- The VS (formerly VSME), developed by EFRAG, is a fully voluntary ESG reporting standard for companies with 1,000 employees or fewer, in force as an EU delegated regulation since September 24, 2026, with no obligation to use it.
- Its Basic module holds around forty datapoints across 11 disclosures (B1 to B11), aligned with the ESRS/CSRD logic but without the administrative burden of these mandatory frameworks.
- It helps companies respond to requests from buyers subject to CSRD and strengthen credibility with financiers.
- No mandatory audit, no imposed format: companies freely choose their reference year and report structure.
What is VSME and why does it matter for SMEs
The VSME (Voluntary Sustainability Reporting Standard for SMEs) is a voluntary reporting standard developed by EFRAG, designed for companies with 1,000 employees or fewer that are not subject to CSRD. Since September 24, 2026, it has been set out in Delegated Regulation (EU) 2026/1560 under the name VS, which replaces the Commission recommendation of July 30, 2025 (see what changes with the VS). It provides a proportionate, streamlined framework for structuring non-financial communications around environmental, social and governance (ESG) issues.
The standard is built around around forty datapoints in its Basic Module, allowing companies of all sizes up to 1,000 employees to engage in a readable ESG approach without the administrative burden of regulatory standards like CSRD.
VSME serves three main purposes:
- strengthening credibility with ESG-conscious financiers,
- responding to requests from large buyers already subject to CSRD,
- and establishing a measurable internal CSR management dynamic.
A voluntary standard: no obligation in 2026
In 2026, no company is required to adopt VSME, even though the delegated regulation that sets it out is in force. The standard remains entirely voluntary.
It requires no external audit, no standardised format and no formal rating. Companies freely choose their reference year, report structure (PDF, Word, Excel) and which data to publish.
This flexibility is strategic: SMEs can initiate coherent reporting now, while getting ahead of requests from clients or partners subject to CSRD. For a precise answer on who VSME applies to and when adoption is recommended, our dedicated article sets out the criteria.
EFRAG does, however, recommend carrying out a double materiality analysis — not mandatory, but essential for building a coherent ESG strategy.
Which companies does VSME actually apply to
VSME is designed for any SME looking to formalise its sustainability approach:
- Suppliers to large groups: responding consistently to ESG questionnaires, which are often multiple and overlapping.
- Growing companies and startups: building a standardised ESG foundation early, which stays usable up to 1,000 employees.
- Industrial SMEs and exporters: improving visibility with international partners and investors.
Eligibility rests on one criterion: the VS is open to any company not subject to CSRD with 1,000 employees or fewer (average over the previous financial year). There is no turnover or balance sheet criterion, and listed SMEs, listed micro-companies and self-employed people are also in scope. Companies with 10 employees or fewer can leave out the more complex environmental data, as explained in our article on optional data for micro-companies.
For financial years starting on or after January 1, 2027, a CSRD client cannot require from a value-chain company with 1,000 employees or fewer more information than Annex II of the VS lists. The supplier can refuse questions beyond this value chain cap, and the client must flag them.
How VSME, ESRS and CSRD fit together
CSRD is the European directive requiring companies with more than 1,000 employees and more than €450M net turnover to publish detailed non-financial reporting. ESRS (European Sustainability Reporting Standards) define the technical content.
VSME is a voluntary tool developed by the same body (EFRAG) for companies that do not fall directly under that obligation. Our article on the differences between VSME and CSRD covers the links and use cases for SMEs in detail.
| Feature | CSRD / ESRS | VSME |
|---|---|---|
| Application | Mandatory | Voluntary |
| Target audience | More than 1,000 employees and more than €450M net turnover | 1,000 employees or fewer, not subject to CSRD |
| Data volume | Several hundred datapoints (mandatory datapoints cut by more than 60% in the revised ESRS) | Around forty datapoints (Basic Module) |
| External audit | Mandatory | Not required |
| Double materiality | Mandatory | Recommended |
Adopting VSME means speaking the same language as large companies without carrying the same reporting burden — a genuine advantage for improving ESG data compatibility across a value chain.
CSRD - Introduction and Practical Guide
Understand CSRD, its obligations and its implementation timeline — so you can anticipate your buyers' requirements and structure your ESG approach accordingly.
Key VSME indicators and tools
The standard has two modules:
- Basic: around forty datapoints across 11 disclosures, B1 to B11 (emissions, social policy, governance, supply chain, ethics).
- Comprehensive: 9 additional disclosures (C1 to C9) for more in-depth reporting.
No format is imposed, but EFRAG provides an Excel template and a XBRL format recommended for investor readability. For a full breakdown of every indicator with data sources and practical examples, our article on VSME indicators covers each one in detail.
How to validate, review and improve your VSME reporting
No external auditor verification is required.
Reliability rests on internal data traceability: supplier invoices, HR records, documented policies. For companies that want to assess their maturity level before getting started, our article on VSME audit walks through the process.
A consultant or a specialised platform like Ditto can provide methodological support, particularly on:
- defining ESG policies,
- building an action plan,
- integrating double materiality,
- and structuring the report according to VSME indicators.
This approach accelerates internal professionalisation without overloading administrative teams.
The Guide to Successful Environmental Reporting
Methodology, key indicators and best practices for structuring your environmental reporting — applicable to VSME, EcoVadis and CSRD.
The concrete benefits for SMEs
Adopting VSME creates immediate value across three areas:
- Commercial: responding effectively to ESG requests from large clients and avoiding missed opportunities.
- Financial: demonstrating CSR credibility to banks and investors, who now integrate these criteria into their risk assessments.
- Organisational: clarifying priorities, engaging teams and building a continuous improvement process.
Structure your VSME reporting with Ditto
Our experts help you collect your indicators, structure your report and meet the expectations of your buyers and supply chain partners.
VSME (EFRAG) — Key Takeaways
| Key point | Essential detail |
|---|---|
| Nature of VSME | Voluntary ESG reporting standard developed by EFRAG for SMEs |
| Main objective | Structure and demonstrate ESG commitment without regulatory burden |
| Obligation | None in 2026: purely voluntary framework |
| Link to CSRD | Methodologically aligned, but proportionate to SME capabilities |
| Required indicators | Around forty datapoints in the Basic Module (B1 to B11), plus 9 disclosures (C1 to C9) in the Comprehensive Module |
| Double materiality | Strongly recommended, not mandatory |
| External audit | Not required |
| Key benefits | Stronger credibility, better access to finance, structured answers to CSRD clients |
| Useful tools | EFRAG templates, human support and automation via ESG platforms like Ditto |
