On 30 July 2025, the European Commission adopted Recommendation (EU) 2025/1710 introducing Voluntary Sustainability Reporting Standard for SMEs (VSME). This initiative aims to support non-listed small and medium-sized enterprises in navigating sustainability disclosures without imposing undue administrative burdens.
In February 2025, the Commission adopted the Omnibus-simplification package which limited the mandatory sustainability reporting to companies with more than 1000 employees. For companies with up to 1,000 employees, the Commission proposed a voluntary reporting framework, the VSME.
The VSME was developed by EFRAG and complements the Corporate Sustainability Reporting Directive (CSRD), which mandates disclosures for large companies. Since SMEs often operate within the value chains of these larger entities, they are increasingly required to provide information to companies in their supply chain who are in-scope of CSRD. The VSME standard offers a consistent and efficient way to respond to such requests.
VSME seeks to:
- reduce complexity by avoiding the need for SMEs to navigate multiple reporting frameworks;
- boost resilience through better monitoring of sustainability performance and risk identification;
- improve access to finance by enhancing credibility with investors and lenders through transparent practices.
This Recommendation serves as an interim solution to meet market demands until a formal delegated act on the voluntary standard is adopted.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
