What is the VSME Standard?
The VSME, which stands for Voluntary Sustainability Reporting Standard for non-listed SMEs, is a framework developed by EFRAG, the European body responsible for sustainability reporting standards in the EU. It was designed specifically to help micro, small, and medium-sized businesses report on their sustainability performance in a way that is proportionate to their size.
The goal is practical: to give smaller businesses a clear structure for responding to sustainability data requests from larger clients, banks, and investors, without having to navigate the full complexity of the EU's Corporate Sustainability Reporting Directive (CSRD), which applies to large companies.
The standard covers environmental metrics like energy use and greenhouse gas emissions, social metrics like workforce safety and pay, and governance metrics like anti-corruption practices. It was published in December 2024 and officially endorsed by the European Commission in July 2025.
Who counts as a micro-enterprise?
Under the VSME, a micro-enterprise is a business that does not exceed two of the following three thresholds: a balance sheet total of €450,000, a net turnover of €900,000, and an average of 10 employees.
If that describes your business, the VSME is designed with you in mind. The standard explicitly encourages micro-enterprises to use only the Basic Module, which is the simpler of its two reporting modules. You are not expected to complete the more detailed Comprehensive Module unless you choose to.
The Basic Module: what you would actually report
The Basic Module covers 11 disclosure areas, labelled B1 to B11. These cover general business information, environmental metrics, social metrics, and one governance metric.
The structure is deliberately straightforward. For most micro-enterprises, many of the disclosures will be short and simple. Some may not apply to your business at all, and you can skip those without explanation.
| Code | Area | What you report |
|---|---|---|
| B1 | Business info | Legal structure, NACE sector code, balance sheet, turnover, headcount, and site locations. |
| B2 | Sustainability practices | Whether any sustainability policies or practices exist and are publicly available. Separating waste or switching off lights counts. |
| B3 | Energy & emissions | Total energy (electricity + fuel); Scope 1 and Scope 2 emissions in tCO₂e. Your utility bills and fuel receipts are the starting point. |
| B4 | Pollution | Pollutant releases to air, water, or soil — only if you are legally required to report them or track them via an environmental management system. Most micro-enterprises can skip this. |
| B5 | Biodiversity | Number and area of sites in or near biodiversity-sensitive areas. If applicable — most micro-enterprises will simply note it does not apply. |
| B6 | Water | Total water withdrawal from utility bills. Water consumption only if your operations use significant volumes in a production process. |
| B7 | Waste | Whether you apply circular economy principles; total waste (hazardous and non-hazardous); amount diverted to recycling or reuse. |
| B8 | Workforce | Employees by contract type (permanent or temporary), gender, and country. |
| B9 | Health & safety | Number and rate of recordable work-related accidents; any fatalities. |
| B10 | Pay & training | Minimum wage compliance; collective bargaining coverage; average training hours by gender. Gender pay gap not required below 150 employees. |
| B11 | Governance | Any convictions or fines for anti-corruption or anti-bribery offences during the reporting period. For most micro-enterprises, this is a one-line "no". |
The "if applicable" principle
One of the most useful features of the VSME for micro-enterprises is what the standard calls the "if applicable" principle. Disclosures only need to be completed if they are relevant to your business, your sector, and your actual activities.
If you do not operate near any protected natural areas, you skip B5. If you are a service business with no significant water use, you skip the water consumption part of B6. If you have no legally required pollution reporting, you skip B4. There is no need to explain or justify the omission.
You can also omit classified or commercially sensitive information if disclosing it would harm your position. The standard is built around proportionality, not box-ticking.
Why bother, if it is voluntary?
The honest answer is that for many micro-enterprises right now, you probably do not need to publish a full VSME report. But the standard is useful in a different way.
If a larger client sends you a sustainability questionnaire, the VSME gives you a ready-made structure to answer it. If your bank asks about your environmental practices as part of a financing review, the Basic Module covers most of what they will want to know. If you want to start tracking your emissions or energy use, the framework tells you exactly what to measure and how to present it.
The European Commission officially endorsed the VSME as a recommended framework in July 2025, encouraging banks, investors, and large corporations to use it as the reference point for their supply chain data requests. That endorsement matters. It means the questionnaires heading your way are increasingly likely to follow this structure, even if the word "VSME" is never mentioned.
Starting simple, even with just the Basic Module applied informally, puts you in a better position than waiting until the requests become urgent.