Two acronyms keep showing up in supplier conversations: CSRD and VSME. They're related but they apply to different companies, require different things, and have very different levels of effort. If you're an SME supplier trying to figure out which one affects you, this guide will clear it up.
CSRD: The Law for Large Companies
The Corporate Sustainability Reporting Directive (CSRD) is EU legislation that requires large companies and listed SMEs to publish detailed sustainability reports. It applies to companies with more than 250 employees, or more than €50 million in revenue, or more than €25 million in total assets (meeting at least two of these three criteria).
CSRD reporting follows the European Sustainability Reporting Standards (ESRS), which are extensive — covering everything from climate change and biodiversity to workforce conditions and business conduct. A full ESRS report can run to hundreds of pages.
If you're a small supplier with fewer than 250 employees, CSRD does not directly apply to you. You don't need to produce a full ESRS report.
VSME: The Standard for SMEs
The Voluntary Sustainability Reporting Standard for SMEs (VSME) was created specifically because of CSRD. Here's the logic: large companies reporting under CSRD need sustainability data from their supply chain. But asking a 50-person manufacturing company to produce the same report as a multinational corporation is unreasonable.
The VSME is EFRAG's answer. It's a simplified, voluntary reporting framework designed for micro, small, and medium-sized enterprises. It was officially adopted by the European Commission in July 2025.
The VSME has two levels:
- Basic Module — 11 core disclosures covering company profile, energy, emissions, water, waste, workforce, and governance. Designed for the smallest companies with the fewest resources.
- Comprehensive Module — Additional disclosures for larger SMEs that want (or need) to report in more detail. Includes topics like biodiversity impact, pollution details, and more granular workforce data.
Most small suppliers will only need the Basic Module.
The Key Differences
| CSRD (ESRS) | VSME | |
|---|---|---|
| Who it applies to | Large companies, listed SMEs | Non-listed micro, small, and medium enterprises |
| Legal requirement | Mandatory (phased in 2024-2028) | Voluntary |
| Reporting depth | Comprehensive (hundreds of data points) | Simplified (11-30 data points) |
| Double materiality | Required (formal assessment) | Simplified (identify what matters) |
| Assurance/audit | Required (limited assurance) | Not required |
| Reporting format | XBRL digital taxonomy | Simple report or digital template |
| Effort | Months of preparation, dedicated team | Days to weeks, one person can manage |
| Cost | €10,000-100,000+ (software, consultants, audit) | Minimal (free tools available) |
Why You're Hearing About Both
If you're an SME supplier, the reason both acronyms are in your inbox is simple: your large customers are subject to CSRD, and they need your data to complete their reports.
Under CSRD, large companies must report on their full value chain — including Scope 3 emissions, supply chain labor practices, and supplier governance. They can't complete this reporting without data from suppliers like you.
The VSME gives you a standard format to provide that data. Instead of responding to 10 different questionnaire formats from 10 different customers, you produce one VSME-aligned dataset and share it with everyone who asks.
This is the main practical benefit: report once, share everywhere.
What This Means for Your Business
If you're under 250 employees and not publicly listed: CSRD doesn't apply to you directly. But your customers who are subject to CSRD will increasingly request VSME-aligned data from you. "Voluntary" means you won't be fined — but you may lose business.
If you're already responding to ESG questionnaires: The questions you're answering likely map to VSME disclosures. EcoVadis, CDP, and most customer-specific questionnaires cover the same core topics. Moving to VSME-aligned tracking means you can respond to all of them from the same dataset.
If you haven't started yet: Start with the VSME Basic Module. The 11 disclosures cover the data that 90% of customer questionnaires ask for. Getting this right takes weeks, not months.
How to Get Started
The practical path for SME suppliers:
- Check your status with the free VSME readiness tool
- Start tracking monthly data — energy, water, waste, workforce numbers
- Document your policies — which ones exist, which need creating
- Calculate emissions — Scope 1 (fuel) and Scope 2 (electricity)
- Produce a VSME-aligned report when customers request it
ESG Passport handles all of this in your browser — data tracking, emissions calculation, and questionnaire response. The free tier covers data tracking; the full tool costs €199 once and generates answers from your tracked data.
For the complete breakdown of each VSME disclosure, see our VSME 11 disclosures guide.
VSME-aligned reporting made simple.
ESG Passport maps your data directly to the VSME Basic Module. Track monthly, report when needed.