CSRD and the voluntary VSME standard for SMEs

Short answer: The CSRD (Directive (EU) 2022/2464) requires large companies and listed SMEs to report on sustainability under the ESRS. Non-listed SMEs are not subject to that obligation. For them, EFRAG developed the VSME, a voluntary standard for answering sustainability questions from the value chain in a consistent way.

What the CSRD governs and for whom

The Corporate Sustainability Reporting Directive (CSRD), Directive (EU) 2022/2464, amends the existing European accounting and transparency rules and significantly expands sustainability reporting. Companies in scope must report under the European Sustainability Reporting Standards (ESRS), developed by EFRAG and adopted by the European Commission.

The scope is phased and targets large companies and listed SMEs (excluding micro-undertakings). Non-listed SMEs are not directly subject to the CSRD reporting obligation. The precise criteria and application dates are set out in the directive text itself and in national transposition legislation; consult the authentic text on EUR-Lex for these.

Note: the scope and timeline of the CSRD are the subject of ongoing European simplification proposals. The position at any given moment is therefore best verified through the official sources of the European Commission and EUR-Lex.

Why the VSME exists

Although non-listed SMEs are not required to report, in practice they do receive sustainability questions — from larger customers that are themselves subject to the CSRD, and from banks and investors that need value-chain data. Without a common framework this leads to divergent and sometimes conflicting requests.

The Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) was developed by EFRAG to provide a single, voluntary response to this. The standard is intended as a common language: an SME reports once under the VSME and can reuse that data across different requesters. The VSME is explicitly voluntary and imposes no legal obligation.

How the VSME relates to the CSRD

The VSME is separate from the statutory ESRS reporting obligation under the CSRD, but it is aligned with it in substance so that the data are usable across the value chain. The standard is designed so that an SME can provide a proportionate, relevant set of information, rather than the full ESRS set that applies to large companies.

For the precise structure, the modules and the status of the standard, the EFRAG project page is the primary source. Anyone wanting to know whether a specific company falls under the CSRD, or which value-chain requests are reasonable, is well advised to test the application against the directive text and their own contractual arrangements, rather than against what a value-chain partner asks for alone.

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