EU releases sustainability standard for SMEs

The European Commission has released a new Voluntary Sustainability Reporting Standard for SMEs (VSME) aimed at easing the reporting burden on small and medium-sized companies.

The new VSME standard is designed to help smaller companies respond to requests for sustainability information from larger companies and financial institutions. While it was initially created to help companies not covered by CSRD, following the ongoing Omnibus changes, it could be used more broadly, potentially even as the basis of the new simplified standard.  

The VSME standard provides a simplified framework designed to suit to the generally more limited capacities of SMEs whilst also aligning with broader EU sustainability goals. It is voluntary and aimed at companies with fewer than 250 employees.

The new standard comprises two modules including “basic” which contains 11 key sustainability indicators and is considered the “minimum requirement” for small and medium-sized companies (while micro-companies can select elements rather than all indicators), and “comprehensive” which includes 9 additional indicators and is aimed at more advanced companies and includes indicators such as Scope 3 emissions, climate risk, and human rights. The basic module is a prerequisite for completion of the comprehensive module.

The Commission recommends that large companies and financial institutions use this standard when requesting sustainability data from SMEs. With its simplified format and structure, some suspect the VSME could become the go-to standard for a wider range of larger companies and financial institutions, ultimately superseding the CSRD for those no longer captured by the smaller threshold.

Discussions on the final Omnibus package are ongoing, we will update you when more information is available.

For more information on the VSME or CSRD, please get in touch.