The Commission's VSMErecommendation for SMEs is a significant step in clarifying voluntary sustainability reporting. It is a recommendation for unlisted SMEs, intended to help companies respond to growing sustainability information requests in a more consistent way.
VSME does not make all SMEs subject to reporting obligations, but it clearly shows the direction in which the market is moving. Customers, large companies, banks and other financiers increasingly need sustainability information. The Commission’s recommendation aims to ensure that this information is not requested from every company in a different format and with a different form, but that VSME would serve as a common framework.
Why did the Commission issue the VSME recommendation?
The background is especially the so-called trickle-down effect. Although unlisted SMEs are not within the scope of the reporting obligation under the Corporate Sustainability Reporting Directive, CSRD, for large companies, they may become subject to sustainability information requests as part of larger companies’ value chains. Large companies need information to understand their own impacts, risks and opportunities, and this need in practice trickles down to suppliers, subcontractors and other partners. CSRD:n raportointivelvoitteen piiriin, ne voivat joutua vastuullisuustietopyyntöjen kohteeksi osana suurempien yritysten arvoketjuja. Suuret yritykset tarvitsevat tietoa omien vaikutustensa, riskiensä ja mahdollisuuksiensa ymmärtämiseksi, ja tämä tarve valuu käytännössä toimittajille, alihankkijoille ja muille kumppaneille.
This is a familiar situation for many SMEs. One customer asks about emissions, another about working conditions, a third about sustainability practices and a fourth about the supply chain. The answers are prepared in a hurry, in different formats and often without the company itself gaining a clear overall picture of its own sustainability work.
This is precisely the core of the Commission’s recommendation. The purpose of the VSME standard is to reduce the number of separate information requests and help SMEs compile their information into one structure. At the same time, it can help companies better understand their own sustainability performance, strengthen their resilience and improve their competitiveness.
VSME is not mandatory, but it can be a sensible practical tool
The Commission’s recommendation concerns voluntary sustainability reporting by SMEs. It recommends that unlisted SMEs and micro-enterprises use the VSME standard when they want to report sustainability information voluntarily. This means that an SME can use VSME from its own starting points, without making the report heavier than necessary.
This is essential for an SME. The value of VSME does not come from the company trying to complete everything possible perfectly. The value comes from the company identifying what information it already has, what it is likely to be asked for and how the information can be compiled so that it can be reused.
In practice, VSME can serve as the first structure for compiling sustainability information for an SME. The company can start with what it already does, what it already measures and what information it already has. The first report may not be perfect, and it does not need to be. What matters more is to build a starting point that can later be supplemented and developed.
Why does this also concern companies that do not have a reporting obligation?
The Commission’s recommendation makes visible the fact that SMEs’ sustainability information is of interest to the market, even if the law does not directly require the company to report. Large companies, financial institutions and other actors need information for their own assessments. For this reason, it may be sensible for an SME to prepare for these requests in advance.
In the recommendation, the Commission also encourages large companies and financial intermediaries to apply proportionality. Where possible, they should limit the information requested from SMEs to the content of the VSME standard. This is an important message for SMEs: the purpose is not to increase the reporting burden, but to limit it.
In practice, this may mean that VSME becomes a common language in the market. If customers and financiers accept a report prepared in accordance with VSME, an SME can respond to several information requests using the same basis. This is a significant practical benefit, especially for companies that do not have a separate sustainability team or resources reserved for reporting.
What should an SME do now?
An SME should not start VSME by asking how to complete the entire standard perfectly. A better question is: what sustainability information is already being requested from us, what information do we already have and what do we need in order to respond credibly?
VSME should primarily be seen as a tool for compiling and structuring information. It helps the company identify where it already stands in sustainability work, what can be demonstrated with information and where there are still gaps. At the same time, it can make visible things that the company has been doing for a long time, but which have not previously been described clearly.
This does not mean that reporting replaces actual sustainability work. On the contrary. Reporting is useful only when it is connected to the company’s real operations, decision-making and development of sustainability work.If VSME remains merely a document, its benefit will remain limited. If it is used to understand the company’s own operations and direct development, it can become a practical tool.
The VSME recommendation strengthens the need for practical reporting
The Commission’s VSME recommendation therefore does not mean that SMEs should suddenly start heavy sustainability reporting. It means that SMEs are being offered a common, lighter and more proportionate way to respond to the demand for sustainability information.
This is also an important message for experts, educational institutions and developers supporting sustainability work. SMEs do not need more complexity, but clear tools, limited operating models and understandable language. VSME can serve as a useful framework here, but it requires practical application.
From an SME’s perspective, the most important thing is to start sensibly. Everything does not have to be done at once. First, the basic information can be compiled, the material sustainability themes identified and the first report structure built. After that, the whole can be supplemented step by step.
VSME does not solve everything, but it can reduce unnecessary work
VSME does not in itself make a company sustainable, and the Commission’s recommendation does not remove the need to develop the company’s operations. Nor does it automatically solve all information requests from customers, banks or financiers.
But VSME can reduce fragmentation. It can help the company answer the same questions more consistently. It can save time, improve transparency and help build a foundation for developing sustainability work.
That is precisely why the Commission’s VSME recommendation is worth taking seriously. Not because it forces an SME to report, but because it shows how the demand for sustainability information is changing.
From an SME’s perspective, the best time to start is not when a customer asks for information by tomorrow. The best time is when the company still has time to compile the information calmly, understand its own situation and build reporting into a useful tool for itself.
See also Käkikuu’s VSME online course for SMEs: VSME Reporting for SMEs (in Finnish)..
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