear framework will help SMEs navigate the complex world of sustainability reporting, ensuring they can focus on what matters most: growing their businesses in a sustainable and responsible way.

Market receives assertive and optimistic message from Commission's VSME recommendation