The Voluntary Small and Medium Enterprise European Sustainability Reporting Standard (VSME ESRS), specifically developed for micro, small and medium-sized enterprises (SMEs), offers a simplified means of disclosing sustainability information. Following the publication of the draft version in December 2023, the final version is now available.

With the latest Omnibus Regulation, the VSME is gaining further significance. Companies that were originally subject to CSRD reporting requirements but have now been excluded from the scope can use the VSME as a practical alternative to continue their reporting. This is particularly relevant for companies that have already taken initial steps in sustainability reporting or are strategically preparing for future requirements.

Note: The Omnibus regulation is still in the proposal stage, and further decisions are pending. This blog is based on the current version of Omnibus as of today. (2.04.25).

In this article, we take a look at how the standards have evolved, what changes have been made, and why the VSME will continue to play an important role.

Table of contents

1. Timeline: Where do we come from and where are we now?
2. Key Changes in the Final Version
3. Why the VSME is relevant
4. Implementing the VSME with Code Gaia

1. Timeline: Where do we come from and where are we now?

Initial draft version

The original version of the VSME was released as a draft at the end of 2023. The goal was to create a practical and applicable standard as an alternative to the ESRS for small and medium-sized enterprises.

Publication of the exposure draft

After an internal revision, the exposure draft of the VSME was published in January 2024.

Public consultation and testing phase

Following the publication, a consultation phase was initiated, during which (financial) companies, sustainability experts, and other stakeholders provided feedback. The focus was on user-friendliness and practical implementation of the standards.

Revision and final publication

After evaluating the feedback, the VSME were revised and finalized at the end of 2024. Significant changes were made to simplify application and reduce unnecessary requirements.

VSME 3.0 / VSME+ ?

A further revision of the VSME standard in response to the Omnibus proposal is possible, as larger companies with less than 1,000 employees will now also use the VSME for their reporting. The future development of the VSME remains to be seen.

2. Key changes in the final version

The final version of the VSME introduces several important adjustments:

Revised modules, core module remains mostly the same
The structure of the standards has been streamlined to enable more efficient reporting. However, the core module remains largely unchanged, as it is essential for capturing fundamental sustainability information.
Additionally, the Comprehensive Module replaces the Narrative and Business Partner Modules, consolidating content. Integrating these into a single module aims to make reporting clearer and more user-friendly.
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Elimination of the materiality assessment
In the final version, no materiality assessment is required. This significantly reduces complexity, and the time required for companies.

General simplification of requirements
Many detailed requirements have been revised or removed to make reporting obligations clearer and more practical.

Reduced scope and simplified structure
The standard has been structurally optimized so that companies can capture and report relevant information more quickly and efficiently.

3. Why the VSME is relevant

Even in their final form, the VSME remain an essential tool for small and medium-sized enterprises looking to integrate sustainability into their reporting systematically. Here are some key reasons:

• Ideal for starting sustainability reporting
  • The standards provide a clear and simple structure to help companies begin their journey toward sustainable business practices.
    
• Enhancing transparency
  • By complying with the VSME, SMEs can make their sustainability efforts more transparent, thereby strengthening trust among customers, investors, and partners.
    
• Meeting supply chain requirements
  • Large companies in the supply chain of SMEs are increasingly demanding sustainability information from their suppliers. The VSME help companies proactively meet these requirements.
    
• Marketing advantages and protection against greenwashing
  • Systematic collection of sustainability data can be effectively used for marketing purposes. At the same time, standardized reporting helps avoid unintentional greenwashing.
    
• Increasing relevance due to the omnibus regulation
  • The new Omnibus Regulation further enhances the importance of the VSME. Companies that were initially subject to CSRD reporting but have now been excluded face the decision of whether to continue reporting voluntarily. Many of these companies have already started sustainability reporting or recognize the strategic advantage of early preparation.
  • The VSME provide these companies with a practical alternative to continue their reporting without having to meet the complex requirements of the full ESRS. This allows them to maintain transparency and meet the expectations of stakeholders and businesses in their supply chain.

4. Implementing the VSME with Code Gaia

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, enabling companies to prepare their sustainability reports efficiently.

Companies that have already started reporting in line with the ESRS can transition seamlessly to the VSME standard. The Code Gaia software supports this process by transferring existing data and aligning it with the new requirements of the standard. This includes the automatic conversion of relevant ESRS metrics into the VSME format. In addition, the software offers a simplified reporting structure with clear input fields, as well as a direct comparison between ESRS and VSME requirements to help identify gaps and opportunities for improvement.

The advantages of reporting with Code Gaia

1. Streamlined data collection: Companies can import existing ESG data or efficiently record new metrics.
2. Automatic translation of reporting requirements: The software highlights which disclosures from the ESRS reporting remain relevant and which can be streamlined or reduced.
3. Structured implementation: Companies receive a clear step-by-step guide to support the preparation of their report.
4. Export and reporting function: The completed report can be exported as a PDF or in other formats and used for internal or external purposes.

We have summarised how your company can efficiently prepare the VSME report and smoothly transition from the ESRS to the voluntary standard in our concise guide. To support this, we have also prepared a mapping that helps you identify the appropriate place for content you have already developed within the new standard. This guide is designed to help you manage the transition in a structured and efficient manner.