The VSME standard: a prime example of EU simplification?

The EU Commission's omnibus proposal of February 2025 indicates a significant restriction of the scope of application of the CSRD. In future, only companies with more than 1,000 employees will be obliged to report in accordance with ESRS. This means that many SMEs will no longer have a formal obligation to report on sustainability.

But this is precisely where the Voluntary Sustainability Reporting Standard for SMEs (VSME) comes in: A voluntary, simplified framework for companies that want to create transparency - be it towards customers, banks, investors or in the supply chain.

What the VSME standard offers

The VSME standard developed by EFRAG consists of two modular report components:

• Basic Module (Basic Module): Contains basic disclosure requirements on ESG issues, including company profile, environmental and social metrics and basic corporate ethics disclosures.
• Extension module (Comprehensive Module): Includes in-depth information on climate transitions, human rights due diligence, climate risks, diversity and sustainability strategies at management level.

In contrast to the ESRS, the VSME is not based on a mandatory double materiality analysis (DWA), but follows the "if applicable" principle: what is relevant for the company is reported. Nevertheless, we recommend carrying out a structured materiality analysis in order to make informed decisions about relevance and to strategically develop your own ESG communication.

Why voluntary implementation makes strategic sense

Despite the elimination of reporting obligations, the pressure of expectations along the supply chain and from financing providers remains. The VSME standard allows SMEs to meet these expectations proactively:

• Fulfillment of indirect requirements from supply chains through structured ESG disclosure (Value Chain Cap)
• Attractiveness to banks and investors, who are increasingly demanding ESG data
• Risk provisioning and opportunity management through structured ESG analysis
• Efficiency gains through early integration of reporting into company processes

Conclusion: The VSME can be seen as a "mini-ESRS" - with less complexity but high strategic relevance.

The path to implementation: assessing materiality & mapping

Even if the DWA is not prescribed in the VSME, our experts strongly recommend that SMEs carry out a targeted double materiality analysis with the following objectives:

• Identification of sustainability-related impacts, risks and opportunities (IROs)
• Evaluation along impact materiality (social & ecological effects) and financial materiality(effects on the company)
• Consideration of internal perspectives (strategy, management) and external requirements (stakeholders, industry)

If material topics have already been collected as part of a CSRD-compliant double materiality analysis, we recommend mapping this content to the structure of the VSME.

Mapping of key topics to VSME specification points

Step 1: Identify relevant topics from the ESRS-AR16 list

Based on the materiality analysis, relevant topics are selected from the ESRS topic architecture (e.g. climate change, biodiversity, labor standards).

Step 2: Thematic prioritization via industry context, stakeholder expectations, value chain

Example: A manufacturing company with energy-intensive processes is likely to prioritize issues such as energy consumption, greenhouse gas emissions and occupational safety.

Step 3: Matching the topics to VSME data

Step 4: Derivation of specific disclosure content & data requirements

Example: If "Greenhouse gas emissions" is classified as material, the following information is required under VSME B3:

• Energy consumption (direct/indirect)
• GHG emissions in CO2 equivalents (optional: Scope 1 and 2)
• Planned reduction targets (optional under C3)

5 Conclusion & outlook: Voluntariness as a strategic signal

The VSME standard offers SMEs a structured but lean alternative to ESRS reporting. It enables voluntary transparency without excessive demands and shows stakeholders: Sustainability is taken seriously in the company.

Five Glaciers Consulting supports companies in this process,

• to carry out methodologically sound materiality analyses,
• efficiently implement VSME-compliant mapping and
• ESG reports as a strategic management tool.

Use the flexibility of VSME to implement your sustainability strategy with a sense of proportion but substance.