Why voluntary ESG reporting matters

A closer look at the VSME Standard

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Companies are facing growing pressure to disclose their sustainability performance. This demand comes not only from evolving regulatory requirements but also from investors, clients, and other stakeholders increasingly focused on environmental, social, and governance (ESG) data. 

While the Corporate Sustainability Reporting Directive (CSRD) sets mandatory ESG disclosure rules for many companies, not all businesses fall within its scope. For those outside the CSRD framework, the Voluntary reporting standard for SMEs (VSME) provides a meaningful and pragmatic way to begin or continue their ESG reporting journey.  

In this article, you’ll learn more about the value and benefits of publishing a voluntary ESG report if your company falls outside the CSRD scope. Find out how you can leverage this framework strategically, even when uncertainty rules the regulatory landscape. 
 
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The benefits of voluntary ESG reporting 

An ESG report addresses not only how environmental, social, and governance factors affect your organisation’s financial performance, but also how your company’s operations impact people, communities, and the planet. It helps stakeholders (including investors, clients, and regulators) understand the financial risks and opportunities of a company and how it contributes to or mitigates ESG challenges. 

Even if the proposed changes to the CSRD (through the EU’s 1st ‘Omnibus’ proposal) may reduce the number of companies required to report, voluntary ESG disclosure remains strategically important. Here's why: 

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Proactive risk management
Voluntary ESG reporting enables you to identify and address environmental, social, and governance risks before they escalate. This forward-thinking approach protects your company's reputation, minimises the likelihood of costly incidents and regulatory fines, and promotes the efficient use of resources. By mitigating risks early, your business can achieve greater long-term resilience.
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Enhancing operational efficiency
Implementing ESG practices often reveals opportunities to optimise your operations. Just think about reducing energy consumption, minimising waste, or improving supply chain performance. These improvements not only support your environmental goals but also lead to cost savings and increased profitability.
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Access to capital
More and more investors are interested in the sustainability efforts of a company. Transparent ESG reporting demonstrates accountability and long-term vision, making your business more attractive to capital providers.

Tip: Both successful as well as unsuccessful outcomes provide valuable learnings for future initiatives. Don’t just focus on the positively received proof of concepts. 

What is the VSME? 

The VSME (Voluntary Sustainability Reporting Standard for non-listed SMEs) was launched by the European Financial Reporting Advisory Group (EFRAG) in December 2024. It was designed specifically for SMEs and micro-enterprises outside the CSRD’s scope, offering a simplified yet structured way to disclose ESG performance. 

Because of the Omnibus proposal, the VSME is now also recommended as a starting point for larger companies that might fall outside of the scope of the CSRD.  

The VSME framework provides two reporting modules: 

  • Basic Module:  

This framework covers 11 core ESG disclosure requirements across environmental, social, and governance topics – with an emphasis on quantitative data.

  • Comprehensive Module (optional): 

Builds further on the Basic Module with 9 additional disclosures, offering more qualitative insights tailored to stakeholder needs. 

Among these 20 disclosure requirements, companies can select the ones that are relevant for their organisations. A double materiality assessment is not mandatory but can be used as guideline for the selection. Otherwise, companies can use the ‘if applicable’ principle, selecting disclosures only when relevant. For example, if a company operates in a high-risk sector or has specific ESG policies in place. 

Although the VSME may not meet every stakeholder’s request for ESG data, it offers a strong and adaptable starting point. You can supplement it with additional entity-specific disclosures as needed. 

Why adopt the VSME Standard? 

  1. Strengthen your position in the value chain: 

Even if your company is no longer subject to CSRD reporting requirements, your business partners may still be. These CSRD-compliant companies will need ESG information from their suppliers. By using the VSME standard, you can efficiently respond to such requests. 

In addition, the European Commission has designated the VSME as the official ‘value chain cap’. This means CSRD-reporting companies cannot require more ESG information from their suppliers than what the VSME standard outlines. As a result, the VSME offers a practical and streamlined way to respond to the growing number of ESG questionnaires from banks, corporate clients, and other stakeholders. 

  1. Build internal capacity and sustainability readiness: 

Implementing the VSME standard supports the development of internal ESG processes and fosters a sustainability-oriented culture across your organisation. This proactive approach positions your company for future compliance. It prepares you for potential growth into regulated reporting categories and strengthens your long-term resilience.  

  1. Enable cost-efficient and scalable reporting: 

The VSME is designed with proportionality in mind. It allows businesses to begin with a simplified Basic Module and expand their reporting scope over time as needed. This flexibility makes it an ideal choice for small and medium-sized enterprises looking to manage ESG reporting efficiently and sustainably. 

  1. Already started with CSRD? Keep the momentum going! 

If your company has already begun CSRD preparations but now falls outside its scope, the VSME allows you to preserve and capitalise on that investment. You can continue using key elements, such as your double materiality assessment and stakeholder engagement work, within a credible ESG framework. The VSME keeps you on the path to ESG maturity without the administrative weight of full CSRD compliance. 

Get started with our VSME Reporting Toolkit 

To help you with setting up VSME reporting, we developed a toolkit that includes:

  • A project management tool
  • Template text for all key sections of your report
  • Best-practice examples from leading companies
  • A hands-on workshop to upskill your team
  • Datapoint selection file

This toolkit is designed to complement EFRAG’s digital tools and aligns with the latest EU and national policy developments. 

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Voluntary ESG reporting represents just one strategic move in your sustainability journey.

You'll find additional proven approaches and actionable insights in our comprehensive ESG white paper, where we outline the complete roadmap for turning compliance challenges into competitive advantages.
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Turn your ESG actions into effective insights

If you are considering voluntary ESG reporting but are not sure where to start, we are here to help. 

Contact us today to identify the right reporting framework for your needs and receive hands-on support in developing your first voluntary report. 

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