The VSME standard for SMEs – hype or real value?
The VSMEsustainability reporting standard is a voluntary standard developed by the EU for SMEs, aimed at facilitating the production of sustainability information and responding to the growing demand for ESG data. However, the standard understandably raises a key question among SMEs: does it offer genuine value, or is it merely a new administrative burden?
The short answer is this: VSME can be useful—but only if it is applied thoughtfully and in a way that supports the company’s business objectives.
Why was VSME created?
The objective of the VSME standard is to provide SMEs with a unified and voluntary framework that enables companies to report on their sustainability to stakeholders without CSRD-level reporting obligations. The background to VSME lies in three key developments:
- Spillover effects of regulation imposed on large companies within value chains
- Growing ESG information needs of financiers and customers
- The need to limit and standardize information requests directed at SMEs
The standard consists of a basic module and an optional extended module. In total, there are around one hundred data points, but their use is voluntary, and the standard itself does not impose any obligations on companies.
What does VSME aim to achieve from an SME perspective?
The objectives of VSME are, in principle, well justified:
- To reduce fragmented ESG information requests
- To improve the comparability of sustainability information
- To support SMEs in monitoring sustainability
- To improve companies’ access to financing
- To function as a “cap” for value-chain information requests (value-chain cap)
When used correctly, VSME can bring clarity, structure, and credibility to an SME.
Strengths of VSME
The key strengths of VSME include:
- A single, coherent framework instead of multiple overlapping information requests
- A lower threshold for starting to measure sustainability
- Better visibility of sustainability work for financiers and stakeholders
- Greater consistency and comparability of sustainability information
For many SMEs, VSME can serve as a first structural step in organizing and clarifying sustainability work.
Weaknesses of VSME – and why they matter for SMEs
VSME is not a model that has emerged from the everyday reality of SMEs. Its key weaknesses are:
- The standard is driven by value-chain and financier needs, not SME needs
- An assumption of existing processes and resources that SMEs often do not have
- A reporting focus without a link to business development
- The absence of a materiality assessment
- The risk of drifting into “reporting for the sake of reporting”
- The standard does not support strategic sustainability work or prioritization
At worst, VSME can become a new administrative burden that consumes time without supporting decision-making.
Why reporting alone changes nothing?
EU regulation and standards can initiate sustainability work, but they do not lead it. Without a business-driven interpretation:
- ESG data remains disconnected
- Reporting turns into a compliance exercise
- Data and metrics do not guide decision making
Value is created only when information supports discussion, helps with prioritization, and is connected to a company’s real decisions.
What do we recommend for SMEs??
We recommend a business-driven approach to sustainability work andreporting::
- Start with a current-state assessment: carry out a self-assessment of sustainability work to gain an overall view of your company’s current situation
- Use the self-assessment–based information as an internal tool for developing sustainability work and for stakeholder communication
- Identify the company’s material sustainability topics through a simplified double materiality analysis avulla yrityksen olennaiset vastuullisuusteemat
- Set your goals and metrics – they don’t need to be complex, as long as they are concrete and impactful.
- Communicate openly to employees, on the website, in tenders, and in customer materials
What do we recommend for educational institutions and developers?
We recommend a business-driven approach to both sustainability work and its reporting. The VSME standard should be viewed critically and seen as a supporting tool for sustainability reporting. Each company can use the parts that are suitable for it and complement them with other sustainability topics and areas it considers necessary.
Summary: hype or real value?
VSME is useful only when:
- Sustainability work is based on the company’s own needs and core business
- Reporting supports management rather than replaces it
- Measurement serves decision-making
The core of sustainability work in SMEs is not the standard, but everyday business, people, and operations.
Read also the blog post: VSME Standard – an Impractical Framework for SME Sustainability Reporting
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