On 17 December 2024, EFRAG published the final standards for VSME (Voluntary ESRS for Non-Listed Small and Long-term Enterprises). However, the recent Omnibus Directive proposal of 26 February 2025 is significantly changing the regulatory landscape for sustainability reporting. This updated guide introduces the standard VSME in the context of the new European guidelines for sustainable reporting for SMEs.
1. The VSME and regulatory changes 2025
Initial framework of the VSME
The standard VSME ESRS (Voluntary ESRS for non-listed Small and Medium-size Enterprises) was designed as a simplified ESG reporting framework adapted to the operational constraints of SMEs. The initial objective was to provide a standardized reporting tool for:
- Replace the multiplicity of CSR questionnaires received by SMEs
- Guide SMEs in identifying and managing their sustainability challenges
- Improving transparency on corporate ESG commitments
- Facilitate the transmission of information to partners subject to CSRD
Impact of the Omnibus Directive on the VSME framework
The Omnibus Directive proposal of 26 February 2025 considerably reinforces the importance of the VSME framework by:
- Reducing the mandatory scope of application of the CSRD by around 80%, exempting businesses with up to 1000 employees
- Officializing the VSME standard as a reference for voluntary reporting via a delegated act
- Postponing for two years the application deadlines for companies still concerned by the CSRD. This proposal, known as Stop the Clock, was voted on 3 April 2025 by MEPs.
- Strengthening the protection of SMEs against excessive requests for information via the “value-chain cap”
These changes are part of a global approach to regulatory simplification aimed at reducing administrative burdens while maintaining the fundamental objectives of sustainable transition.
2. Companies affected by the VSME after the Omnibus
New application criteria
Following the Omnibus Directive, the regulatory landscape for sustainability reporting is being reorganized as follows:
Key points to remember
- Unlisted SMEs remain exempt from regulatory reporting requirements, but may voluntarily adopt the VSME framework
- Large companies up to 1000 employees are now exempt from CSRD obligations and can use the VSME framework
- Listed SMEs benefit from a delay of two years (reporting in 2029 for the financial year 2028), with the possibility of opting out until 2031
- The VSME framework becomes the official reference for voluntary reporting, with the forthcoming publication of a recommendation by the Commission
3. Structure and content of the VSME standard
The VSME framework maintains its structure in two complementary modules:
“Basic” module: the fundamental basis
This module provides the essential foundation for businesses starting out in sustainability reporting. It is characterized by:
- 11 essential ESG indicators structured in three pillars (environment, social, governance)
- Calculation of emissions limited to scopes 1 and 2 (direct and indirect energy-related emissions)
- Absence of double materiality analysis, contrary to the full requirements of the CSRD
- Flexibility in the choice of indicators relevant to the company's activity
“Complete” module: for an in-depth approach
This complementary module, which requires the prior application of the Basic module, addresses:
- Les sustainable business models
- Les diversity and inclusion issues
- Les climate risks and coping strategies
- Les emission reduction policies Of greenhouse gases
This module takes a more narrative approach, allowing companies to value their good practices and concrete actions in terms of sustainability.
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4. Strategic benefits of adopting VSME
In the post-Omnibus context, adopting VSME has several competitive advantages:
Strategic forecasting of market developments
The Omnibus Directive alleviates regulatory constraints but reinforces the importance of voluntary approaches. Companies adopting VSME demonstrate their ability to anticipate and their proactive commitment to sustainable transition.
Optimizing access to finance
Financial institutions are increasingly integrating ESG criteria into their risk assessments. The application of the VSME:
- Facilitates access to green and sustainable finance
- Improves extra-financial ratings
- Strengthens credibility with responsible investors
Effective response to the requirements of business partners
The “value-chain cap” reinforced by the Omnibus Directive protects SMEs against excessive requests for information, but does not eliminate the need to respond to requests from partners subject to the CSRD. The VSME provides:
- A standardized and recognized framework for responding to customer requests
- A methodology adapted to the constraints of SMEs
- Protection against requests that exceed the frame of reference
Competitive advantage and differentiation
The voluntary adoption of the VSME makes it possible to:
- Differentiate yourself in markets that are increasingly sensitive to ESG issues
- Reinforcing employer attractiveness for talent
- Improving brand image and consumer reputation
- Access new markets that require sustainability guarantees
Practical implementation of the VSME
The application of the VSME requires a methodical approach adapted to the available resources:
Phase 1: Preparation and planning
- CSR maturity analysis to identify the starting point
- Selecting the level of engagement (Basic module alone or with the Comprehensive module)
- Stakeholder mapping and their expectations in terms of sustainability reporting
- Allocation of resources necessary (human, technical, financial)
Phase 2: Data collection and processing
- Identifying information sources internal and external
- Implementation of collection tools adapted to the size and resources of the company
- Definition of periodicity collection (monthly, quarterly, annual)
- Data validation by the operational teams concerned
Phase 3: Analysis and writing of the report
- Performance analysis depending on the indicators chosen
- Identification of areas for improvement and future goals
- Writing the report with a focus on clarity and transparency
- Content validation by management and business managers
Phase 4: Communication and continuous improvement
- Publication of the report on the company's website
- Targeted communication with priority stakeholders
- Feedback collection partners and users of the report
- Integration of lessons in the next reporting cycle
5. Updated VSME FAQ 2025
When will the VSME be officially adopted by the European Commission?
According to the Omnibus proposal, the Commission plans to adopt the VSME standard as a delegated act as soon as possible. In the meantime, a recommendation on voluntary reporting based on the VSME standard will be published to guide companies wishing to apply it now.
Is VSME compatible with other sustainability reporting standards?
The VSME was designed to be compatible with the main international standards (GRI, SASB) while being specifically adapted to the constraints of European SMEs. It also allows a harmonious relationship with the requirements of the CSRD for companies that would be subject to it later.
How does the “value chain cap” reinforce the protection of SMEs?
The Omnibus Directive extends this protection to all companies up to 1000 employees (compared to only SMEs previously) and makes it directly applicable to companies subject to reporting (rather than to ESRS standards only). The level of information required is now defined by the voluntary standard adopted by the Commission, thus limiting excessive requests.
What resources are available to facilitate the adoption of VSME?
The European Commission is planning several support initiatives:
- A multi-country flagship project under the Technical Support Instrument 2025 entitled “Improving Sustainability Reporting for Businesses”
- The SME forum launched by EFRAG to discuss best practices
- Application guides and digital tools under development
Will VSME become mandatory for SMEs in the future?
Although the Commission currently maintains the voluntary nature of VSME for unlisted SMEs, the evolution of the regulatory framework could lead to obligations that are sectoral or linked to certain activity thresholds. The early adoption of the VSME is therefore a process of strategic foresight.
6. Conclusion
The Omnibus Directive marks a significant turning point in the European approach to sustainability reporting, by prioritizing proportionality and simplification while maintaining the fundamental ambition to transition to a sustainable economy.
The frame VSME is thus becoming a major strategic tool for SMEs and companies with up to 1000 employees wishing to structure their CSR approach without suffering a disproportionate administrative burden.
The voluntary adoption of this standard now represents a choice that is all the more relevant as it offers an optimal balance between methodological requirements and adaptation to the operational constraints of SMEs. In an economic environment where sustainability is becoming a factor of competitiveness, VSME is a strategic investment for the sustainability and growth of businesses, while contributing to European ecological transition goals.
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