Small and medium-sized enterprises (SMEs) often find themselves caught in a double bind when it comes to ESG reporting. On the one hand, expectations from banks, investors, and corporate clients to provide sustainability data are growing rapidly. On the other, most reporting standards have been designed with large enterprises in mind — overlooking the operational realities of smaller organisations.

That’s exactly where the VSME standard comes in. Developed specifically for non-listed SMEs, it offers a voluntary yet structured framework that reflects how smaller companies actually operate and balances practicality with strategic relevance.

This article explains how the VSME works, who it's for, and why it’s becoming more relevant than ever — especially in the context of the EU Omnibus Proposal and broader shifts in ESG regulation. 

What Is VSME?

The Voluntary Sustainability Reporting Standard for SMEs (VSME) is about pragmatic ESG reporting, not about regulatory compliance. It helps SMEs respond to growing stakeholder demands without adding unnecessary complexity, giving them tools to identify relevant ESG risks, manage their sustainability data more effectively, and communicate progress on their own terms.

VSME is tailored to the economic footprint and reporting capacity of SMEs. It’s not a watered-down version of CSRD but a standalone standard designed to empower SMEs to participate meaningfully in Europe’s broader sustainability transformation.

The VSME standard was created to help SMEs:

• Manage their sustainability performance

• Strengthen their operational resilience and competitiveness

• Respond to data requests from stakeholders

Ultimately, enabling SMEs to access green financing opportunities and contribute to the broader transition toward a sustainable economy.

Who is VSME for?

The VSME framework applies specifically to non-listed micro, small, and medium-sized enterprises, as defined by the EU:

What is the VSME standard used for?

VSME is primarily designed to support bilateral information exchange:

• Banks, large companies, and investors can request sustainability information from their SME suppliers and partners

• SMEs can also use VSME to voluntarily publish sustainability reports, enhancing transparency and trust with external stakeholders

How is the VSME structured?

VSME is built around a modular structure. Companies select one of two modules based on their context and stakeholder expectations.

Key points about applying the VSME:

• Companies must comply with the full content of the selected module

• The “If applicable” approach allows organisations to omit disclosures they deem irrelevant, with no justification needed

• Companies can add additional disclosures (qualitative or quantitative) to reflect sector-specific or organisation-specific topics

• Comparative reporting becomes necessary from the second reporting year

How is VSME different from other ESG frameworks?

VSME was inspired by the European Sustainability Reporting Standards (ESRS), developed by EFRAG under the CSRD. However, VSME takes a more pragmatic and SME-friendly approach:

Key changes under the Omnibus Proposal

In February 2025, the European Commission introduced the Omnibus Proposal to simplify sustainability reporting across the EU. Among its suggested changes:

• Only companies with >1,000 employees and either €50M turnover or €25M in assets will be required to report under the CSRD

• Many small and medium-sized enterprises will no longer fall under mandatory disclosure obligations

• Recommendations for voluntary sustainability reporting based on the VSME Standard and incorporated into delegated acts.

Consequently, the VSME is quickly gaining relevance—not only for small businesses but also for midmarket companies and financial institutions navigating the Omnibus Proposal.

Recommendations for voluntary sustainability reporting based on the VSME Standard and incorporated into delegated acts.

This means that the VSME is quickly gaining relevance—not only for small businesses but also for midmarket companies and financial institutions navigating the Omnibus Proposal.

How does VSME reporting work in practice?

• Frequency: Reports are typically prepared annually, aligned with financial reporting cycles

• Consistency: If ESG data hasn’t changed, companies can reference the previous year

• Format: Reports can be published:

  • As a standalone report

  • Within a management report section

  • Through cross-references to accessible documents

• Disclosures can be omitted if the information is sensitive or classified

How Atlas Metrics Supports VSME Reporting

Atlas Metrics helps SMEs meet VSME requirements with ease, combining automation, expert guidance, and ESG insights in one seamless solution.

Effortless VSME Compliance

Whether you’re reporting under the Basic Module or taking a step further with the Comprehensive package, Atlas Metrics automates your VSME reporting. From data collection to report generation: enter your data once, and our platform ensures it is transferred across relevant disclosures and even to other frameworks if needed.

This cross-standard compatibility avoids duplicate entries, saves time, and keeps your ESG documentation aligned across the board.

Smart Guidance and Built-in Expertise

Our platform is designed to make VSME adoption intuitive. You’ll find built-in definitions, glossaries, examples, and step-by-step prompts to help you apply the VSME standard confidently and correctly.

Actionable Insights and Benchmarking

With Atlas, VSME reporting isn’t just about compliance, it’s about strategy. We provide a clear overview of your sustainability performance and allow you to benchmark your results against industry averages. This enables continuous improvement and more informed communication with customers, regulators, or investors.

Conclusion

The VSME Standard is playing an increasingly significant role in the European ESG landscape. It offers SMEs a simplified and flexible approach to sustainability reporting without the burden of full CSRD compliance. For mid-market companies, the VSME provides a structured reporting framework during the transition period as the omnibus regulatory changes are finalized, with the EU indicating it will also serve as the foundation for future voluntary reporting standards for these companies. 

Whether you're responding to data requests from corporate partners or actively driving your ESG strategy forward — Atlas Metrics helps you report with confidence, clarity, and compliance.