EFRAG's VSME: A New Sustainability Standard for SMEs
What is VSME, and why is it important for SMEs?
In December 2024, EFRAG (European Financial Reporting Advisory Group) published the Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME), a new voluntary reporting standard aimed at small and medium-sized non-listed companies.
This standard stems from the need to provide SMEs with a simple, standardized tool to respond to the increasing demands for sustainability data from banks, investors, and large companies. The aim is to reduce the administrative burden and improve access to green financing.
Modular structure: a tailor-made approach for SMEs
The VSME is structured in two modules:
This modular structure allows SMEs to choose the level of detail best suited to their needs and capabilities, facilitating progressive and customized adoption.
VSME benefits: simplification and access to green finance
The VSME is designed to replace the multiple ESG questionnaires currently in use, making collecting sustainability information more effective. This reduces the administrative burden and creates opportunities for SMEs to access sustainability-related finance, improving their market competitiveness.
A participatory process for a shared standard
The VSME development process included a public consultation between January and May 2024 involving SME associations, banking institutions, and large companies. The feedback made it possible to simplify the standard further, making it more accessible and applicable.
Voluntary adoption of the VSME: added value for unlisted SMEs
VSME is only intended for SMEs not subject to the Corporate Sustainability Reporting Directive (CSRD), and its adoption is completely voluntary. However, the standard can help SMEs respond to their business partners' demands for transparency and improve their reputation and business relations.
Next steps: support and resources for VSME implementation
To support VSME implementation, EFRAG plans to launch several initiatives in 2025, including:
VSME: a more sustainable future for European SMEs
In summary, VSME represents a significant step towards standardizing sustainability reporting for unlisted SMEs. It provides a practical tool to address transparency and sustainability challenges, contributing to a more sustainable and resilient European economy.