VSME: European Commission recommends a lighter reporting route for SMEs

On 30 July 2025, the European Commission issued a recommendation encouraging smaller companies to adopt the Voluntary SME Sustainability Reporting Standard (VSME). The goal is to reduce the burden on SMEs receiving sustainability data requests from larger, CSRD-reporting clients and lenders.

Although the recommendation is non-binding, it clearly indicates a preference for VSME as a practical, short-term option while the EU’s broader “Omnibus” simplification package develops.

What is VSME?

VSME is a concise, principles-based standard that asks SMEs to disclose (i) key impacts on people and the environment and (ii) how environmental and social issues affect the business and cash flows – using requirements that are simpler than ESRS. Two application depths are envisaged: a Basic module focused on essential indicators and a more Comprehensive option for SMEs facing higher-intensity requests.

Why this matters for construction supply chains

The Omnibus package is expected to introduce a “value-chain cap”—limiting what CSRD-reporting companies can request from non-CSRD suppliers to what aligns with the forthcoming voluntary SME standard (anticipated to be based on VSME). In practice, that should mean fewer sprawling questionnaires, more consistency between clients, and lower compliance friction for SMEs.

What’s next and timing

The Commission plans to adopt a formal voluntary SME standard via a delegated act after Omnibus negotiations conclude. Until then, VSME is the recommended reference point for SMEs responding to customer and bank information requests.

Three practical steps for SMEs (now–next):

1. Adopt VSME to streamline responses to client and lender requests.
2. Choose your module (Basic vs Comprehensive) and run a quick gap check on data, controls and evidence.
3. Monitor Omnibus progress so templates can be tuned once the final voluntary standard – and the value-chain cap – are formalised.