Sustainability Office is part of the ESRS VSME community 🌟

What is VSME ESRS?

A voluntary sustainability reporting standard for micro, small, and medium enterprises (VSME). It is a standard aimed at unifying the approach to sustainability reporting at the EU level.

What is the role of the VSME community?

The VSME community contributes to the development of the VSME standard by providing advice to EFRAG regarding outcomes such as user guides for the VSME standard, mapping tools and platforms for sustainability reporting for SMEs, and similar initiatives...

Why VSME ESRS were developed?

As EFRAG points out in its announcement: "It stems from the market need to have a simple reporting tool to be used by SMEs to face growing sustainability data requests from business counterparties (i.e. banks, investors or larger companies for which non-listed SMEs are suppliers) in an efficient and proportionate manner as well as to facilitate their participation in the transition to a sustainable economy. Based on market acceptance, the VSME is expected to standardise the current multiple ESG data requests (which represent a significant cost of preparation for non-listed SMEs), by reducing the number of uncoordinated requests they receive. This is expected to support them in having better access to lenders, investors and clients."

VSME ESRS

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VSME vs. SET 1 ESRS Standards

We should have started with VSME.

In the first years of reporting, the focus should have been on the basics:

policies, measures, goals, plans, indicators.

In fact, the VSME ESRS standard, which is simple and foundational to the sustainability of a company, should have been introduced right away. Over time, additional data points could have been added.

After around 10 reports according to the ESRS standards, I can conclude that they are unnecessarily complicated, with a lot of overlap, a lot of ambiguity, and a lot of "non-standardization." In many cases, reporting under the same standard, two companies would not get the same results. Why? Because the standard leaves companies the choice of methodology.

Does the ESRS prescribe how you will present your employee training? NO. So, Company A will count all seminars, conferences, online courses, and webinars in which their employees participated, while Company B will limit itself to only in-house training that was specifically organized for their employees. Company A will report far more training hours than Company B – but is this really better in practice?

Let’s go back to the ESRS VSME. It has a much simpler structure, there is no concept of materiality but rather applicability, it provides instructions on how to calculate and present indicators, offers more detailed explanations, and gives examples of policies, measures, and goals...

Reporting under the ESRS VSME standard will result in a much clearer and user-friendlier sustainability report, especially for companies with fewer than 500 employees.