Voluntary Sustainability Reporting Standard for non-listed SMEs
A simplified voluntary sustainability reporting standard for non-listed SMEs. European Commission Recommendation C(2025)4984 of 30 July 2025.
Context
The VSME is the European Commission's simplified voluntary standard for non-listed SMEs to report on sustainability without the complexity of CSRD/ESRS. It drastically reduces the administrative burden compared with the full standard and is designed with SMEs in mind that face pressure from B2B customers or financiers.
Regulatory origin
European Commission Recommendation C(2025)4984, published on 30 July 2025. A NON-binding standard for voluntary application. It coexists with CSRD/ESRS (binding for waves 1-3) and with the Omnibus Directive (EU) 2026/470.
Structure of the standard
Basic Module with 16 minimum datapoints. Mandatory if the SME decides to use the VSME standard.
Comprehensive Module with additional datapoints. Optional, for SMEs that wish to show greater depth.
Differences from CSRD
| Aspect | CSRD/ESRS | VSME |
|---|---|---|
| Mandatory | Yes (listed + large companies waves 1-3) | No (voluntary) |
| Datapoints | >1,100 | 16 (Basic) + additional (Comprehensive) |
| External assurance | Yes (limited → reasonable) | Not required |
| XBRL tagging | Yes | No |
| Double materiality | Mandatory | Simplified |
Timeline
EFRAG draft
EFRAG publishes the first draft of the VSME standard for public consultation.
EFRAG final
EFRAG approves the final version of the VSME standard and submits it to the Commission.
Recommendation C(2025)4984
The Commission adopts the VSME standard by way of a non-binding Recommendation.
Voluntary adoption
European SMEs begin to adopt the VSME at the request of large B2B customers obliged by CSRD.
Applied case
A non-listed textile SME below the CSRD thresholds post-Omnibus decides to adopt the VSME to respond to the ESG requests of its main customer (a large retailer subject to CSRD wave 1).
It adopts the Basic Module with 16 minimum datapoints: Scope 1+2 emissions, energy intensity, waste, pay equality, workplace accidents.
It reports in a PDF format published on its corporate website, without XBRL tagging or external assurance.
Its retailer customer receives the VSME report and integrates it as Scope 3 category 1 in its own CSRD Sustainability Statement.
Implementation cost: ~80h of internal team time + EUR 4,000 of one-off consultancy. Against the >EUR 100k a full CSRD report would cost.
Common mistakes
The VSME is not a simplified version of CSRD or of the full ESRS: it does not apply double materiality and has no legal force.
Annex I ¶4, in faithful paraphrase: this Standard has no legal authority, unlike the ESRS for large undertakings. The standard operates with predefined disclosures B1-B11 + C1-C9 subject to the "if applicable" principle of ¶13, not with a double-materiality process like that of ESRS 1 Chap. 3 (Delegated Regulation (EU) 2023/2772). Annex I ¶3 states, in faithful paraphrase, that non-listed companies fall outside the scope of the CSRD. An SME applying the VSME does not comply with the ESRS if it is obliged to do so.
The VSME is not the same as the LSME for listed SMEs foreseen by the CSRD.
Recitals 4 and 6 of the Recommendation explicitly distinguish the two standards. The LSME (described in recital 4, in faithful paraphrase, as "a separate, lighter and proportionate set of standards") is foreseen by the CSRD itself (Directive (EU) 2022/2464) for SMEs whose securities are admitted to trading on a regulated market in the Union and will be adopted by the Commission by way of a binding delegated act. The VSME is voluntary and for non-listed SMEs and micro-undertakings — Recommendation C(2025) 4984 final recital 7 in fine, in faithful paraphrase: separately from the LSME foreseen by Directive (EU) 2022/2464, the Commission asked EFRAG to develop a separate, simpler standard for voluntary use by non-listed SMEs.
It does not exempt from parallel substantive obligations: the VSME is a reporting framework, not a compliance one.
Recital 21, in faithful paraphrase: the voluntary sustainability reporting standard set out in Annex I operates without prejudice to companies' reporting obligations arising from other Union legislation. Even if the SME reports under the VSME, it remains subject to applicable sectoral or cross-cutting obligations — for example the CSDDD (Directive (EU) 2024/1760) when it enters its scope, the EUDR (Reg. (EU) 2023/1115), the Forced Labour Regulation (Reg. (EU) 2024/3015), the ESPR (Reg. (EU) 2024/1781) and the future textile DPP, among others.
The Basic Module is not optional: it is a prerequisite for the Comprehensive Module.
Annex I ¶6, in faithful paraphrase: applying the Basic Module is a prerequisite for applying the Comprehensive Module. And ¶5(b) describes the Comprehensive as datapoints reported "on top of the Basic Module". There is no option to report only the Comprehensive. The two formal options are OPTION A (Basic only) or OPTION B (Basic + Comprehensive), per Annex I ¶24(a). For micro-undertakings, the Basic is the "target approach" — they may apply only certain parts per ¶3 + ¶5(a).
The current legal status is not binding positive law: it is a Recommendation + a pending legislative proposal.
Recommendation C(2025) 4984 final is not binding per se. Recital 15, in faithful paraphrase, describes it as an intermediary solution to address market demand until a voluntary standard based on the VSME developed by EFRAG is adopted by way of a delegated act within the framework of the Omnibus simplification proposal. The delegated act proposed in the Omnibus Simplification Package (COM(2025) 81 final of 26 Feb 2025, recitals 12-14) is pending processing: recital 14 in fine indicates that the timing depends on the conclusion of the negotiations between the co-legislators. Until it is adopted, the VSME is voluntary and applies via the Recommendation.
Frequently asked questions
What is the VSME?
The Voluntary Sustainability Reporting Standard for SMEs, a non-binding European Commission recommendation (Recommendation C(2025)4984 of 30 Jul 2025) aimed at non-listed SMEs. A simplified voluntary standard for SMEs to report on sustainability without the complexity of CSRD/ESRS, reducing the administrative burden.
Who does the VSME apply to?
To non-listed SMEs (not obliged by CSRD) that wish to communicate sustainability information in a structured way — typically to respond to B2B customers (who request ESG data across the supply chain) or to apply for sustainable bank financing. Applicable regardless of size within the SME range.
How is the VSME applied?
In accordance with Commission Recommendation C(2025)4984 (30 Jul 2025): a simplified questionnaire with two modules — (i) Basic Module (16 minimum datapoints from the Annex, mandatory to use the standard), (ii) Comprehensive Module (additional datapoints from the Annex, optional when more depth is desired). Reporting in PDF or web format, without mandatory external verification, without XBRL tagging.
What is the difference between the VSME and CSRD?
CSRD applies to large companies and listed SMEs (mandatory · binding ESRS Set 1 · external audit · XBRL). The VSME applies to non-listed SMEs (voluntary · simplified datapoints · no audit · free format). The VSME is the "SME version" designed not to overwhelm companies that are not obliged but wish to respond to the chain.
Do SMEs using the VSME have to comply with CSRD/ESRS?
Not directly. If an SME is NOT subject to CSRD (not listed or below the thresholds), it may use the VSME instead. If the SME IS subject to CSRD (listed SME, wave 3), it must comply with CSRD/ESRS — the VSME does not exempt it. The two standards are not alternatives for companies under an obligation.
Fuentes oficiales
- Recommendation (EU) 2025/1710 — Voluntary sustainability reporting standard for SMEs (OJEU 5.8.2025)European Commission · OJEU L_20250171030 jul 2025Commission Recommendation
- European Commission · Brussels 30.7.202530 jul 2025Technical annex
- European Financial Reporting Advisory Groupdic 2024EFRAG standard (technical basis)
- European Commission · Brussels 26.2.202526 feb 2025Pending legislative proposal
