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EFRAG launched the Final Voluntary Sustainability Reporting Standard for SMEs (VSME)
FRAG has officially launched the Voluntary Sustainability Reporting Standard (VSME) for non-listed micro, small, and medium-sized enterprises (SMEs). Developed at the request of the European Commission, the VSME simplifies sustainability reporting, helping SMEs align with environmental goals and access green financing opportunities.
What is the Voluntary Sustainability Reporting Standard -VSME?
The Voluntary Sustainability Reporting Standard for SMEs, or VSME, provides a standardized framework for reporting sustainability-related data. Targeting SMEs not covered by the Corporate Sustainability Reporting Directive (CSRD), the VSME aims to reduce the burden of multiple and uncoordinated ESG data requests.
Key objectives of the VSME include:
Simplifying ESG disclosures for SMEs.
Facilitating access to sustainable financing.
Supporting the transition to a sustainable economy.
Detailed Structure of the VSME
The VSME is crafted to simplify sustainability reporting while meeting the diverse needs of SMEs. Its modular structure provides flexibility based on the complexity and capacity of the reporting entity.
Here's an in-depth look at its two core modules:
Basic Module: Simplified, Foundational Reporting
Designed primarily for micro and small undertakings, the Basic Module provides a streamlined framework focusing on core sustainability disclosures. These are intended to serve as a starting point for SMEs new to sustainability reporting.
Key Components of the Basic Module:
General Information:
Legal form, operational geolocation, and sector classification.
Sustainability-related certifications or labels obtained.
Environmental Metrics:
Total energy consumption and breakdown by renewable and non-renewable sources.
Scope 1 and Scope 2 GHG emissions, with intensity ratios based on turnover.
Data on pollution, water use, biodiversity, and circular economy initiatives.
Social Metrics:
Workforce demographics (contract type, gender, turnover).
Health and safety statistics, including accident and fatality rates.
Gender pay gap and collective bargaining coverage.
Governance Metrics:
Records of corruption and bribery incidents, including financial penalties incurred.
This module ensures that SMEs provide relevant data while keeping the reporting burden minimal.
Comprehensive Module: Advanced, Detailed Reporting
The Comprehensive Module builds on the Basic Module, catering to SMEs with more advanced reporting capabilities or those seeking to meet the demands of stakeholders such as banks, investors, or corporate partners.
Key Components of the Comprehensive Module:
Enhanced Disclosures on Strategy:
Business model and sustainability initiatives integrated into strategic plans.
Specific practices and policies for transitioning to a sustainable economy.
Advanced Environmental Metrics:
Scope 3 GHG emissions for relevant categories, using GHG Protocol standards.
Detailed climate risk assessments and mitigation plans.
Transition targets and action plans for reducing emissions.
Expanded Social Metrics:
Human rights policies addressing issues like child labor, discrimination, and forced labor.
Incident reporting and management practices for value chain-related human rights violations.
Governance Enhancements:
Revenue disclosures from high-risk sectors (e.g., fossil fuels, tobacco, controversial weapons).
Gender diversity ratios in governance bodies.
This module is tailored to SMEs operating in sectors with higher sustainability risks or those heavily reliant on external financing.
Guiding Principles and Flexibility
Scalability: SMEs can start with the Basic Module and gradually adopt the Comprehensive Module as their capabilities grow.
Relevance: Disclosures are required only when applicable, ensuring proportionality.
Alignment: The VSME aligns with larger frameworks like the European Sustainability Reporting Standards (ESRS) while maintaining simplicity.
By replacing fragmented ESG questionnaires with a standardized approach, the VSME equips SMEs to respond efficiently to stakeholder demands and align with global sustainability goals.
Stakeholder Feedback Shapes the VSME
EFRAG conducted an extensive public consultation from January to May 2024, gathering input from SMEs, industry associations, banks, and other stakeholders. Following the consultation, the VSME was refined to ensure simplicity and practical application.
Alongside the VSME, EFRAG has published the Basis for Conclusions, explaining the development process, stakeholder feedback, and cost-benefit analysis.
Educational Videos on the VSME
To support adoption, EFRAG has released three educational videos on the VSME:
Introduction to the VSME: Overview of objectives, principles, and structure.
Basic Module Details: Insights into foundational reporting metrics.
Comprehensive Module Exploration: Guidance on advanced disclosures and future VSME ecosystem plans.
These videos, led by EFRAG experts, offer a practical starting point for SMEs to implement the VSME.
Tools and Resources for SMEs
In 2025, EFRAG will roll out additional initiatives to complement the VSME, including:
Digital tools for easier reporting.
Practical guides and educational materials.
Awareness campaigns and outreach events.
These efforts aim to foster broad acceptance of the VSME and empower SMEs to align with global sustainability goals.
Why the VSME Matters
Patrick de Cambourg, Chair of EFRAG SRB, stated,
“The VSME reduces reporting complexity for SMEs and opens new opportunities for green financing.”
Chiara Del Prete, EFRAG SR TEG Chair, added that the collaborative development process has ensured the VSME meets market needs and supports SMEs effectively.
The VSME is a game-changer for SMEs, providing a clear, accessible framework to start or strengthen their sustainability journey. With the VSME, SMEs can simplify reporting, access sustainable financing, and contribute to a greener economy.
Explore the VSME and start your sustainability journey today. Watch the educational videos to learn how this innovative standard can benefit your business.
Learn More and Get Started
EFRAG is committed to supporting SMEs in their sustainability journey. For more details:
Take advantage of these resources to simplify your reporting process and align with global sustainability goals. Together, we can create a sustainable future!
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