VSME: the EU voluntary standard, and why UK suppliers are receiving it

VSME stands for the Voluntary Sustainability Reporting Standard for non-listed Small and Medium-sized Enterprises. EFRAG built itat the European Commission's request to replace the stream of uncoordinated ESG questionnaires that SMEs receive from banks, investors and larger customers. EFRAG delivered it on 17 December 2024.

The Commission endorsed it in Recommendation (EU) 2025/1710 of 30 July 2025. The Omnibus I Directive then told the Commission to adopt a standard for voluntary use based on that Recommendation. The delegated act was adopted on 3 July 2026, published in the Official Journal on 21 September 2026 as Delegated Regulation (EU) 2026/1560, and entered into force on 24 September 2026.

The Voluntary Standard keeps the VSME's two modules. The Commission's staff working document says it adds no datapoints or modules to VSME; changes are limited to coherence with the revised ESRS and presentation.

The Basic Module is a prerequisite for the Comprehensive Module. Each module must be complied with in full, but “if applicable” items are reported only where they apply. Some datapoints are voluntary for undertakings with 10 employees or fewer. The standard is intended for undertakings with an average of 1,000 employees or fewer in the preceding financial year.

The EU's Corporate Sustainability Reporting Directive requires in-scope companies to report on their value chain, not only their own operations. After Omnibus I, scope is companies with more than 1,000 employees and net turnover above €450 million. To report on their suppliers, they ask their suppliers.

The Recommendation called this the “trickle-down effect”: large reporters pass data requests to smaller companies that are not themselves obliged to report. VSME was designed to make those requests predictable. Omnibus I went further and turned it into a legal ceiling. Our guide to CSRD after Omnibus I covers the scope change.

A UK SME will rarely be a CSRD reporter itself. But it can sit in a reporter's value chain, and the definition of a protected undertaking turns on headcount and on being in that value chain. It does not say where the supplier must be established.

The cap sits in Article 19a(3) and Article 29a(3) of the Accounting Directive, as amended. The Regulation fills it in. Article 3(2) says the cap “shall only comprise the datapoints specified in Annex II”, not the whole standard.

The list above is read from Annex II of the Regulation as published, which matches Annex II as transmitted to the Council. Law firms reading the Official Journal text, including Arthur Cox, describe the same two-level structure. Not every point of a listed disclosure is capped: B8's country split, B9's fatalities and B10's pay gap sit outside Annex II.

A UK manufacturer with an average of 180 employees last year receives a questionnaire from a German customer collecting data for its FY2027 CSRD sustainability statement. The purpose is CSRD reporting and the supplier is protected, so the question for each item is where it sits in the Regulation: inside the Annex II cap, inside the Annex I standard but outside the cap, or not in the standard at all.

In the checker at the top of this page, “beyond the voluntary standard” means beyond the capped datapoints. Article 3(2) makes Annex II the whole of the cap, so an item the standard covers but Annex II does not is one the customer must flag and the supplier may decline.

Eight of the sixteen items sit in Annex II. On these answers the supplier provides those eight and declines the rest, or answers some of them because the relationship warrants it. The customer must have marked every over-cap item and told the supplier of the right to decline; if it did not, the supplier can point that out. The cap never obliges the supplier to answer anything, including the Annex II items.

The same questionnaire sent for a different purpose changes the answer. If the customer says it is running supply-chain due diligence, or the request comes from a bank, none of it is capped. Our guide to handling ESG questionnaires covers those cases.

The cap governs one thing: information a CSRD reporter requires for its own sustainability reporting. The Commission's value-chain cap Q&Asays it “does not affect information requests for purposes other than sustainability reporting under CSRD”.

The Directive names one carve-out expressly. Nothing in the cap affects requests “for the purpose of complying with Union requirements on undertakings to conduct a due diligence process”. So a request made under the Corporate Sustainability Due Diligence Directive is untouched by the 1,000-employee cap. The CSDDD has its own, different limit on information requests to business partners with fewer than 5,000 employees.

The cap does not oblige anyone to report either. It sets a ceiling, not a floor. A customer may ask for less than Annex II, and the Regulation's recitals say it should if it does not need everything.

The UK has no SME sustainability standard of its own. Two UK frameworks sit near VSME, and neither is designed for a small supplier answering a customer.

GOV.UKsays UK SRS is “available for voluntary use, by any entity that chooses to do so”. It is built on IFRS S1 and S2, a far heavier exercise than VSME. For the mandatory side, see our guide to UK SRS thresholds.

An unquoted company is exempt from SECR where it meets two or more of: turnover of £36 million or less, balance sheet of £18 million or less, 250 employees or fewer, under Schedule 7 Part 7A of SI 2008/410. Most UK SMEs are exempt. Those that do report under SECR already hold much of the energy and emissions data VSME's B3 disclosure asks for, and the government conversion factors work for both.

BDO reports that EFRAG has updated its non-mandatory guidance for the Voluntary Standard on its Knowledge Hub. Linklaters' note of 21 September 2026 sets out both September regulations side by side. If you supply EU groups, the Omnibus I scope rules tell you which customers are reporters.

If you choose to report under the standard rather than answer questionnaire by questionnaire, B1 asks you to state which option you selected, whether the report is individual or consolidated, and to make an explicit statement of compliance. A single report that customers can be pointed to often saves more effort than it costs.

The cap is drawn by headcount, so the answer changes with size. Pick the description that fits; each tab says what applies, what to do next and by when.

The timeline marks what has passed and what comes next on the day you read it, from EFRAG's draft to the transposition deadline for the cap.

VSMEEFRAG, 2024

The Voluntary Sustainability Reporting Standard for non-listed SMEs, which the EU standard is based on.

Voluntary StandardDR (EU) 2026/1560, Annex I

The EU’s standard for voluntary use by undertakings protected by the value-chain cap.

Basic ModuleB1–B11

The minimum module: basis for preparation, practices and policies, and core metrics.

Comprehensive ModuleC1–C9

The additional disclosures banks, investors and corporate clients are likely to ask for.

Value-chain capArt 19a(3)

The most a CSRD reporter may require from a protected undertaking for its CSRD reporting.

Annex IIDR (EU) 2026/1560 Art 3(2)

The closed list of datapoints the cap comprises: 23 above 10 employees, 9 at 10 or fewer.

Protected undertakingArt 19a(3)

A value-chain undertaking with an average of 1,000 employees or fewer in the preceding financial year.

Self-declarationArt 19a(3)

A supplier’s statement that it is protected, which the reporter may rely on unless manifestly incorrect.

If applicable principleAnnex I ¶15

An item reported only where its circumstances apply; omitted, it is taken as not applicable.

Location-based Scope 2B3 ¶33

Scope 2 emissions from purchased energy calculated with the location-based method; the Scope 2 figure B3 asks for.