VSME and the voluntary sustainability reporting framework for SMEs changed in September 2026 when the EU’s new voluntary sustainability reporting standard entered into force. The EU has now established a common reporting framework that allows companies to provide sustainability information voluntarily and respond to the information needs of customers, banks and other stakeholders, for example. The framework builds on the VSME standard, which is already familiar to many SMEs. The new voluntary standard is based on VSME but has been amended to align with the EU’s revised sustainability reporting regulation.
VSME did not simply get a new name
Commission Delegated Regulation (EU) 2026/1560 was published on 21 September 2026 and entered into force on 24 September 2026. The Regulation established a voluntary sustainability reporting standard for companies that are not subject to mandatory sustainability reporting under the CSRD. The standard can be used by companies with up to 1,000 employees.
The new standard is based on the previous VSME standard, but it is not simply the same standard under a new name. Among other changes, the Commission has aligned its content with the revised ESRS standards, reduced the number of data points, clarified the value chain limitation and simplified some requirements for companies with up to 10 employees. For SMEs, however, the most important point remains unchanged: use of the standard is voluntary.
Why is a voluntary standard needed if reporting is not mandatory?
SMEs should distinguish between two things: a statutory reporting obligation and the sustainability information that companies may be asked to provide in practice. Most SMEs are not subject to mandatory reporting under the CSRD. Nevertheless, sustainability information may be needed, for example, when a company acts as a supplier or subcontractor to a large company, applies for financing, participates in a tender or responds to a customer’s supplier questionnaire. This is precisely where the voluntary standard provides a common framework.
The EU defines three very practical purposes for the standard. It enables companies to respond to the information needs of value chains and to information required by banks and investors. At the same time, the standard is intended to help companies better manage their own sustainability issues related to the environment and people. This last point is easily overlooked in discussions about reporting. The purpose of collecting sustainability information is not merely to produce a report. The information should help the company make better decisions.
Basic or Comprehensive?
The new standard retains the two-tier structure familiar from VSME. The Basic Module contains the B1–B11 disclosures and forms the foundation of the standard. It is intended particularly for micro-enterprises and also serves as the minimum reporting level for other companies. The Comprehensive Module supplements the Basic Module with information that may be required particularly by banks, investors and larger corporate customers. The Comprehensive Module is not used independently; the Basic Module always provides the foundation. However, this does not mean that every SME should start collecting as much information as possible. A company should first understand what information is actually needed in its own business and stakeholder relationships.
The Value Chain Cap also changes information requests from large companies
The new regulatory framework includes a particularly relevant provision for SMEs: the value chain cap. Its purpose is to limit the amount of information that a company subject to the CSRD can require, for the purposes of its own sustainability reporting, from companies in its value chain with up to 1,000 employees. The limitation is based on specific data points defined in the new standard. The value chain cap applies to financial years beginning on or after 1 January 2027. This is a significant change because one of the challenges SMEs have faced in sustainability work has been the wide variation in information requests from large customers.
However, the value chain cap does not mean that customers can no longer request other sustainability information from SMEs. The limitation applies to information requested for the purposes of sustainability reporting under the CSRD. Companies may still be required to provide information based on other legislation, procurement criteria, contractual terms, supplier requirements or other business needs. SMEs should therefore not assume that the new regulation eliminates customers’ sustainability requirements.
What does this mean for a micro-enterprise?
The standard has been further simplified for the smallest companies. The Basic Module is specifically designed as an approach for micro-enterprises, and some information that constitutes relevant data points for larger companies is voluntary for companies with up to 10 employees.
This is an important principle. It is not reasonable to expect a two-person consultancy to manage sustainability information in the same way as an industrial company employing hundreds of people. Nevertheless, even a small company can benefit from having its key sustainability information in one place and readily available to customers when needed.
What about an SME with 10–250 employees?
For companies in this group, the standard may be even more relevant. They often already have employees, premises, energy consumption, procurement activities, supply chains and larger corporate customers. At the same time, customer sustainability requirements can be considerably more detailed than those faced by micro-enterprises. For these companies, the voluntary standard provides a useful framework for managing sustainability information. However, simply completing the reporting standard does not in itself solve the company’s sustainability work. The company still needs to decide, for example:
- which sustainability topics are most important to the business
- what targets are set for them
- what practical actions will be taken
- who is responsible for implementing them
- which indicators will be used to monitor progress.
Reporting comes on top of this work – it does not replace it.
What if a large customer requests sustainability information?
The first question to ask is: what is the information request based on? If the customer needs the information for its own CSRD reporting, the new value chain cap is relevant. If the information is requested for purposes such as supplier selection, a procurement contract, environmental requirements or other legislation, the situation may be different.
The second important question is whether the company already has the required information. When sustainability information is collected systematically according to a common standard, there is no need to start from scratch every time a customer sends a questionnaire.
A reporting tool does not determine what is material
An increasing number of tools are entering the market that allow companies to produce sustainability reports in accordance with the standard. This is a positive development. Reporting does not need to be, and should not be, a burdensome or expensive project for an SME. But tools have their limits. They do not automatically tell a company which sustainability issues are most important to its specific business or what it should do about them next.i.
Sustainability work should therefore be built in the following order: current state → material topics → targets and actions → indicators → data → reporting and communication. When the groundwork has been done properly, reporting in accordance with the voluntary standard also becomes substantially easier.
What should an SME do now?
The first step is to determine what sustainability information the company already has, what customers and other key stakeholders need, and where the most significant gaps are. After assessing the current state of the company’s sustainability work, the company should identify the sustainability topics that are most material to its business and select concrete actions and indicators for them. The voluntary sustainability reporting standard should be used as a common information framework for this work. This way, the company does not build its sustainability work around producing a report. Instead, it builds a sustainability management approach from which a report can be produced when needed.
Käkikuu helps SMEs identify the material topics in their sustainability work, develop practical actions and indicators, and produce the sustainability information required under the new voluntary sustainability reporting standard.
Read Käkikuu's blgo post: VSME Reporting Has Changed – What Does Omnibus I Mean for SMEs?
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