The Corporate Sustainability Reporting Directive (CSRD) brings with it new requirements for sustainability reporting. While large companies are obliged to double materiality assessment, small and medium-sized enterprises (SMEs) are faced with the question of how they can sensibly align their sustainability strategy. This is where the ESRS VSME sustainability report comes into play.
The VSME standard(Voluntary standard for non-listed micro-, small- and medium-sized enterprises) offers a voluntary but practical solution for SMEs to address ESG-relevant issues. to report. But how can the material topics on the ESRS AR 16 list be efficiently linked to the disclosure points in the VSME sustainability report?
In this article, we show you how to create a systematic mapping of the material topics for your VSME sustainability report. We explain which topics of the European Sustainability Reporting Standards (ESRS) are particularly relevant and how they can be assigned to the individual VSME report disclosures.
Overview of the ESRS VSME Sustainability Report
What is the VSME sustainability report?
The ESRS VSME sustainability report is based on EFRAG’s voluntary VSME standard, which was developed specifically for unlisted small and medium-sized enterprises (SMEs). The aim is to provide practical and simplified sustainability reporting that is based on the requirements of the European Sustainability Reporting Standards (ESRS) in order to establish a uniform standard.
Why should SMEs use the VSME sustainability report?
Even though the VSME standard is not a legal requirement, it offers numerous advantages:
- Transparency for business partners: Large companies are increasingly demanding ESG data from their suppliers.
- Facilitating lending: Banks and investors are paying more attention to sustainability information.
- Strategic advantages: Developing a structured sustainability strategy helps to minimize risks and exploit opportunities.
- Efficient reporting: The VSME sustainability report has a modular structure, which means that SMEs only need to record relevant data.
Structure of the VSME Sustainability Report
The VSME standard divides the report into two modules:
- Basic module (mandatory components for basic reporting)
- General company information
- Environmental metrics (e.g. energy consumption, CO₂ emissions, waste management)
- Social metrics (e.g. working conditions, equal rights)
- Governance aspects (e.g. corruption prevention)
- Comprehensive module (additional optional information for a detailed sustainability assessment)
- Climate strategy & reduction targets
- Risk management in relation to sustainability
- Extended social and governance aspects
We have collected all the disclosure requirements of the voluntary reporting standard and prepared them in a VSME data point list so that all the relevant information is clearly presented and you can start collecting data straight away.
VSME Sustainability Report & the materiality assessment
A double materiality assessment (DMA ) is no longer mandatory after the last VSME update in December 2024. However,materiality assessment can serve as a strategic tool and bring benefits for organizations. Companies can thus specifically assess which ESRS topics actually have material opportunities and risks for their business model – both financially and ecologically & socially (financial materiality) or the extent to which the company’s activities have a positive or negative impact on people and the environment (impact materiality).
Methodology of mapping the key topics
Why is mapping useful in the VSME sustainability report?
Although DMA is not mandatory under the ESRS VSME standard, it can help companies to align their sustainability strategy in a targeted manner. The mapping of material topics enables SMEs to link the relevant ESG topics from the ESRS standards with the disclosure requirements in the VSME standard. This enables them to:
- Set priorities: Which sustainability issues are strategically relevant for the company?
- Increase efficiency: Focus resources on the most important reporting obligations.
- Create comparability: Align ESG data consistently with the requirements of larger companies.
Step-by-step instructions for mapping
A systematic mapping of the material topics in the VSME sustainability report can be carried out in the following steps:
1) Identify topics from the ESRS topic list
The ESRS AR 16 list contains ESG topics that may also be relevant for the VSME sustainability report. These include, for example
- Climate change (ESRS E1): CO₂ emissions, climate risks, energy consumption
- Pollution (ESRS E2): Air, water and soil pollution
- Water and Marine Resources (ESRS E3): Water consumption, marine ecosystems
- Biodiversity (ESRS E4): Biodiversity, ecosystem protection
- Circular economy (ESRS E5): Resource consumption, waste management
- Working conditions (ESRS S1-S2): Safety, remuneration, social standards
- Business Conduct (ESRS G1): Corruption prevention, business ethics
2) Prioritize key topics
Not every topic from the ESRS AR 16 list is relevant for every company. Prioritization is carried out within the scope of analysis according to the principle of double materiality through the structured recording and evaluation of IROs (Impacts, Risks, Opportunities). Helpful for this are:
- Sector affiliation (e.g. for manufacturing companies: Energy consumption & waste management)
- Regulatory requirements (e.g. Supply Chain Act for globally active companies)
- Stakeholder expectations (e.g. sustainability criteria of investors and banks)
3) Comparison with the VSME disclosure requirements
Once the relevant ESRS topics have been identified, they are assigned to the corresponding reporting requirements in the VSME Sustainability Report.
| VSME Specification point | Related ESRS topics |
|---|---|
| B1 - General company information | General information |
| B2 - Sustainability guidelines & future strategies | ESRS E1 (Climate Change), ESRS E5 (Circular Economy), ESRS S1 (Own Workforce), ESRS G1 (Business Conduct) |
| B3 - Energy & greenhouse gas emissions | ESRS E1 (Climate Change) |
| B4 - Air, water & soil pollution | ESRS E2 (Pollution) |
| B5 - Land use & biodiversity measures | ESRS E4 (Biodiversity & Ecosystems) |
| B6 - Water consumption & water stress management | ESRS E3 (Water and Marine Resources) |
| B7 - Resource utilization & waste prevention | ESRS E5 (Circular Economy) |
| B8 - Working conditions & employment structure | ESRS S1 (own workforce) |
| B9 - Health & Safety | ESRS S1 (own workforce) |
| B10 - Remuneration, collective agreements & training | ESRS S1 (own workforce) |
| B11 - Ethics, Compliance & Corruption Prevention | ESRS G1 (Business Conduct) |
| C1 - General description of the business model & strategy | General information |
| C2 - Significant sustainability impacts, risks & opportunities | General information |
| C3 - Climate targets & transition plans | ESRS E1 (Climate Change) |
| C4 - Climate-related risks | ESRS E1 (Climate change) |
| C5 - Additional information on the workforce | ESRS S1 (Own workforce) |
| C6 - Human rights policies & processes | ESRS S1 (Own workforce) |
| C7 - Serious human rights violations | ESRS S1 (Own workforce), ESRS S2 (Workers in the value chain), ESRS S3 (Affected communities) |
| C8 - Turnover from certain sectors & exclusion from EU benchmarks | ESRS G1 (Business Conduct) |
| C9 - Gender diversity in corporate governance | ESRS G1 (Business Conduct) |
4) Integration into VSME reporting
Once the mapping has been completed, companies can target:
- Define core indicators for the VSME sustainability report
- Closing data gaps and optimizing internal processes for ESG reporting
- Communicating material topics transparently in the sustainability report
Mapping of environmental topics (ESRS E1-E5) in the VSME sustainability report
A central element of the VSME sustainability report is the disclosure of environmental indicators. The ESRS environmental topics (E1-E5) play a key role here. In this section, we show how these topics can be assigned to the VSME disclosure requirements.
ESRS E1 - Climate change
Climate change has a direct impact on companies – from rising energy costs to physical risks from extreme weather events. And many companies are actively contributing to climate change through their emissions. The relevant reporting requirements in the VSME Sustainability Report are:
- B3 – Energy and greenhouse gas emissions: Recording of energy consumption and CO₂ emissions.
- C3 – Climate targets & transition plans: If a company has specific climate strategies, these can be disclosed in the comprehensive module.
- C4 – Climate-related risks: Assessment of physical and transitory climate risks, including extreme weather events, regulatory changes and financial impacts on the business.
ESRS E2 - Pollution
Air, water and soil pollution are key challenges in many industries. The VSME Sustainability Report covers these topics as follows:
- B4 – Air, water and soil pollution: Companies should indicate relevant emission values here.
💡 Practical example: A printing company can explain in the report how solvent emissions are reduced and recycling techniques for waste water are used.
ESRS E3 - Water and marine resources
Water management is particularly relevant in water-intensive industries. The corresponding disclosure requirements in the VSME sustainability report are:
- B6 – Water consumption & water stress management: Companies indicate their water withdrawal, consumption and recycling here.
💡 Practical example: A hotel can show in the report how it reduces consumption through water-saving technologies and integrates rainwater utilization.
ESRS E4 - Biodiversity and Ecosystems
Companies operating in or near biodiversity-sensitive areas should consider their impacts. Important points in the VSME Sustainability Report:
- B5 – Land use & biodiversity measures: Information on sites in protected areas and measures to preserve biodiversity.
💡 Practical example: An agricultural cooperative can demonstrate how it protects soil health through sustainable cultivation methods.
ESRS E5 - Circular economy
The use of resources and waste management are key issues in the circular economy. The VSME sustainability report includes:
- B7 – Resource utilization & waste avoidance: Disclosure of material flows and waste volumes as well as recycling rates.
💡 Practical example: An electronics manufacturer can specify how it uses recyclable materials and avoids electronic waste.
Mapping of social aspects (ESRS S1-S4) in the VSME sustainability report
In addition to environmental factors, social sustainability issues play a central role in the VSME sustainability report. ESRS standards S1 to S4 cover various social aspects, including working conditions, human rights and consumer protection.
ESRS S1 - Own workforce
The protection and promotion of employees is essential for sustainable companies. In the VSME standard, these topics are covered by:
- B8 – Working conditions & employment structure: Information on the workforce, contract types and employee rights.
- B9 – Health & safety: Measures for accident prevention and workplace health promotion.
- B10 – Remuneration, collective agreements & further training: Wage transparency, further training opportunities and collective agreements.
- C5 – Additional (general) information on the workforce: Extended information on the employment structure, including contract types, working models and diversity indicators.
- C6 – Human rights policies & processes for own employees: Presentation of internal guidelines and measures to protect employee rights and human rights due diligence.
- C7 – Serious human rights abuses: Disclosure of potential or actual human rights abuses in own workforce, value chain and affected communities, and actions taken to prevent and remedy these.
💡 Practical example: A production company could report that 80% of its employees are covered by collective agreements and that annual safety training is carried out.
ESRS S2 - Workforce in the value chain
Companies are increasingly responsible for the conditions in their supply chain. Relevant disclosure obligations in the VSME Sustainability Report:
- C7 – Serious human rights abuses: Disclosure of potential or actual human rights abuses in own workforce, value chain and affected communities, and actions taken to prevent and remedy these.
💡 Practical example: A fashion company could state that 95% of its suppliers have been audited and comply with BSCI social standards.
Mapping of governance aspects (ESRS G1) in the VSME sustainability report
In addition to environmental and social issues, governance factors are a key component of sustainability reporting. The ESRS G1 standard covers aspects such as corporate ethics, corruption prevention and responsible business practices.
ESRS G1 - Business Conduct
Compliance with ethical business practices strengthens the trust of investors, customers and stakeholders. The relevant reporting obligations in the VSME Sustainability Report are:
- B11 – Corruption & business ethics: Disclosure of measures to prevent corruption, whistleblower systems and ethical business practices.
- C8 – Sales & EU benchmark exclusions: Disclosure of sales in sensitive industries and possible exclusions from sustainability benchmarks.
- C9 – Gender diversity in management: Information on gender distribution in management and diversity measures.
💡 Practical example: A company could report that all managers undergo annual anti-corruption training and that an internal whistleblower system is in place.
Governance & sustainability strategy
Governance structures also play a role in the strategic management of sustainability issues. In the VSME Sustainability Report, companies can explain how they manage sustainability:
B2 – Sustainability guidelines & future strategies: Presentation of internal ESG guidelines and sustainability targets.
💡 Practical example: An SME could state that it has appointed a sustainability officer and conducts regular training for employees.
Challenges & solutions for SMEs
Although the VSME standard offers simplified reporting for SMEs, there are still implementation challenges. Small and medium-sized enterprises often have limited resources to develop a detailed sustainability strategy. Typical challenges and possible solutions are outlined below.
1) Lack of internal resources & know-how
🤷🏼 Problem: Many SMEs do not have their own sustainability departments or ESG experts.
🎯 Solution:
- Use of guidelines and the ESRS VSME Sustainability Report Template for SMEswhich was developed specifically for the VSME standard.
- Cooperation with external CSRD consultancies or industry associations that offer support with reporting.
- CSRD training for employees to improve their understanding of ESG requirements.
💡 Practical tip: Many companies, chambers of commerce and industry associations offer free CSRD webinars.
2) Data collection & documentation
🤷🏼 Problem: Companies have to record a large amount of ESG data that has not yet been systematically documented.
🎯 Solution:
- Introduction of a simple ESG database to systematically collect relevant information.
- Use of ERP systems or ESG reporting software that automatically evaluates ESG data.
- Integration of supplier surveys to document environmental and social standards in the value chain.
💡 Practical tip: Companies can use their existing energy and financial reports as well as ISO certifications or EMAS as a basis for data collection in order to avoid duplicating work.
3) Lack of comparability with large companies
🤷🏼 Problem: SMEs fear that their sustainability report will not be able to keep up with the comprehensive CSRD reports of large companies.
🎯 Solution:
- Focus on relevance rather than completeness – the VSME sustainability report allows SMEs to concentrate on the key issues.
- Use of benchmark data from the industry to present comparable sustainability figures.
- Clear communication of own ESG strategy to demonstrate credible progress.
💡 Practical tip: Transparency counts for more than perfection – even small companies benefit from a step-by-step ESG approach.
4) Lack of financial resources for sustainability measures
🤷🏼 Problem: Investments in sustainability, such as CO₂ reduction or the circular economy, can be cost-intensive.
🎯 Solution:
- Use of funding programs & ESG financing specifically provided for SMEs.
- Integration of sustainable supply chain strategies to achieve long-term savings.
- Cooperation with other companies and industry associations to jointly implement sustainability initiatives.
💡 Practical tip: Banks are increasingly offering green loans with better conditions for sustainable investments.
Summary: Practical solutions for successful ESG integration
Despite some challenges, SMEs can successfully implement the VSME sustainability report by:
✔ Using simple & practical CSRD reporting software.
✔ Collecting & optimizing ESG data step by step.
✔ Following proven industry standards.
✔ Exploiting funding opportunities & financing options.
Conclusion & recommendations for action for SMEs
The VSME sustainability report offers SMEs a practical way of structuring their ESG strategy and creating transparency. Even though CSRD is not mandatory for SMEs, voluntary reporting brings competitive advantages, better financing conditions and more efficient use of resources.
Recommendations for simple implementation
- Identify relevant ESG issues: Focus on the most important sustainability aspects.
- Start simple data collection: Use existing company data as a basis.
- Implementing small measures with a big impact: Energy efficiency, supply chain management, social initiatives.
- Using the sustainability report as a communication tool: Strengthening trust among investors, customers and partners.
- Use subsidies & advice: Take advantage of support from ESG experts and funding programs.
With increasing ESG requirements, the VSME sustainability report is becoming more and more relevant for SMEs. Those who integrate sustainability aspects at an early stage secure long-term competitive advantages and remain fit for the future.
