VSME Reporting for SMEs: What You Actually Need to Do

The EU Voluntary Sustainability Reporting Standard for SMEs (VSME) was officially adopted by the European Commission in July 2025. If you're a small or medium-sized business in Europe, you've probably started hearing about it from customers, banks, or industry associations.

Here's the short version: the VSME is a standardized way for SMEs to report sustainability data. It was designed specifically for businesses without dedicated ESG teams. It's voluntary — but that word is misleading, because your customers may soon require it.

This guide covers what the VSME actually asks for, what data you need to collect, and how to get started without hiring a consultant.

What Is the VSME Standard?

The VSME was developed by EFRAG (the European Financial Reporting Advisory Group) as part of the EU's Corporate Sustainability Reporting Directive (CSRD) ecosystem. Large companies reporting under CSRD need sustainability data from their supply chain — and the VSME gives SMEs a standardized format to provide it.

Think of it as a common language. Instead of every customer sending you a different spreadsheet with different questions, the VSME defines exactly what data points SMEs should report. Banks and investors are also starting to use it for green financing decisions.

The standard has two levels: a Basic Module (11 disclosures) and a Comprehensive Module (more detailed, for larger SMEs). Most small suppliers will only need the Basic Module.

The 11 Basic Module Disclosures

The VSME Basic Module covers the essentials that customers and financial institutions most frequently request:

B1 — Basis for preparation. Describe your business model, products/services, markets, and number of employees. This is the foundation — who you are and what you do.

B2 — Practices for sustainability due diligence. Do you have policies covering ethics, anti-corruption, human rights, and supplier management? What governance structures are in place?

B3 — Material sustainability matters. Which ESG topics are most relevant to your business and stakeholders? This doesn't require a formal double materiality assessment — a simple explanation of what matters most is enough.

B4 — Energy and greenhouse gases. Total energy consumption (split by electricity, heating, transport), renewable energy share, and Scope 1 and 2 greenhouse gas emissions. This is typically the most data-intensive disclosure.

B5 — Pollution. Are you generating significant air, water, or soil pollution? For many office-based or light manufacturing businesses, this may be minimal.

B6 — Water. Total water consumption in cubic meters. Straightforward for most SMEs.

B7 — Biodiversity. Do your operations impact biodiversity? For most small suppliers, this is a brief statement about site locations and land use.

B8 — Resource use, circular economy and waste. Total waste generated, recycling rate, and hazardous waste volumes. This is the second most commonly requested data point after emissions.

B9 — Workforce general characteristics. Total headcount (FTE), split by gender. New hires and departures for the period.

B10 — Workforce health and safety. Number of work-related accidents, injuries, and fatalities. Hours worked (for calculating incident rates).

B11 — Workforce training. Total training hours and training hours per employee.

What Data Do You Actually Need to Collect?

Strip away the formal language and the VSME Basic Module comes down to collecting a handful of data points on a regular basis:

Monthly tracking (recommended):

• Electricity consumption (kWh) from your utility bills
• Gas consumption (kWh) from your gas bills
• Vehicle fuel (liters) from fuel receipts or fleet management
• Water consumption (m3) from your water bill
• Waste volumes (kg) from your waste hauler invoices
• Workforce headcount (from payroll)

Annual or as-needed:

• Work-related accidents and near-misses (from HR/incident reports)
• Training hours delivered (from HR records)
• Policy status (do you have an environmental policy, code of conduct, etc.?)
• Certifications held (ISO 14001, ISO 45001, etc.)

If you track these monthly, you'll have everything you need to complete the VSME Basic Module at the end of the year. The hardest part isn't the calculation — it's building the habit of collecting data consistently.

How to Start Without a Sustainability Team

You don't need one. The VSME was explicitly designed for businesses with limited resources. Here's a practical approach:

Step 1: Gather what you already have. Pull your last 12 months of utility bills, waste invoices, and payroll data. You probably have 60-70% of what you need in existing records.

Step 2: Set up monthly tracking. Designate one person (often the office manager, finance lead, or operations manager) to enter data once per month. This takes about 15 minutes if you have the invoices ready.

Step 3: Document your policies. Check which governance documents you already have — most companies have at least a basic code of conduct or health and safety policy. Note which ones exist and which don't.

Step 4: Calculate your emissions. Your Scope 1 emissions come from gas and vehicle fuel. Your Scope 2 emissions come from electricity. Standard conversion factors exist for both — you don't need to hire a consultant to multiply kilowatt-hours by an emission factor.

Step 5: Produce your first report. After 12 months of tracking, compile the data into the VSME format. This can be a simple document or spreadsheet covering the 11 disclosures.

Tools like ESG Passport can automate most of this — data entry, emissions calculation, and report generation — from your browser. No cloud account required, no subscription.

"Voluntary" Doesn't Mean Optional

The VSME standard itself is voluntary. Nobody will fine you for not producing a VSME report. But here's the reality:

Large companies reporting under CSRD need data from their suppliers. The VSME gives them a standard format to request it. If your customer adopts the VSME as their supply chain data collection framework, responding becomes a business requirement — not a legal one, but a commercial one.

Banks are also starting to use VSME-aligned data for green financing assessments. If you apply for a sustainability-linked loan, having your VSME data ready can make the process significantly faster.

The companies that start tracking now will be ready when the requests arrive. The ones that wait will be scrambling — again.

What's Next

If you're already receiving ESG questionnaires from customers, chances are the questions map closely to the VSME disclosures. Our VSME 11 disclosures guide breaks down each one in detail.

For a quick check of where you stand, try the free VSME readiness checker — it takes about 5 minutes and shows exactly which disclosures you can already cover with data you have today.