VSME reporting for SMEs: what is it and how do you start?

What is VSME?

VSME stands for Voluntary Sustainability Reporting Standard for non-listed SMEs. It is a voluntary European sustainability standard for SMEs, developed by EFRAG. You use it to report in a fixed, recognisable way on environment, people and governance.

It is important to know that a VSME report is not a CSRD report and not a formal determination of what is or is not mandatory for you. It is a standard that lets you show voluntarily and in a structured way what you do, for example to customers or financiers who ask for that information.

In practice SMEs mainly use VSME as a common language. Instead of filling in a separate questionnaire for every customer and bank, you point to one structured report.

Basic or Comprehensive

The standard has two forms. The Basic form consists of the basic disclosures B1 to B11, covering business details, energy and emissions, water, waste, workforce, and health and safety, among others. The Comprehensive form adds disclosures C1 to C9 on strategy, reduction targets, climate risks, human rights and governance.

For most organisations Basic is a good starting point. You can grow into Comprehensive later if clients or financiers ask for more detail.

Choose deliberately and record why. Disclosures that do not apply to your company can be marked as not applicable with a short justification, instead of being ignored.

The role of double materiality

A double materiality assessment (DMA) looks at two sides: what is your impact on people and the environment, and what risks and opportunities do sustainability topics bring to your business? That analysis can be a good source for deciding which topics weigh most for you.

A DMA is not a precondition for starting with VSME, however. You can prepare a VSME report without one. If you do have one, you use it as additional support, and you decide which datapoints apply based on your own situation.

An example: an installation company with 24 employees sees that the conditional disclosures stay open as optional as long as there is no reason to fill them in. They complete what applies, such as energy and workforce, and declare the rest not applicable with a short reason.

How do you begin?

Start small and with what you already have. Much of the requested data is already recorded somewhere in your organisation. Work through the steps below and build towards a first version you can improve later. Keep in mind that this is a voluntary report: you decide how far to go and you can grow in steps, without the first version having to be perfect.

• Choose the reporting year and the form: Basic or Comprehensive
• Appoint a coordinator and an owner per disclosure
• Collect what already exists: energy, employees, accidents, training and policies
• Fill in what is missing and record the source
• Have a second person review before you finalise anything
• Keep evidence and the calculation method for next year

Reusing datapoints

The biggest time saving comes from reuse. You need energy use and emissions for climate data. Headcounts, accidents and training hours are already in your HR and safety records. Policy documents and objectives are often already in your management system. Preferably work with one source per figure, so you never have to explain two different numbers for the same subject.

Make sure you record once, properly, and use it several times. That gives consistency between what you tell customers, financiers and in a report, and makes repeating the process next year much lighter.

Watch the quality of the source. A figure from accounts or an energy bill is easier to justify than an estimate, but a well documented estimate beats an empty field.

How to put it into practice

Treat the first report as a learning process. Do not expect everything to be complete at once, and accept that some figures are estimates at first. Always record where a value comes from, so you can improve next year.

Common mistakes are starting too late, not assigning an owner per disclosure and taking over figures without checking the source.

Also communicate the purpose internally. When employees understand why energy, absence or training hours are tracked, the data is supplied more reliably. A short explanation in the team prevents many questions afterwards and makes the next round easier.

• Plan the report as a project with an end date
• Start with the data that is already available
• Let owners complete their own disclosure
• Check any figure that deviates strongly from the source
• Ask a reviewer to check before you finalise
• Store the calculation method and evidence for next year

Preparing VSME with BrydgeOne

The VSME & sustainability module is a report generator that reuses what is already in BrydgeOne: energy and emissions, employees, incidents, training, policy and objectives. That data is offered as found data, with the source, period and calculation shown. You use it with one click, look at the source or adjust it, and a proposal never silently becomes a reported figure.

You choose Basic or Comprehensive, assign an owner and reviewer per datapoint, and work through retrieve, complete, review and approval, and finalise towards the report. You can carry out a double materiality assessment in the same module, and it is a source for the report but not a requirement.