The Voluntary Sustainability Reporting Standard for SMEs, or VSME, is a practical sustainability reporting framework designed to help small and medium-sized enterprises prepare ESG information in a simpler and more structured way. For SMEs in the EU, it can help respond to sustainability data requests from large customers, banks, investors, and value-chain partners. For SMEs in Thailand, it can be used as a practical reference to prepare for export markets, supply chain requirements, green finance, and future sustainability expectations (European Commission, 2025a; EFRAG, 2024).

What is VSME?

VSME stands for Voluntary Sustainability Reporting Standard for SMEs.

In simple words, it is a lighter sustainability reporting framework for smaller companies that are not required to prepare full CSRD or ESRS reports.

It was developed by EFRAG, the European Financial Reporting Advisory Group. The European Commission adopted a recommendation on VSME in July 2025 to make it easier for SMEs to respond to sustainability information requests from large companies and financial institutions (European Commission, 2025a).

The purpose is not to turn SMEs into large-company reporting teams. The purpose is to give SMEs a common language for sharing sustainability information.

Instead of receiving many different ESG questionnaires from customers, banks, or buyers, SMEs can use VSME as a structured starting point.

Why VSME matters for EU SMEs

Many SMEs are not directly required to report under CSRD. However, this does not mean sustainability reporting is irrelevant.

SMEs may still be asked for ESG data because they supply larger companies, work with banks, export products, or join procurement processes where sustainability information is increasingly expected (European Commission, 2025a).

For example, an SME manufacturer may be asked by a large EU customer to provide information on energy use, greenhouse gas emissions, waste, employee safety, or anti-corruption practices.

A food processor may be asked about traceability, water use, packaging, supplier practices, and labor conditions.

A logistics provider may be asked about fuel use, emissions, driver safety, and route efficiency.

VSME helps these companies organize the information before the request arrives.

VSME is voluntary, not full CSRD reporting

This point is important. VSME is voluntary. It is designed for non-listed SMEs and does not have the same legal authority as the ESRS for large undertakings (EFRAG, 2024). This means SMEs should not see VSME as another heavy compliance burden. A better way to see it is as a practical ESG data pack. It helps SMEs answer common questions such as:

What does the company do?
Where does it operate?
How much energy and water does it use?
What waste does it generate?
Does it have workplace health and safety data?
Does it have basic policies for employees, suppliers, and business conduct?
Can the company explain its sustainability risks and actions clearly?

The two parts of VSME: Basic and Comprehensive

VSME has two main modules.

1. Basic Module

The Basic Module is the practical starting point. It includes general company information and basic ESG metrics.

The VSME Standard includes Basic Module topics such as energy and greenhouse gas emissions, pollution, biodiversity, water, circular economy and waste, workforce characteristics, health and safety, remuneration, training, and corruption or bribery-related matters (EFRAG, 2024).

For many SMEs, this is already enough to create a useful first sustainability profile.

2. Comprehensive Module

The Comprehensive Module adds more detail. It is useful when banks, investors, or larger corporate customers request deeper information.

According to EFRAG, applying the Basic Module is a prerequisite for applying the Comprehensive Module (EFRAG, 2024).

The Comprehensive Module may include topics such as business model and sustainability initiatives, greenhouse gas reduction targets, climate risks, human rights policies, severe human rights incidents, and governance diversity.

For SMEs, the practical approach is simple: start with the Basic Module, then move to the Comprehensive Module only when the business need is clear.\n\n## What data should SMEs prepare first?\n\nSMEs do not need to start with a long report. They should start with data that already exists in daily operations.

A practical VSME-style ESG data pack may include:

Data category	Examples of information to collect
Company profile	Company name, location, business type, products, services, and markets
Value chain	Key suppliers, raw material sources, main customers, and distribution channels
Energy	Electricity consumption, fuel use, renewable energy if available
Greenhouse gas emissions	Scope 1 and Scope 2 emissions as a practical starting point
Water	Water use, water sources, wastewater, and treatment method if relevant
Waste	Waste type, waste volume, disposal method, recycling or reuse
Workforce	Number of employees, employment type, gender, age group, and training hours
Health and safety	Workplace incidents, lost-time injuries, PPE, and safety training
Human rights	No child labor, no forced labor, grievance channels, and labor policy
Governance	Code of conduct, anti-corruption policy, supplier policy, and complaints channel
Traceability	Lot number, batch number, supplier, production date, and shipment record

This is not only useful for EU SMEs. It is also useful for Thai SMEs that sell to international buyers.

How VSME can apply to Thailand SMEs

Thailand SMEs may not be legally required to follow VSME. However, VSME can still be useful as a voluntary structure.

This is especially relevant for Thai SMEs that:

Export to EU customers
Supply large Thai companies that report ESG data
Work with international brands\n- Sell agricultural, food, textile, packaging, electronics, or manufacturing products
Need financing from banks or investors
Want to improve supplier credibility
Need better internal data for sustainability, quality, or operational improvement

For example, a Thai rice mill that sells to an exporter may be asked about energy use, water use, waste, supplier traceability, and labor practices.

A Thai food processor selling to European buyers may be asked for packaging data, emissions, food safety links, supplier controls, and worker safety information.

A Thai component manufacturer may be asked to provide ESG data to a multinational customer that needs value-chain information.

In these cases, VSME can act as a simple preparation framework, even outside Europe.\n\n## Connecting VSME with Thailand sustainability practice

Thailand already has sustainability reporting guidance, especially for listed companies. The Stock Exchange of Thailand explains that ESG information helps stakeholders understand a company’s operations more holistically and can increase confidence in long-term business potential (Stock Exchange of Thailand, n.d.).

The SET guide also emphasizes practical reporting principles such as materiality, timeliness, reliability, and comparability. These principles are useful for SMEs even if the guide itself is designed for listed companies (Stock Exchange of Thailand, n.d.).

This means Thai SMEs can combine two practical ideas:

Use VSME as a simple international structure for SME sustainability data.
Use Thai sustainability guidance as a local reference for ESG topics, value chain thinking, materiality, and performance indicators.

The result is not a complicated report. It is a better data foundation.

Why this matters for business, not only compliance

For SMEs, sustainability reporting should not be treated only as paperwork.\n\nGood ESG data can support business decisions.

It can help identify where energy is wasted, where water risks exist, where supplier information is weak, or where workplace safety needs improvement.

It can also support customer trust. When a buyer asks for sustainability information, the SME that can respond clearly and quickly may look more prepared than a competitor that has no data.

It may also support financing conversations. Banks and investors are increasingly interested in ESG risks, climate exposure, and business resilience (European Commission, 2025b).

VSME does not guarantee funding. However, it can help SMEs present information in a more organized way.

How SMEs can start with VSME in five steps

Step 1: Define the business scope

Start with the main company, main site, or main product line.

Do not try to cover everything at once. A practical first scope could be one factory, one warehouse, one product category, or one export supply chain.

Step 2: Map the value chain

List the key activities from raw materials to customer delivery.

For a manufacturer, this may include suppliers, inbound logistics, production, packaging, storage, delivery, and after-sales service.

For an agricultural SME, it may include farms, collection points, processing, storage, transport, and buyers.

Step 3: Collect existing data

Start with data that already exists:

Electricity bills
Fuel records\n- Water bills
Waste disposal invoices
HR records
Training records
Safety incident logs
Supplier lists
Purchase orders
Production and shipment records

This avoids making sustainability reporting feel separate from normal business operations.

Step 4: Identify what is missing

Most SMEs will have some missing data. That is normal.

The key is to be honest and systematic. Identify which data is missing, why it is missing, who owns it, and how the company can collect it next time.

Step 5: Prepare a simple ESG data pack

The first output does not need to be a long sustainability report.

A simple ESG data pack can include:

Company profile
Reporting scope
Key sustainability topics
Basic environmental data
Basic workforce data
Health and safety data
Governance policies
Supplier and traceability information
Notes on missing data and improvement actions

This can be used to respond to customers, banks, partners, or internal management.

Common mistakes SMEs should avoid

Mistake 1: Waiting until a customer asks

By the time a customer asks, the deadline may be short. SMEs should prepare basic data early.

Mistake 2: Writing nice stories without data

A sustainability message is stronger when it is supported by evidence. Simple numbers are better than vague claims.

Mistake 3: Collecting too much information too soon

SMEs should not copy large-company reporting. Start with the data that matters most to customers, operations, and risk.

Mistake 4: Treating ESG as only one department’s job

Energy data may sit with operations. Workforce data may sit with HR. Supplier data may sit with procurement. Sustainability reporting needs cooperation across departments.

Mistake 5: Making claims that cannot be verified

Avoid statements such as “fully sustainable” or “carbon neutral” unless there is strong evidence and a clear method behind the claim.

Where Aeternum Ally can help

Aeternum Ally helps SMEs organize ESG data, prepare sustainability information, and respond to sustainability requests from customers, investors, lenders, and value-chain partners.\n\nFor SMEs that want to use a VSME-style approach, Aeternum Ally can support practical work such as:

Structuring ESG data by topic
Collecting operational data from different departments\n- Preparing review-ready sustainability information
Tracking missing data and improvement actions
Creating supplier and traceability records
Helping teams respond more consistently to customer ESG questionnaires

The goal is not to make SMEs produce unnecessary reports. The goal is to make sustainability data easier to manage and more useful for business decisions.

Aeternum Ally does not replace legal, accounting, or assurance advice. It supports better preparation, better data organization, and clearer sustainability communication.

Final thought

VSME gives SMEs a practical way to start sustainability reporting without copying the complexity of large-company CSRD and ESRS reporting.

For EU SMEs, it can help respond to customer, bank, investor, and procurement requests more consistently.

For Thailand SMEs, it can be used as a voluntary preparation tool for export markets, international supply chains, green finance, and stronger business credibility.

The most important step is not writing a perfect report. The most important step is building reliable ESG data little by little.

SMEs that start early will be better prepared when customers, lenders, or partners ask for sustainability information.

References

European Commission. (2025a, July 30). Commission presents voluntary sustainability reporting standard to ease burden on SMEs. https://finance.ec.europa.eu/publications/commission-presents-voluntary-sustainability-reporting-standard-ease-burden-smes_en

Commission. (2025b, July 30). Questions and answers on the recommendation on a voluntary sustainability reporting standard for small and medium-sized companies. https://finance.ec.europa.eu/publications/questions-and-answers-recommendation-voluntary-sustainability-reporting-standard-small-and-medium_en

Financial Reporting Advisory Group. (2024). Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME Standard). https://www.efrag.org/sites/default/files/sites/webpublishing/SiteAssets/VSME%20Standard.pdf\n\nGlobal

Reporting Initiative. (2024). Consolidated set of the GRI Standards. https://www.globalreporting.org/standards/

Stock Exchange of Thailand. (n.d.). Sustainability Reporting Guide for Listed Companies. The Stock Exchange of Thailand.

VSME Explained Simply: What EU and Thailand SMEs Should Know About Sustainability Reporting