About
Tasked by the European Commission, EFRAG published the VSME in December 2024. At the time, it was not intended to adopt the standard in the form an EU legislative act. However, as part of its simplification agenda in the field of sustainability reporting, the Commission adopted the VSME in the form of a recommendation in July 2025.The Commission's intention is also that the standard will act as a "shield" for companies not subject to the CSRD, by limiting the information that companies falling within the scope of the CSRD can request from companies in their value chains with fewer than 1,000 employees.
Similar to the European Sustainability Reporting Standards (ESRS) that apply under the CSRD, the VSME sets out requirements that allow reporting undertakings to provide relevant information on: (a) how they have had and are likely to have a positive or negative impact on people or on the environment in the short-, medium- or long-term; and (b) how environmental and social issues have affected or are likely to affect their financial position, performance and cash flows in the short-, medium- or long-term.
The VSME is, however, less comprehensive – and less burdensome to comply with – than the ESRS. The VSME consists of two modules that companies can use to prepare their sustainability reports: the Basic Module and the Comprehensive Module. Applying the Basic Module is a prerequisite for applying the Comprehensive Module. Use of only the Basic Module is intended for micro-undertakings and constitutes a minimum requirement for other undertakings. The Comprehensive Module sets out additional datapoints that are likely to be requested by banks, investors and corporate clients of the undertaking on top of the Basic Module. Many of the data points link to data points in EU legislation such as the SFDR, CRR (Pillar 3 reporting) and the Benchmark Regulation.
The Norwegian Ministry of Finance published an unofficial Norwegian translation of the VSME on 14 May 2025. The Norwegian government recommends that companies reporting sustainability information on voluntary basis do so in accordance with the VSME.
Who does it impact?
The VSME is voluntary, but is intended to be used by SMEs in order to create better opportunities for such companies to obtain green financing. In connection with the proposed amendments to the scope of the CSRD, the Commission stated that it intended to adopt a voluntary standard based on the VSME, that companies falling outside of the CSRD obligations may make use of. The Commission adopted such standard 25 July 2025 in the form of a recommendation. Companies within scope of the CSRD that report on their value chains, may not request more information from companies in their value chain than what follows from the data points of the VSME. The Commission's intention is to "shield" those smaller companies from onerous reporting obligations.
Status: Launched
The VSME was published in December 2024.
Relation to other initiatives and regulations
The VSME is stand-alone reporting standard, but many of the data points link to data points in EU legislation such as the SFDR, CRR (Pillar 3 reporting) and the Benchmark Regulation.
Participants
Undertakings not subject to CSRD reporting that wish to report in a voluntary basis.
Thommessen's comments
The relevance of the VSME has increased due to the Commission's adoption of the VSME and the proposed reduced scope of entities subject to the CSRD reporting obligations. The Commission intends that the VSME will serve two functions: (i) enabling smaller companies to report pursuant to comparable standards and improving their access to green financing and (ii) "shielding" companies not subject to the CSRD from burdensome reporting obligations by limiting the information that companies falling within the scope of the CSRD can request from those companies as part of their value chain reporting. The second function is undoubtedly welcomed by companies in the value chains of CSRD-reporting entities. With respect to the first function, it remains to be seen how widely adopted a voluntary standard will be among target companies and whether, maybe especially in light of recent shifts in perceived public priorities within ESG and sustainability, it will indeed have an effect in improving companies' access to financing.