The VSME Basic Module Explained: What SMEs Actually Need to Report

Whether you are a small business, supplier, or subsidiary, the VSME Basic Module is rapidly becoming the default way to respond to sustainability data requests. Some organisations use it voluntarily, while others integrate it into their client onboarding, bank financing, or group reporting.

The Basic Module is simple by design. It mirrors the structure of the European Sustainability Reporting Standards (ESRS) but removes complexity that small organisations cannot realistically manage. It gives SMEs a flexible, proportionate format that still aligns with what large companies need for their CSRD reporting.

This guide explains every disclosure in the Basic Module, how to prepare the required data, and what this information is used for.

1. Overview of VSME & Why EFRAG Created It

EFRAG published the Voluntary Standard for non-listed micro-, small-, and medium-sized undertakings (VSME) in 2024. It was designed for SMEs outside the mandatory scope of the CSRD.

The objective is clear:

• Support SMEs in responding to sustainability data requests from large clients, banks, and investors.
• Help SMEs manage environmental and social issues proportionately.
• Improve access to finance by providing reliable, structured sustainability data.
• Align with ESRS topics without requiring the full CSRD burden.

Because CSRD requires large companies to collect sustainability data from their supply chain, the VSME Basic Module has become the most widely recognised format for suppliers across Europe.

For a broader introduction to SME pathways, see: CSRD vs VSME: What’s the Difference and Why It Matters for SMEs

2. The 12 Disclosure Areas in the Basic Module

The Basic Module contains 12 disclosures (B1–B11 plus the overarching environmental/social/business-conduct sections). These cover the minimum information SMEs need to provide when asked for sustainability data.

B1 – Basis for Preparation

Explain what standard you use (Basic or Basic + Comprehensive), whether it’s an individual or consolidated report, and key company details such as:

• Legal form
• NACE code
• Balance sheet total
• Turnover
• Number of employees
• Countries of operation
• List of subsidiaries (if consolidated)

B2 – Practices, Policies & Future Initiatives

Describe what you are already doing on sustainability:

• Practical actions (energy efficiency, training, safety)
• Policies (environment, HR, governance)
• Planned initiatives
• Any targets

B3 – Energy & GHG Emissions

Disclose:

• Total energy consumption (electricity + fuels)
• Breakdown of renewable vs non-renewable energy
• Scope 1 and location-based Scope 2 emissions
• GHG intensity (emissions ÷ turnover)

For methodology support, you can use: GHG Protocol for SMEs: Complete Methodology Guide

B4 – Pollution of Air, Water & Soil

If you already report pollutant emissions to authorities or under an environmental management system, list the substances and quantities.

B5 – Biodiversity

Report the number and area of sites in or near biodiversity-sensitive areas. Additional land-use metrics are optional.

B6 – Water

State:

• Total water withdrawal
• Water withdrawn from high water-stress areas If water-consuming processes exist, disclose water consumption (withdrawal minus discharge).

B7 – Resource Use, Circular Economy & Waste

Disclose:

• Total waste (hazardous / non-hazardous)
• Waste recycled or reused
• Material mass-flow (if relevant to your sector)

B8 – Workforce – General Characteristics

Break down employees by:

• Contract type
• Gender
• Country (if operating in multiple locations)

B9 – Workforce – Health & Safety

Provide:

• Number of incidents
• Lost-time injuries
• Any safety programmes

B10 – Workforce – Remuneration, Collective Bargaining & Training

Include:

• Training hours
• Access to collective bargaining
• Pay structure (not salaries—just how pay is organised)

B11 – Business Conduct

Disclose:

• Any convictions or fines for bribery or corruption

3. What Data SMEs Typically Already Have

Most SMEs already hold a surprising amount of VSME-relevant data in ordinary business records:

Environmental

• Electricity and fuel invoices
• Waste contractor summaries
• Water bills
• Delivery fuel receipts (small fleets)

Social

• Payroll system headcounts
• HR files with training records
• Health and safety logs
• Working hours records

Governance

• Compliance certificates
• Insurance declarations
• Company policies or codes of conduct

This means SMEs rarely “start from zero” despite initial fears.

For real-world data challenges, see: Why Your CSRD Data Doesn’t Match Industry Benchmarks

4. What Data May Require Estimates

Certain datapoints are harder for SMEs to measure directly, so the VSME Standard allows reasonable estimation.

Energy Breakdown

Some SMEs only have total electricity use without renewable/non-renewable detail. Using supplier averages or standard grid factors is acceptable.

Scope 1 Emissions

Fuel consumption from company vans or heaters can be estimated using litres or invoices.

Waste Mass

Contractors often provide volume rather than weight. You can use typical conversion factors.

Water Consumption

If only withdrawal is known, consumption can be approximated using discharge system assumptions.

Proximity to Biodiversity Areas

Most SMEs identify this via public maps rather than site assessments.

Estimates should be consistent each year and documented in your notes.

5. Example Disclosures (Short, Fictional)

Below are simplified examples written in the tone real SMEs often use:

Example B2: Practices & Initiatives (Fictional Engineering SME)

“We operate from a 1,200 m² site with moderate electricity use. In 2024 we replaced older lighting with LED fixtures and introduced safety training for all workshop staff. In 2025 we plan to install a 15 kWp solar array. We currently track energy use monthly and aim to reduce electricity consumption by 5% per year.”

Example B3: Energy & Emissions (Fictional Café Chain)

• Electricity: 92 MWh (100% non-renewable grid supply)
• Gas for kitchen: 11 MWh
• Scope 1 emissions: 2.4 tCO2e
• Scope 2 emissions (location-based): 19.6 tCO2e
• GHG intensity: 0.00012 tCO2e per euro of turnover

Example B8: Workforce (Fictional IT Agency)

• Total employees: 26 (24 permanent, 2 temporary)
• Gender: 14 women, 12 men
• Locations: Spain (23 employees), Portugal (3 employees)

These examples show the Basic Module does not require narratives that are overly polished—clarity matters more than style.

6. How Banks and Large Companies Use This Information

Large clients

CSRD requires value-chain data. Buyers use VSME disclosures to:

• Calculate Scope 3 emissions
• Identify supplier risks
• Meet procurement requirements
• Respond to auditors and assurance providers

This aligns with ESRS data requirements under CSRD.

For supplier-specific guidance, you can read: CSRD Reporting for Niche & Craft Manufacturers: A Supplier’s Guide

Banks and investors

Financial institutions use VSME data to:

• Assess sustainability risks
• Support green lending decisions
• Understand workforce stability
• Verify compliance with sector policies

Corporate groups

Parent companies often consolidate information from subsidiaries. VSME simplifies their process because its datapoints map cleanly to ESRS.

Frequently Asked Questions

Is the VSME Basic Module enough for most supplier requests?

For many clients, yes. The Basic Module mirrors the minimum ESRS datapoints large companies need for their own CSRD reporting. Some buyers may request additional metrics, but Basic Module coverage is usually sufficient. If you need help understanding how suppliers respond, see: How SMEs Can Handle Sustainability Data Requests from Large Clients.

Does the VSME Standard require perfect accuracy?

No. The VSME Basis for Preparation allows SMEs to provide estimates where data cannot be measured directly. The key requirement is that the information remains reasonable, consistent, and explainable. For emissions methods, see: GHG Protocol for SMEs: Complete Methodology Guide.

How long does it take to prepare a Basic Module report?

For most SMEs, gathering the first full year of data takes 12–25 hours. After that, annual updates take 5–10 hours. Businesses already tracking energy or waste will spend less time.

Do banks really use VSME reports?

Yes. Banks increasingly integrate sustainability indicators into credit assessments. VSME gives them reliable data on environmental use, workforce stability, and governance, helping SMEs access finance on better terms.

Key Terms

• VSME — Voluntary Standard for non-listed SMEs published by EFRAG.
• Basic Module — The minimum disclosure set for sustainability reporting under VSME.
• ESRS — European Sustainability Reporting Standards used under CSRD.
• Scope 1 / Scope 2 Emissions — Direct vs indirect energy emissions.
• Circular economy — Keeping materials in use as long as possible.

Conclusion & Next Steps

The VSME Basic Module gives SMEs a straightforward way to meet rising sustainability expectations. It offers clarity for suppliers, supports conversations with banks, and builds the foundation for stronger internal management of environmental and social impacts.

Once your business completes the Basic Module for the first time, reporting becomes routine. Your clients receive consistent data, your team gains confidence, and you benefit from a simple structure that mirrors European expectations.

With a clear approach and steady progress, sustainability reporting becomes an advantage—not an administrative burden.

If you’d like to continue, you may find this helpful: CSRD for Beginners: A Plain-Language Guide for Small Businesses