The VSME Standard: A Guide for UK SMEs

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voluntary VSME standard

The VSME Standard: A Guide for UK SMEs

If you’re reading this, you’ve probably searched something along the lines of “what is the VSME standard?” or pehaps “VSME?” or maybe “Is the VSME really V? Is it really for SMEs?”. Fear not, because we have you covered.

What is the VSME standard?

The Voluntary Sustainability Reporting Standard for SMEs (VSME) is a new voluntary reporting framework designed specifically for micro and small businesses. Developed by the European Financial Reporting Advisory Group (EFRAG), it provides an easy-to-use way for non-listed companies to respond to ESG data requests.

The VSME standard has two levels:

  • Basic Module – core ESG disclosures, such as energy use, GHG emissions (Scope 1 and 2), workforce facts, and governance basics.
  • Comprehensive Module – optional add-on with extra disclosures like climate targets, strategy, Scope 3 emissions, and diversity metrics.

Who is it for – and why does it matter now?

The VSME standard is for non-listed SMEs i.e. those not listed on any stock exchange, typically with under 250 staff, that are outside legal reporting requirements but face growing pressure to disclose ESG data. Customers, banks and investors increasingly expect transparency, and the EU’s official endorsement of VSME in July 2025 encourages those stakeholders to request ESG info in this format.

We believe it could be exactly what’s needed to level the playing field for SMEs – UK SMEs generate over a third of national emissions, yet many feel overwhelmed by ESG reporting demands. The VSME offers a manageable alternative that aligns with stakeholder expectations without the cost or burden of full corporate standards.

Does it apply to UK businesses?

Remember, it’s voluntary, so at this point there is no one that has to use it. But even though the VSME standard was developed by the EU, UK businesses can absolutely use it. In fact, many will find it increasingly relevant. If your company supplies goods or services to EU clients, reports to EU investors, or wants to access green finance, you may be asked for ESG information – and VSME is the format they’re encouraged to use. The EU’s July 2025 Recommendation explicitly allows non-EU SMEs to adopt the standard voluntarily. So while it’s not legally required in the UK, it’s becoming a common language across European supply chains – and a practical way for UK businesses to stay aligned with market expectations.

What do VSME disclosures involve?

They’ve broken it down into two modules, and you can decide whether you want to just report on the Basic module or Basic + Comprehensive (you can’t just report on Comprehensive).

Basic Module: ~50 data points, including company profile, energy use, water consumption, pollution, recycling, employee training, safety records, and governance breaches.

Comprehensive Module: Adds ~40 items, like sustainability strategy, climate targets, Scope 3 data, diversity policies, and supply chain risks.

All disclosures are proportional: much like GRI Standards, if something doesn’t apply to your business, you can skip it.

Getting started: Tools and support

If you want to do this yourself, you’ll need Annexes 1 and 2 on this European Commission page. 

  • Annex 1 contains the list of required disclosures: this is your checklist. It outlines all the items in the Basic Module (B1–B11) and the optional Comprehensive Module (C1–C9). Each item specifies what topic to report on, like energy use, water withdrawal, or training hours.

  • Annex 2 explains how to report each item. It gives definitions, units of measure, conditions for inclusion, and what to do if a disclosure doesn’t apply. It’s the “how-to” guide that sits behind the checklist in Annex 1.

In addition to this, you can start by using free carbon calculators (like SME Climate Hub) and gathering basic figures: energy bills, payroll size, company policies. EFRAG is also building a digital reporting template to help SMEs complete the VSME process more easily in future.

Can Brace For Impact do this for me?

Some businesses will want expert support – either to translate raw data into a polished report or to make sense of terms and categories. Support from sustainability consultants or services like ours can help avoid mistakes and save time.

Like with all of our work, we weave a commercial thread though our VSME report so it stands alone as marketing material. That can be as simple as using your company branding and photography to design the report, or we can use the information and present it as a full Sustainability Report, highlighting the positive impact you’re making on the world in a way that wins you work.

If you’d like to talk about how we can help your business produce a VSME-aligned sustainability report, get in touch.