Cut Costs, Save Time, and Stay Competitive: How VSME Transforms SME ESG Reporting

By Sarah Shannon

Sustainability reporting has long been a challenge for SMEs, often burdened with multiple ESG data requests, inconsistent reporting formats, and high administrative costs. Sound familiar? There is a solution. The European Financial Reporting Advisory Group (EFRAG) has now introduced the Voluntary Sustainability Reporting Standard for SMEs (VSME)—a simple, structured, and standardised framework designed to make ESG reporting more accessible for small and medium-sized enterprises.

As a sustainability platform that helps organisations collect ESG data, we see VSME as a much-needed and welcome step forward. It eliminates the complexity that often discourages SMEs from engaging in sustainability reporting, making it easier to track progress, integrate sustainability into business strategies, and unlock new opportunities.

The ESG Reporting Struggles for SMEs

Until now, SMEs have faced significant challenges when it comes to ESG reporting. Many businesses have struggled with:

Multiple, unstructured requirements – Different stakeholders request ESG data in varying formats, leading to inefficiencies and duplication of work.
Limited time and expertise – Many SMEs lack dedicated sustainability professionals or the internal knowledge to gather data and prepare reports.
High costs – Responding to ESG data requests or hiring sustainability experts can be a costly and time-consuming process.
Missed opportunities – Without a structured and recognised way to provide ESG data, SMEs risk losing contracts, investment opportunities, and access to green financing.

This lack of standardisation has created an unnecessary burden, making ESG reporting seem more complex than it needs to be.

How VSME Simplifies ESG Reporting

Fortunately, the VSME framework removes much of this complexity by introducing a clear, streamlined approach that is specifically designed for SMEs.

Here’s how it makes ESG reporting easier:

The “If Applicable” Principle – Unlike other frameworks, VSME only requires SMEs to report on ESG topics that are actually relevant to their business. There is no need for a materiality assessment, which saves time and effort.
A Clear and Simple Reporting Process – The framework uses straightforward terminology, predefined reporting templates, and avoids technical jargon, ensuring SMEs can provide information in a structured and efficient way.
Checklist-Based Disclosures – Instead of lengthy written explanations, ESG disclosures are structured as multiple-choice questions or quantitative data points, significantly reducing the effort required.
A Modular Approach for Flexibility:
- Basic Module: Helps SMEs meet fundamental ESG expectations and simplify reporting for clients and lenders.
- Comprehensive Module: Incorporates the Basic Module but also allows SMEs to secure investment and position themselves as sustainability leaders.
No Mandatory Public Disclosure – Unlike some ESG frameworks, VSME does not require SMEs to make their reports publicly available, giving businesses greater control over their sustainability information.

By following these simplified reporting steps, even the smallest businesses can now engage in sustainability reporting without the overwhelm of unnecessary complexity.

The Strategic Advantages of VSME for SMEs

For SMEs considering ESG reporting, adopting the VSME framework offers a range of key benefits, including:

Reducing inefficiencies in ESG reporting – Avoid the administrative burden of responding to multiple questionnaires, cut costs, and save valuable time.
Improving access to financing – By demonstrating sustainability commitments in a structured format, SMEs can strengthen loan applications, attract sustainability-focused investors, and access green finance opportunities more easily.
Strengthening business relationships – Many large companies now require ESG data from their suppliers. Adopting VSME allows SMEs to meet supply chain sustainability requirements, ensuring they remain competitive and avoid losing contracts due to a lack of ESG data.
Preparing for future regulations – While VSME is currently voluntary, ESG disclosure requirements continue to evolve. Adopting this framework now ensures businesses are well-prepared for potential regulatory changes, reducing the risk of disruption in the future.
Enhancing market position – By improving brand reputation and demonstrating responsible business practices, SMEs can attract sustainability-conscious customers, investors, and business partners, setting themselves apart from competitors.

How a Sustainability Platform Can Help

For SMEs already tracking ESG data—or those looking to start—a sustainability platform, like Pulse Market can make the entire process even easier. With the right tools in place, businesses can:

Standardise ESG data collection in alignment with the VSME framework.
Reduce the reporting burden by automating data gathering and structuring reports efficiently.
Gain a competitive edge by demonstrating ESG commitment with minimal effort.

Is VSME the Right Choice for Your Business?

If you are an SME, it is worth considering whether the VSME framework could be the right fit for you. Ask yourself:

Are stakeholders (such as clients, lenders, or investors) requesting ESG data?
Does your business already track sustainability metrics, but struggles with reporting?
Would standardisation help reduce the complexity and costs of ESG reporting?
Do you want to stay ahead of future regulations and position yourself as a sustainability leader?

If you answered yes to any of the above, then we can help simplify sustainability reporting, reduce administrative burdens, and open new doors for business growth. Now is the time to take action and build a solid foundation for future ESG reporting.