In practice, small and medium-sized enterprises (SMEs) often have to engage with sustainability reporting. In 2025, the EU Commission issued a recommendation for a voluntary SME standard. This "Voluntary SME-Standard" (VSME) could help smaller enterprises respond to the requests from their business partners for sustainability information along the value chain and present their sustainability goals and projects more easily.
Non-capital-market-oriented micro, small, and medium-sized enterprises are not legally obliged to prepare a sustainability report. However, they are often requested by their business partners and customers to provide sustainability information – which can vary significantly.
FAQ on Voluntary SME Standard (VSME)
What is a recommendation by the EU Commission?
The EU Commission can issue recommendations, published in the Official Journal of the EU in all languages of member states. Generally, such recommendations are non-binding.
Why did the EU Commission issue a recommendation in 2025?
The Commission seeks to address uncertainties in supply chains. The VSME was created to assist SMEs in handling and standardizing numerous sustainability information requests.
Where can I find the recommendation or the VSME in various languages?
The recommendation has been published in the Official Journal of the EU. The German version is available here in the Official Journal.
Is the VSME already integrated into statutory sustainability reporting?
No. The VSME is not yet part of the European Sustainability Reporting Directive (CSRD) or the European Sustainability Reporting Standards (ESRS). However, the trilogue agreement under the so-called Omnibus procedure envisions its inclusion. An implementation is expected in 2026.
Who developed the VSME?
The EU Commission tasked the "European Financial Reporting Advisory Group" (EFRAG) with developing a voluntary standard for SMEs. EFRAG presented a first draft in early 2024, allowing comments and practical testing. The revised standard was submitted to the EU Commission at the end of 2024.
What does the "Omnibus" concerning sustainability mean for the VSME? What role should the VSME play?
In February 2025, the EU Commission proposed revisions to the Corporate Sustainability Reporting Directive (CSRD) in the so-called Omnibus I on sustainability. It includes limiting the information companies must collect from their supply chains, aligned with the minimal requirements of the VSME but with certain exceptions.
The proposal also intends to make the VSME binding by adopting it as a delegated regulation.
Will the VSME be revised, and if so, when?
The EU Commission plans to consult with member states and stakeholders in 2026 before adopting the VSME as a delegated legal act.
Are there support tools for using the VSME?
The German Sustainability Code platform, funded by the Federal Ministry for Economic Affairs, allows companies to implement the VSME digitally. It also provides various tools for sustainability reporting. EFRAG offers extensive resources at www.efrag.org, including explanatory videos available in German, a digital Excel template for completing the VSME (currently only in English), and additional guides. The offerings continue to expand and include links to resources in the respective national languages.
Contents of the VSME
The VSME provides two modules (for the individual company or on a consolidated basis): the basic module and the additional module. They contain sustainability information on environmental and social topics as well as corporate policies.
A company can apply the basic module alone or the basic module supplemented by the additional module.
Application options:
| Option 1 | Option 2 |
|---|---|
| Basic module | Basic module |
| Additional module |
The report in accordance with the VSME is to be prepared annually if it is requested by large companies or banks. If the SME prepares annual financial statements, the VSME report should be available at the same time as the annual/consolidated financial statements. The SME can decide whether to publish its report according to the VSME. Certain confidential information may be omitted, but it must be indicated that this option has been used. From the second year onward, comparative figures from the previous year should be included in the report.
The two modules expect some information from the company and provide other data points under the "if applicable" approach. In this case, an SME applying the VSME only has to provide information that is relevant to the SME.
Consultation on the first VSME draft
As part of a consultation from January to May 2024, EFRAG requested assessments and evaluations of the VSME draft. Contributions from SMEs applying the VSME were as important as those from large companies and business partners requesting data from SMEs.
Pilot project on the suitability of the VSME
Twelve member companies of the German Chamber of Commerce and Industry (IHK) volunteered to examine the requirements of the VSME ESRS in detail to assess its practical applicability and feasibility.
The participating SMEs came from various industries and regions, with employee numbers ranging from 20 to 200.
The German Chamber of Commerce and Industry (DIHK), the German Accounting Standards Committee (DRSC), and the Baden-Württemberg Cooperative State University (DHBW) supported the companies from January 2024 to May 2024 by conducting introductory workshops on the VSME modules, providing translations of the VSME ESRS requirements, and holding numerous evaluation discussions.
- Relevant in topic:
- Sustainability and Corporate Responsibility
- Key areas:
-
- Sustainable Finance
Ansprechpartnerinnen
Cornelia Upmeier
Director CSR | Special Projects
Annika Böhm
Director Corporate and Accounting Law