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La Lorraine Bakery Group

La Lorraine Bakery Group (LLBG), a Belgian family-owned company with over 85 years of expertise in the milling and bakery sector, partnered with Karomia to complete their Double Materiality Assessment (DMA) and begin their CSRD gap analysis. With Karomia’s AI-powered platform, LLBG rapidly identified key Impacts, Risks, and Opportunities (IROs), reduced ESG team workload, and laid a solid foundation for their future CSRD compliance.

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Van Moer Logistics

Van Moer Logistics, a leading integrated logistics service provider, faced the complex task of completing their Double Materiality Assessment (DMA) to meet CSRD reporting requirements. By leveraging Karomia’s AI-driven platform, they transformed a manual, time-consuming process into an efficient, streamlined workflow, saving time, reducing workload, and ensuring audit-ready compliance.

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Beyond Compliance : The Future of ESG
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How VSME Helps SMEs Overcome ESG Reporting Barriers

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.
VSME standard: basic module vs comprehensive module

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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.

EFRAG VSME Updates: What EU Companies Should Know

As the Corporate Sustainability Reporting Directive (CSRD) continues to shape the sustainability landscape across Europe, EFRAG’s VSME standard is gaining traction as the go-to framework for small and mid-sized enterprises navigating ESG disclosures. In light of the Omnibus proposal published on 26 February 2025, the European Commission is gearing up to adopt the VSME standard, a move that carries important implications for EU-based companies with 251 to 1000 employees.

In this blog, we break down the most recent updates from the EFRAG SRB April 2025 meeting, with a focus on what it means for your VSME reporting journey. At Karomia, we welcome additional clarifications and support the need for a VSME that works for larger organizations, and we believe this latest development marks a step in the right direction.

What is the VSME standard?

The VSME standard, developed by EFRAG, refers to a voluntary sustainability reporting framework specifically designed for non-listed SMEs, initially targeting companies with fewer than 250 employees. However, the Omnibus proposal explicitly paves the way for its expansion to larger SMEs (251–1000 employees).

If your company falls into this bracket, you’re now in scope for VSME application, meaning VSME ESG disclosures are likely to become an expectation, even if not (yet) a legal obligation.

Key VSME Reporting Updates

Timeline for VSME standards updates

1. The Commission will issue a recommendation soon

The European Commission is expected to recommend the VSME standard as early as June 2025, providing much-needed clarity for companies navigating voluntary sustainability reporting.

However, its adoption as a delegated act under the broader CSRD VSME framework will depend on the outcome of the ongoing Omnibus negotiations. If further adjustments are deemed necessary for companies with 251 to 1000 employees, a revised version (VSME v2) may be developed in 2026 before formal legal adoption.

💬 Karomia Insight: We view this phased approach as both pragmatic and necessary. A VSME that works for more complex organizations is crucial, and the Double Materiality Assessment (DMA) remains, in our view, an essential tool to help determine the right scope.

2. New tools are coming — including digital templates and an XBRL taxonomy

The upcoming VSME tool, a digital Excel template, is expected by June 2025, alongside a converter to auto-generate XBRL-based reports. These tools aim to simplify VSME data entry, validation, and reporting.

3. Support guides will clarify disclosure requirements

Three VSME Support Guides are currently in development, targeting:

  • Disclosure C2: Sustainability practices & future initiatives
  • Disclosure C3: GHG emissions and climate targets
  • Disclosure C7: Severe human rights incidents

Scaling the VSME: Room for Sector-Led Innovation

As the VSME expands to mid-sized companies, we at Karomia also recognize the value of industry-led initiatives. There is no one-size-fits-all when it comes to ESG, especially in verticals with unique sustainability challenges.

The EFRAG VSME standard is a strong foundation. But to truly serve larger and more complex companies, sector-specific standards may need to complement the current framework.

Prepare for the Next Phase of VSME Reporting

With the VSME ecosystem rapidly taking shape, EU mid-sized companies need to start preparing for a voluntary but highly strategic phase of sustainability reporting. Whether you’re reporting under CSRD, starting your VSME journey, or exploring VSME standards that suit your business, now is the time to act.

At Karomia, we’re here to help you make sense of these developments and turn them into strategic opportunities, not just regulatory checkboxes.

Ready to explore VSME reporting options tailored to your company?

Get in touch with our team to talk about materiality, tools, or industry-specific ESG approaches that work for you.

Post-Omnibus Chaos: Why VSME Reporting Is the Smart First Step in the ESG Puzzle

The Omnibus proposal has thrown ESG reporting into a state of uncertainty. While large companies (+1000 employees) remain in scope of the Corporate Sustainability Reporting Directive (CSRD), the reporting timelines and exact ESRS (European Sustainability Reporting Standards) content remain unclear.

And for smaller EU companies suddenly out of scope, the question looms large: Should we stop reporting, or take proactive steps with a voluntary framework like the VSME?

The reality is, most businesses, regardless of their legal obligations, will still face ESG information demands from banks, investors, customers, and regulators. That’s why aligning with the VSME standard developed by EFRAG is a no-regret move, especially while the rest of the market stalls in confusion.

This blog dives into:

  • Real-world reactions from over 50 companies post-Omnibus
  • Why VSME reporting is becoming a de facto baseline for ESG data
  • How to write a VSME report that actually works for your business
  • And why VSME is just one part of your broader ESG strategy

What Companies Are Doing After the Omnibus Proposal

In the immediate aftermath of the Omnibus announcement, we spoke to more than 50 mid-sized companies that are no longer in the mandatory CSRD scope. These included a diverse mix of sectors, maturity levels, and ESG reporting experience. What we found is that companies are falling into four distinct response types, each reflecting different levels of ESG readiness and strategic foresight.

What Companies Are Doing After the Omnibus Proposal

The Champions (45%)

These companies are continuing their double materiality assessment (DMA) and aligning with the broader ESRS framework voluntarily, even without a legal mandate. They see ESG as a long-term value driver and a key part of corporate governance. Although many won’t undergo a formal audit due to resource constraints, they recognize that building internal ESG data capabilities now will give them an advantage, not just for compliance, but for stakeholder relationships and future-proofing their operations.

The Pragmatists (25%)

This group takes a balanced approach. They value the strategic insights that come from a materiality assessment but choose to report using the VSME standard. This lets them provide ESG information that is both relevant and digestible for banks, investors, and clients, without the reporting overhead that comes with full ESRS compliance. Many pragmatists also cherry-pick ESRS topics that are most material to their sector, blending voluntary VSME reporting with selected ESRS-aligned disclosures.

The Minimalists (20%)

These companies are driven primarily by external pressure, especially from banks or clients in the supply chain. Rather than investing in a full strategy, they adopt the VSME reporting framework to meet immediate stakeholder demands. The goal is simple: respond to ESG data requests in a consistent format, reduce the burden of sustainability questionnaires, and avoid reputational or financial risk.

The Inactives (10%)

A small portion of companies have taken no action, choosing to wait for clearer regulatory guidance. While understandable, this approach carries significant risk. As we’ll explore below, banks, customers, and investors are moving ahead with VSME-aligned data expectations, making inaction a short-lived option. Sooner or later, every company will need to respond.

Why VSME Reporting Is the No-Regret Move for ESG Managers

The VSME standard, created by EFRAG, offers small and medium-sized enterprises a structured, voluntary ESG reporting framework that aligns with CSRD logic but at a lower burden. It defines up to 100 ESG data points, grouped under two modules: the Basic module and the Comprehensive module. What’s unique about VSME reporting is that it sets the ceiling, the maximum data that can be requested from SMEs by stakeholders. This provides much-needed clarity in a landscape where companies are often overwhelmed by inconsistent data requests.

For ESG managers, the value of VSME is clear. With expectations growing across the board, from banks performing ESG risk assessments to customers needing supplier data for their own CSRD reports, companies are under pressure to deliver structured, transparent ESG information. VSME reporting standardizes and streamlines this process, helping businesses respond to ESG requests once, and do it right.

Why VSME Reporting Is the No-Regret Move for ESG Managers

What’s more, the market is beginning to converge around the VSME CSRD approach. In early 2025, Febelfin and Isabel Group launched a common digital platform that banks will use to collect ESG data from SME clients. This platform will be aligned with the EFRAG VSME standard, creating an ecosystem where SMEs and banks speak the same reporting language. The reason is simple: banks are now subject to Capital Requirements Regulation (CRR III) and Capital Requirements Directive (CRD VI), which require them to assess ESG risk in their loan books starting in 2026. And the only way they can do that is by collecting consistent ESG data from clients.

If your company wants to access financing, reduce interest rates, or participate in public and private tenders, providing a VSME report will increasingly become the baseline requirement. In that sense, preparing your VSME report isn’t just a compliance task, it’s a competitive advantage.

How to Create a VSME Report That Fits Your Business

The VSME tool is designed to be flexible. It meets companies where they are today, whether they’re new to ESG reporting or already managing sustainability KPIs. Depending on your size and ESG maturity, you can choose one of three VSME reporting paths:

How to Create a VSME Report That Fits Your Business

Option 1: Basic Module – For Micro and Small Enterprises

The Basic module covers essential ESG metrics like energy usage, waste management, and employee policies. It’s designed for companies with limited resources and experience in ESG. This is the best option for first-time reporters who want to meet the baseline requirements of stakeholders, especially banks and customers, without overextending their capacity.

Option 2: Basic + Comprehensive Module – For Medium Enterprises

This path is ideal for businesses with a growing need to report to financial institutions, investors, or large corporate clients. It includes additional data points such as carbon footprint, climate risks, and social governance. It allows companies to demonstrate leadership on ESG issues, improve risk transparency, and position themselves for green funding and procurement opportunities.

Option 3: All Modules + Custom Topics – For ESG-Mature SMEs

For businesses that want to stay ahead of regulation and build trust with partners, this option combines all VSME modules with customized disclosures requested by customers or sector bodies. It’s the choice for ESG trailblazers who see reporting as a business enabler, not just a compliance requirement. Many Wave 2 CSRD reporters in this category are already using this approach to stay ready for future ESRS adoption.

VSME Reporting Is Only One Piece of the ESG Puzzle

It’s important to recognize that while VSME reporting is a smart and strategic starting point, it’s not the entire journey. Your annual ESG report, whether aligned to VSME or ESRS, is just the output. The real work lies in understanding, prioritizing, and taking meaningful sustainability action behind the scenes.

VSME Reporting Is Only One Piece of the ESG Puzzle

1. Understand Your Business and Stakeholder Needs

Use your impacts, risks, and opportunities (IROs), to assess what matters most to your business and to your stakeholders. What ESG topics are banks concerned with in your sector? What do your customers value in the supply chain? Where are your biggest sustainability gaps? Measuring your current ESG baseline is the first step to building a reporting strategy that makes sense.

2. Prioritize and Take Action

Once you know where you stand, you can define ESG goals and focus efforts where they’ll matter most. Whether it’s energy efficiency, DEI policies, or sustainable procurement, VSME reporting only works when it reflects real action. Your annual reporting obligations, and your credibility with stakeholders, depend on consistent progress.

3. Report and Communicate

Sustainability is a journey, not a checkbox. Your VSME or ESRS report is not just for regulators, it’s a tool for communicating your strategy to investors, customers, employees, and partners. Done right, it can strengthen your brand, improve access to capital, and help attract the next generation of talent who want to work for companies making a difference.

Redefine VSME reporting with Karomia

VSME reporting doesn’t have to be a burden. With Karomia’s AI-powered platform, you can turn scattered files, invoices, and policies into a clear, structured report, without getting lost in the regulation. Our step-by-step process helps you start with what you already have, prefill disclosures using your business data, and collaborate seamlessly with your team or consultant. In just a few guided steps, you can generate a shareable, stakeholder-ready VSME report or even publish an ESG dashboard that tells your sustainability story.

Let’s make reporting the easy part! Book a call today.

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Stakeholder Engagement Webinar

Learn in 30 minutes how to engage your stakeholders in an effective and efficient way during your Double Materiality Assessment.

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Omnibus & Your ESG Report: What’s Next?

Unpack the Omnibus proposal and its impact on your ESG reports. Learn how AI can do all the heavy lifting to get your report done.

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DMA Masterclass

Learn how to conduct a CSRD compliant but pragmatic double materiality assessment with our masterclass video

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Watch our webinar replay to learn how to effectively and efficiently ensure compliance of your Double Materiality Assessment. With insights, practical tips, and strategies from Karomia.

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La Lorraine Bakery Group

La Lorraine Bakery Group (LLBG), a Belgian family-owned company with over 85 years of expertise in the milling and bakery sector, partnered with Karomia to complete their Double Materiality Assessment (DMA) and begin their CSRD gap analysis. With Karomia’s AI-powered platform, LLBG rapidly identified key Impacts, Risks, and Opportunities (IROs), reduced ESG team workload, and laid a solid foundation for their future CSRD compliance.

La Lorraine Bakery Group
Van Moer Logistics

Van Moer Logistics, a leading integrated logistics service provider, faced the complex task of completing their Double Materiality Assessment (DMA) to meet CSRD reporting requirements. By leveraging Karomia’s AI-driven platform, they transformed a manual, time-consuming process into an efficient, streamlined workflow, saving time, reducing workload, and ensuring audit-ready compliance.

Van Moer Logistics
Aluminium Duffel

Aluminium Duffel, a leading manufacturer of aluminum rolled products, turned to Karomia to simplify their Double Materiality Assessment (DMA) process and ensure compliance with CSRD reporting. In just one weekend, Karomia’s innovative tool helped them finalize months of work, collect data from 56 stakeholders, and reduce administrative burden.

Aluminium Duffel
beMatrix

beMatrix, a leading provider of modular aluminum frames for temporary constructions, faced the overwhelming challenge of completing their Double Materiality Assessment (DMA) as part of their CSRD reporting. With Karomia’s step-by-step platform, they streamlined the process, saving significant time and effort while achieving compliance with precision.

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La Lorraine Bakery Group

La Lorraine Bakery Group (LLBG), a Belgian family-owned company with over 85 years of expertise in the milling and bakery sector, partnered with Karomia to complete their Double Materiality Assessment (DMA) and begin their CSRD gap analysis. With Karomia’s AI-powered platform, LLBG rapidly identified key Impacts, Risks, and Opportunities (IROs), reduced ESG team workload, and laid a solid foundation for their future CSRD compliance.

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