Although small and medium-sized enterprises (SMEs) across Europe may no longer fall under the strict reporting obligations of the Corporate Sustainability Reporting Directive (CSRD), they are still feeling the pressure. The directive has created a ripple effect: stakeholders now expect greater transparency, no matter the company size. Yet for most SMEs, the costs and complexity of traditional ESG reporting simply don’t add up.

That’s where the VSME standard comes in. Developed by EFRAG, the Voluntary Sustainability Reporting Standard for SMEs (VSME) is designed to simplify ESG disclosures for small and medium-sized businesses. Unlike the CSRD, the VSME standard is lean, practical, and proportionate, giving SMEs a more accessible way to meet growing demands.

📊 Want the full breakdown? Check out our complete VSME guide to dive deeper into the standard, its structure, and how it compares to the ESRS.

In this article, we’ll show how VSME reporting helps your business overcome the three biggest ESG reporting barriers.

“Sustainability Reporting Is Too Complex”

The original CSRD requirements are extensive, especially for small teams. Understanding the directive, identifying material topics, mapping disclosures to ESRS standards—it can feel like mission impossible.

VSME simplifies complexity without cutting corners

That’s why EFRAG’s VSME standard exists. Rather than overwhelm small businesses, it offers a framework focused only on what matters most, delivering clarity, consistency, and relevance.

In fact, the VSME Comprehensive Module covers the maximum ESG dataset reasonably expected from SMEs by banks, investors, and CSRD-reporting clients. So by using the VSME, you're not just ticking boxes, you're building real stakeholder trust.

To accommodate SMEs at different stages, the VSME offers two modules:

• Basic Module: 11 core disclosures (B1–B11) on topics like energy use, workforce, and anti-corruption. Ideal for small teams responding to standard ESG data requests.
• Comprehensive Module: Adds 9 more disclosures (C1–C9) for businesses needing deeper transparency, without requiring full ESRS compliance.

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“We Don’t Have Enough Resources”

Under CSRD, SMEs often spent excessive time and budget producing dense, compliance-driven reports. That left little room for real sustainability action.

Resource-friendly by design

The VSME standard was built specifically to avoid that trap. It retains the core principles of the ESRS framework while removing unnecessary burden.

Here’s how it helps:

• Simplified structure: The Basic Module contains ~40 data points; the Comprehensive Module ~100. That’s a fraction of full CSRD requirements, and much easier to interpret.
• Smarter data collection: Most required info is already available internally. No complex stakeholder interviews or vague metrics.
• Targeted reporting: VSME’s materiality-based structure lets you skip irrelevant sections and focus on what actually matters.

And with the right VSME tool, like Karomia, the process becomes even lighter. Just upload your existing documents and company data, and let the platform prefill your disclosures based on context. Reports are generated in hours, not months.

“We Don’t See the Financial Benefits”

For many SMEs, ESG has felt like a cost center, not a business opportunity. But that perception is quickly changing.

ESG is now a growth lever

Banks are preparing for CRR III and CRD VI, which will require them to assess ESG risk in their lending starting 2026. That means they’ll need consistent, comparable ESG data from clients.

Buyers subject to CSRD must report on their supply chains. If you're not providing ESG data, you risk losing contracts.

Talent and consumers are also paying attention. Job seekers and buyers increasingly prefer companies that align with their values.

The VSME standard helps SMEs meet all of these expectations without overextending. It turns ESG reporting into a business enabler, not just a compliance task.

Preparing your VSME report today helps you:

• Improve financing opportunities
• Stay competitive in procurement
• Attract values-driven customers and employees

Early adoption also positions you as a strategic, future-ready partner in ecosystems where VSME vs CSRD isn’t just a technical difference, it’s about proving you're serious about sustainability.

The EFRAG VSME standard empowers SMEs to report on sustainability in a way that’s realistic, relevant, and resource-friendly. As expectations rise across finance and supply chains, VSME reporting gives you a head start.

Redefine VSME Reporting with Karomia

Karomia’s AI-powered VSME tool helps you:

• Start with what you have: Upload documents and info, and Karomia will prefill your disclosures with contextual accuracy.
• Go from data to report in hours: No manual formatting or complex mapping.
• Share what matters: Deliver a clear, structured report that meets stakeholder expectations.

Take the first step toward easier, smarter ESG reporting—book a demo today.