Our thinking

SMEs’ new disclosure sidekick

10 January, 2025

EFRAG has unveiled the Voluntary Sustainability Standard for non-listed SMEs (VSME) – the voluntary counterpart to the ESRS. In a paradoxical twist, while critics claim EU reporting requirements threaten competitiveness, the VSME aims to boost it by offering smaller businesses a lifeline to sustainability performance and disclosure. 

Unlike the mandatory standards, this voluntary version removes the requirement for a double materiality assessment and focuses on a predefined list of topics, and centres on disclosures related to actions, commitments, and performance. This simplified approach acknowledges SMEs generally have smaller negative impacts than larger companies and fewer resources to dedicate to implementing the full ESRS requirements. 

SMEs can start with the Basic Module, focusing on environmental KPIs, workforce data, and anti-corruption measures, or go deeper with the Comprehensive Module, which includes governance, climate targets, human rights, and DEI disclosures. Both options are backed by detailed guidance, with practical tools like templates and calculators in development to ensure a smooth adoption process. 

With over 50,000 companies in scope for CSRD—including many large businesses—adopting the voluntary standard makes strategic sense for SMEs and even for non-EU companies looking to enhance their reporting. Many larger companies will require sustainability-related information from their SME partners to meet their own obligations. Aligning with the VSME helps SMEs stay competitive and relevant, meet increasing partner demands, and access more sustainable financing. 

The VSME is a practical way to tackle evolving sustainability demands.  If you’re interested, EFRAG has prepared a highlights webinar, as well as deep dives into the Basic Module and the Comprehensive Module.   Whether you’re just getting started or staying ahead of the curve, we’re here to help you make it work for your business.

By Mariana Garcia