SMEs are facing increasing pressure to report their sustainability data

Although they are not directly obliged by the CSRD (Corporate Sustainability Reporting Directive), these companies are being pulled into the requirements this directive imposes. Large companies subject to this regulation demand more and more sustainability information from their suppliers – and SMEs are part of this chain.

What is the challenge?

Many SMEs face an overload of uncoordinated requests and complex administrative management, with limited resources to respond to the ESG (Environmental, Social and Governance) requirements of their clients and financial partners.

The solution: VSME

The VSME (Voluntary Sustainability Reporting Standard for SMEs) was created to simplify this process. Developed by EFRAG (European Financial Reporting Advisory Group), the VSME is a simplified sustainability reporting standard, designed to be practical and accessible for SMEs.

Its approach reduces the complexity and high costs associated with stricter standards such as the ESRS (European Sustainability Reporting Standards).

How does VSME work?

The VSME is composed of two complementary modules:

Basic module

• Ideal for microenterprises and the minimum requirement for all other companies.
• Includes a section of general disclosures about the company or group, its practices, policies, and initiatives for a more sustainable economy.
• Requires the disclosure of key ESG metrics, with clear and straightforward requirements, such as:
• Unlike the ESRS, social disclosures are limited to own workforce, without requiring data on the value chain, consumers, or affected communities.

Comprehensive module

• Recommended for small and medium-sized companies that need a more detailed approach.
• Requires completion of the Basic Module. Together, they cover the key ESG issues demanded by banks, investors, and large clients.
• Introduces the description of practices, policies, and initiatives for a more sustainable economy, already mentioned in the Basic Module.
• Requires more detailed environmental information, including GHG reduction targets and climate risks.
• Adds social requirements, such as:
• Introduces governance disclosures for specific sectors (arms, tobacco, fossil fuels, and pesticides), as well as gender diversity in governance bodies.

Is Double Materiality analysis required?

The VSME approach is based on the principle “if applicable”, allowing each company to report only the information relevant to its business model. Thus, it does not require a Double Materiality Analysis, unlike the ESRS.

Aliados recommendation:

Double Materiality Analysis is a deep reflection on a company’s sustainability strategy. Although it is not mandatory under VSME, Aliados recommends carrying it out.

This analysis brings added value for organizations:

• Identifies impacts, risks, and opportunities related to sustainability topics
• Aligns business strategy with market trends
• Strengthens business resilience

Adopting a well-structured sustainable strategy:

• facilitates access to financing
• improves competitiveness
• reinforces the company’s reputation in a market that increasingly values efficiency and environmental and social responsibility

Why should SMEs adopt the VSME?

The VSME does not impose new obligations – it provides a clear and accessible structure so that SMEs can effectively communicate their sustainability practices.

Key advantages:

• Less bureaucracy and more accessibility: it requires significantly less information than more complex standards like the ESRS, reducing costs and administrative burden.
• Easier access to financing: banks and investors increasingly demand ESG data. Having a sustainability report can ease access to sustainable financing.
• Meets the requirements of large companies: SMEs need to provide ESG information to maintain business relationships with large companies.
• Preparation for future regulations: although voluntary, the VSME helps companies proactively prepare for future reporting requirements.
• Competitive advantage: more sustainable companies gain a stronger reputation and attract new clients and partners.

How to start?

Aliados Consulting can help your company implement VSME in a simple and effective way! Here are the steps we follow:

1. Initial assessment – We identify the most relevant reporting requirements for your company.
2. Data collection and structuring – We request and organize the necessary ESG information in line with the VSME modules.
3. Sustainability Report preparation – We draft a document aligned with VSME and market best practices.
4. Ongoing support – We provide guidance for continuous improvement and preparation for future requirements.

Need support to prepare your sustainability report? We are here to help! 📩 hello@aliados.consulting

Sustainability is not just for large companies. VSME offers a clear, objective, and accessible way for SMEs to take their first step on this journey.