For Banks: Collecting SME ESG Data with VSME

European banks face an awkward asymmetry. The European Banking Authority’s Guidelines on the management of ESG risks (EBA/GL/2025/01) apply to large institutions from 11 January 2026, and to smaller, non-complex institutions from January 2027, requiring climate and environmental risk to be worked into credit processes. But the loan books those processes must cover are full of SME borrowers who have never produced an emissions figure, and who receive a different ESG form from every institution and large customer that asks.

This page makes the case, for credit and ESG-risk teams, that the VSME standard is the rational request format for SME borrower data, explains where the EU has already said so, and covers the honest limits of what VSME data can carry in a credit context.

The EU Has Already Named the Format

Two official signals point the same way:

• The July 2025 Commission Recommendation on the voluntary standard explicitly asks financial institutions to limit their SME sustainability data requests to what the VSME standard defines. Unlike the value-chain cap binding CSRD reporters, this is guidance rather than a ceiling — bank requests grounded in prudential regulation sit outside the cap — but it sets the reference point for what a proportionate ask looks like.
• VSME was built against bank questionnaires. In developing the standard, EFRAG analysed twelve ESG questionnaires covering roughly 26,000 SMEs, drawn from banks, rating agencies, and supply-chain initiatives, precisely so the standard’s disclosures would satisfy the data needs behind those forms. A bank adopting VSME fields is converging on a format designed partly from its own sector’s asks.

Since 3 July 2026 the standard also carries a delegated act: it becomes the EU’s official voluntary standard (VS) from FY2027, the same document that defines the cap for corporate requesters. One format now anchors the customer channel, the platform channel, and — by recommendation — the lending channel. The transition detail is in VSME becomes the VS.

Mapping Credit Needs to VSME Fields

The disclosures a credit process actually consumes map cleanly onto the standard:

Note where the weight falls: C3 and C4 sit in the Comprehensive Module, not the Basic one — and they are the two disclosures that matter most to a lender. A bank’s standard request is therefore best framed as Basic Module plus C3 and C4, which is also exactly the shape the cap’s carve-outs permit corporate buyers to ask, so the borrower’s one dataset serves both.

Why a Proprietary Form Underperforms

The instinct to design an in-house borrower ESG form runs into three costs:

1. Response burden lands on the least-resourced counterparties. An SME borrower answering five bespoke bank and customer forms produces five inconsistent datasets, none of them better than the one reusable report the same effort could have funded.
2. Incomparable data. Portfolio-level analysis wants identical fields across borrowers; bespoke forms guarantee the opposite. VSME’s coded disclosures are comparability by construction.
3. The convergence is happening anyway. Corporate buyers must rebuild supplier questionnaires against the VS ceiling for FY2027, EcoVadis recognises VSME-aligned reports in its Q1 2026 methodology, and smaller banks come under the EBA guidelines in January 2027. A proprietary form built now is a stranded asset by its second review cycle.

Honesty requires the current-state caveat: in practice, banks still seldom reference VSME in their forms. That is the opportunity, not a counter-argument — early adopters set the format their borrowers reuse, at the moment borrowers are being pushed onto it from every other channel.

Designing the Request

• Accept a VSME report as the response. A borrower’s existing report contains the Basic set by definition; asking them to re-key it into a portal is pure friction. Free tools now generate a complete VSME report at no cost, which removes the “our borrowers can’t afford this” objection entirely.
• Ask for C3 and C4 explicitly. They are the credit-relevant disclosures and the ones a Basic-only report omits. A one-page supplement is a proportionate ask.
• Scale down for micro-borrowers. The VS defines a lower ceiling for enterprises of 10 or fewer employees; a micro-loan book warrants the minimum fields that feed your models, not the full set.
• Accept estimates, labelled. VSME expressly permits documented estimation. For financed-emissions purposes, a labelled estimate from utility bills beats both a blank field and proxy sector averages.
• Refresh annually, not per facility. The data is annual by nature; per-application re-collection multiplies burden without improving it.

The Honest Limits

VSME data is proportionate by design, and a credit team should know what that buys and what it does not:

• No assurance. VSME reports are self-declared. For most SME exposures that matches the materiality of the data; for larger or higher-risk exposures, evidence requests (bills behind the figures) or assured reporting remain the escalation path.
• Shallow for mid-caps. For larger borrowers approaching CSRD scope, VSME’s depth and its weak interoperability with full ESRS datasets are real constraints; the standard is an SME instrument, not a universal one.
• No collateral-level data. Property-level energy performance and similar collateral attributes sit outside the standard and keep their own collection channels.

Frequently Asked Questions

Does the value-chain cap restrict what banks may ask borrowers?

No. The cap binds CSRD reporters collecting value-chain data; requests grounded in banking regulation fall under its other-EU-law carve-out. What exists on the lending channel is the July 2025 Recommendation asking financial institutions to hold SME requests to VSME — softer in form, but pointing at the same format, and the practical case for following it is data quality rather than legal compulsion.

Is self-declared VSME data reliable enough for credit decisions?

For the bulk of SME exposures, yes, in the same sense that self-declared financials below audit thresholds are: proportionate, documented, and escalatable. The standard’s estimation rules require methodology notes, which make figures reviewable, and evidence can be requested where an exposure justifies it. The alternative — unanswered forms and sector proxies — is not more reliable, only more familiar.

What should we ask of borrowers with fewer than 10 employees?

The minimum your models actually consume, which for most micro-exposures is energy use and fuel from bills (B3 inputs) and a sentence on site-level physical risk. The VS’s lower micro ceiling for corporate requesters is a sensible benchmark for lenders too: if the cap regards the full set as disproportionate for micro-enterprises, a lending form probably should as well.

How does this interact with what our borrowers’ customers ask them?

Favourably, and that is the core argument. The same VSME dataset a borrower prepares for a large customer’s capped request, or for an EcoVadis assessment, answers the bank’s form — see one VSME report for every ESG request for the borrower’s-eye view. A bank that requests in VSME shape inherits data the borrower maintains anyway, which is the strongest data-quality guarantee available at this end of the market.

Key Terms

• EBA/GL/2025/01 — the EBA’s guidelines on ESG-risk management: large institutions from 11 January 2026, smaller and non-complex institutions from January 2027.
• July 2025 Recommendation — the Commission act asking companies and financial institutions to hold SME data requests to the VSME standard.
• VSME / VS — EFRAG’s voluntary reporting standard for SMEs, adopted by delegated act on 3 July 2026 as the EU’s voluntary standard from FY2027.
• B3 / C3 / C4 — the energy-and-emissions, climate-targets, and climate-risk disclosures: the credit-relevant core of the standard.
• Financed emissions — the GHG emissions attributable to a bank’s lending and investment portfolio, for which borrower B3 data is the primary input.

Conclusion

The EBA guidelines made SME ESG data a supervisory matter; the Commission has already said what a fair collection format looks like; and every other channel a borrower faces is converging on the same standard. For a bank, adopting VSME-shaped requests is less a sustainability gesture than a data-architecture decision: comparable fields, maintained by the borrower for their own commercial reasons, at zero acquisition cost.

The banks that move before January 2027 set the format; the ones that move after will receive it.