At the end of February, the European Union proposed far-reaching changes to companies’ sustainability reporting and obligations with its omnibus proposal. These changes aim to reduce the regulatory burden on small and medium-sized enterprises (SMEs). But what role does the voluntary VSME play? And how can the simple transition from the ESRS be achieved?
Our expert Lea Müller explained these questions in detail in our webinar.
Watch the recording here or get an overview first in the following blog post.
BACKGROUND
Voluntary ESRS for SMEs (VSME) is becoming increasingly important, particularly as a result of the EU Omnibus Regulation. In future, companies with fewer than 1,000 employees will no longer be subject to the mandatory ESRS reporting obligations. Nevertheless, the EU Commission recommends that these companies report voluntarily in accordance with a recognized standard. The standard offers a lean and practical solution to ensure continued transparency and to position themselves sustainably within the value chain.
Table of contents
- What is the VSME? – Background and purpose of the voluntary reporting standard
- Why the VSME is particularly relevant now
- Advantages of the VSME
- Code Gaia and VSME: How to successfully transition from ESRS to VSME
- Conclusion
1 What is the VSME? – Background and purpose of the voluntary reporting standard
VSME ESRS is the abbreviation for “Voluntary Small and Medium Enterprise European Sustainability Reporting Standard”, which is recommended for voluntary use in sustainability reporting by small and medium-sized enterprises (all companies with fewer than 1000 employees and €50 million turnover) operating in the European Union. The application of this standard should be considered by companies that are not required by regulations to report in accordance with CSRD.
DEVELOPMENT
In September 2023, the European Commission commissioned EFRAG (Europe’s voice in corporate reporting) to develop a voluntary sustainability reporting standard for non-listed SMEs. As a result, EFRAG published the first draft of the VSME (“Exposure Draft”) for public consultation in January 2024. After a revision phase, EFRAG approved the final version in October 2024, which was submitted to the European Commission in December 2024. On July 31, 2025, it adopted the VSME standard as a recommendation for voluntary sustainability reporting by small companies.
In EFRAG ‘s words, the standard is intended as a simple reporting tool to help SMEs respond efficiently and appropriately to requests for sustainability information from business partners (i.e. banks, investors or larger companies for which SMEs are suppliers) and to facilitate their participation in the transition to a sustainable economy. The European Commission recommends that smaller companies also continue to focus on sustainability reporting so that they can provide information to ESRS-reporting companies in the value chain.
2. why the VSME is particularly relevant now
The EU Omnibus Regulation announced at the end of February stipulates that companies with fewer than 1,000 employees will no longer be subject to the mandatory ESRS in future. This means that some companies that were previously obliged under the CSRD to prepare a “sustainability statement” in accordance with the ESRS are now no longer required to do so. They can therefore now fall back on voluntary reporting standards. The EU Commission recommends that these companies use voluntarily recognized standards, such as the Voluntary Small and Medium Enterprise European Sustainability Reporting Standard. By simplifying the standard, companies can continue to document their sustainability efforts without having to go to the great expense of ESRS reporting. In addition, the “voluntary ESRS” provides a standardized basis for transparency towards customers, investors and banks.
3. advantages of the VSME
The standard offers SMEs a compact and modular solution for structured sustainability reporting. It focuses on key ESG indicators and enables efficient mapping of the sustainability strategy. Due to its significantly smaller scope compared to the mandatory ESRS, it remains practical and applicable for companies of all sizes without overburdening smaller companies with little or no formalized processes.
The voluntary standard follows a very simple structure consisting of two modules. The Basic Module and the Comprehensive Module. You can find out exactly how it is structured in this blog post.
4 Code Gaia and VSME: How to successfully transition from ESRS to VSME
Code Gaia offers companies a user-friendly software solution for implementing the Voluntary Small and Medium Enterprise European Sustainability Reporting Standard. The standard has been fully integrated into the software since last year and enables companies to create their sustainability reports efficiently.
Companies that have already started with ESRS reporting can seamlessly switch to the standard. The Code Gaia software helps to transfer existing data and adapt it to the new requirements of the standard. This means an automatic transfer of relevant ESRS key figures into the VSME format. In addition, a simplified report structure with clear input fields and a direct comparison between ESRS and VSME requirements to identify gaps or optimization potential.
The advantages of reporting with Code Gaia
- Simple data collection: Companies can adopt existing ESG data or efficiently collect new key figures.
- Automatic translation of reporting requirements: The software shows which information from ESRS reporting is still relevant and which can be reduced.
- Structured implementation: Companies receive clear guidelines for creating the report step by step.
- Export and reporting function: The finished report can be exported as a PDF or in other formats and used for internal or external purposes.
How to switch from ESRS to VSME
For companies that have already been working with the ESRS standards, the switch to the Voluntary Small and Medium Enterprise European Sustainability Reporting Standard means a significant simplification. While ESRS reporting often includes over 100 disclosure requirements, the voluntary standard reduces this scope considerably. Code Gaia helps to make this transition efficient:
- Analysis of the current reporting status: Which ESRS key figures have been recorded so far? Which data is still relevant for the VSME?
- Automated conversion: The software assigns existing data to the appropriate VSME categories.
- Identify and close gaps: Companies receive an overview of which additional information is useful or necessary.
- Creation of the report: With the Code Gaia platform, companies can create and publish the VSME report directly digitally.
We have summarized how your company can prepare the VSME report efficiently and switch smoothly from the ESRS to the voluntary standard in our compact guide. We have also prepared a mapping to help you find the right place in the standard for content that has already been developed. This guide will help you to make the transition in a structured and efficient way.
6. conclusion
The VSME is an efficient and pragmatic alternative to ESRS reporting for SMEs. It reduces the reporting effort, but still offers a high level of transparency and connectivity to larger companies and investors. Our software provides companies that want to switch from ESRS reporting to the voluntary standard with a simple solution to make this process seamless.
