Small and medium-sized enterprises are entering a new chapter in ESG reporting. While much attention has centred on the Corporate Sustainability Reporting Directive (CSRD) and its extensive ESRS standards, the European Commission has introduced a more proportionate framework tailored for smaller organisations: Voluntary SME (VSME) Disclosure Standards.
Although voluntary, these standards carry significant strategic weight. As larger companies face stricter ESG requirements, SMEs - often integral parts of their value chains - must demonstrate sustainability performance to remain competitive, credible and compliant with downstream expectations.
For ESG professionals supporting SMEs, VSME disclosure is a critical opportunity to strengthen sustainability governance and prepare for increasingly data-driven stakeholder demands.
SMEs may not face mandatory CSRD reporting, but they operate within the same ecosystem. Investors, banks, large customers and regulators increasingly expect consistent, comparable ESG information - regardless of company size.
VSME disclosure helps SMEs:
In many ways, VSME is not about compliance - it’s about staying competitive.
Unlike the full ESRS suite, VSME standards are intentionally simplified. They offer SMEs a structured but manageable way to disclose sustainability performance.
Covers essential information on governance, strategy and policies relevant to sustainability.
SMEs must describe:
SMEs report on core environmental topics, such as:
These may include:
Focused on ethics, compliance, anti-corruption and supplier management.
The aim is to ensure SMEs offer meaningful, credible ESG information without the administrative burden of full ESRS.
The VSME standard is designed to be proportional:
Despite this, the structure aligns with ESRS, making it easier for SMEs to integrate into value chain reporting.
Preparing for VSME disclosure requires several foundational steps.
Identify which environmental, social and governance topics matter based on operations, stakeholders and risks.
Clarify roles, responsibilities and escalation processes - even small steps improve clarity.
Particularly around emissions, energy use, workforce metrics and policies.
Policies do not need to be complex, but they must be clear and grounded in practice.
Suppliers, customers, employees and investors can all shape priority topics.
This ensures scalability and reduces manual effort as reporting expectations grow.
SMEs often report similar barriers when approaching ESG disclosure:
A lightweight, digital-first approach can help overcome these challenges without overwhelming the organisation.
Manual ESG reporting becomes inefficient quickly, even with simplified standards. Digital platforms provide structure, traceability and repeatability - crucial for scaling sustainability maturity.
Digital platforms help SMEs:
Digitalisation ensures that ESG reporting adds strategic value rather than administrative weight.
The VSME Disclosure Standards offer SMEs a practical, approachable way to enter the ESG reporting landscape. They help organisations build foundational governance, improve transparency and position themselves as credible partners in increasingly sustainability-driven value chains.
For ESG professionals, VSME is not only a compliance exercise - it is a strategic opportunity. By adopting structured disclosure practices early, SMEs build resilience, unlock new opportunities and prepare for more complex requirements in the years ahead.
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