VSME for Manufacturing SMEs: Simplified Sustainability Reporting

Whether you are a small business, supplier or subsidiary working in Europe’s manufacturing sector, sustainability reporting can feel complex. Some organisations report under CSRD directly, while many others use the VSME Standard voluntarily to give customers the information they need without heavy compliance costs. Either way, a simple, structured approach helps your factory provide credible environmental and social data while avoiding the complexity of enterprise reporting systems.

The VSME Standard was designed specifically so SMEs can supply sustainability information that is relevant, understandable, comparable and verifiable — the same qualities CSRD expects across the value chain . CSRD itself emphasises that large companies rely on information from business partners, including smaller suppliers, to understand sustainability risks and impacts throughout their chains .

This guide introduces VSME for manufacturers, explains how the Basic Module works and when to consider the Comprehensive Module, and gives practical examples from real factory processes.

1. Why Manufacturing SMEs Benefit From VSME

Manufacturing sites — machining workshops, fabrication lines, coating plants, moulding facilities — typically handle energy-intensive processes, production waste, chemical use and diverse worker roles. These topics feature heavily in customer questionnaires and supplier evaluations.

VSME helps SMEs:

• Respond consistently to different customer sustainability requests
• Avoid filling out multiple bespoke questionnaires each year
• Build a simple data structure that improves over time
• Demonstrate good governance, worker safety and environmental control
• Provide information aligned with CSRD without full ESRS complexity

For additional background on the role of VSME in CSRD reporting, see the guide: The VSME Basic Module Explained

2. Overview of VSME: How the Standard Works

The VSME Standard includes two modules:

1. Basic Module (required for all VSME reporters)

Covers essential sustainability information expected from SMEs:

• General disclosures (B1–B2): policies, practices, and environmental/social initiatives
• Environmental data: energy, GHG, water, pollution, waste
• Social data: workforce size, contract types, training, safety
• Governance disclosures: basic business conduct practices

The Basic Module is intentionally concise, focusing on the most universally relevant sustainability topics for SMEs.

2. Comprehensive Module (optional)

Adds depth for SMEs with larger impacts or customer-specific needs:

• More detailed metrics on environment and workforce
• Additional narrative disclosures (e.g., human rights, supply chain due diligence)
• Expanded social and governance topics for sectors with higher risk

Most manufacturers begin with the Basic Module, then adopt targeted elements of the Comprehensive Module only when a customer contract or industry scheme requires it.

3. What the Basic Module Requires — With Manufacturing Examples

Below are the mandatory sections, with examples tailored to production facilities and component suppliers.

B1 — General Information

Covers company description, activities, locations, and sustainability roles.

Manufacturing example: A 35-person machining company describes its CNC operations, use of coolant systems, compressed air infrastructure, and production shifts. It identifies the operations manager as responsible for sustainability data collection.

B2 — Policies, Actions and Targets

SMEs explain their environmental and social practices. This may include energy-saving initiatives, waste segregation, safety processes or equality policies.

Manufacturing examples:

• Policy to reduce scrap rates across two machining lines
• Plan to replace LPG forklifts with electric units
• Target to cut compressor electricity by 10% over three years
• Noise- and dust-control measures in fabrication areas

VSME allows SMEs to describe current practices and future initiatives without requiring complex frameworks, focusing on relevance, understandability and verifiability (paragraphs 8–11) .

B3 — Energy Use, GHG Emissions and Intensity

One of the most important manufacturing topics. SMEs must report:

• Total energy consumption (MWh), renewable vs non-renewable
• Scope 1 and Scope 2 emissions (GHG Protocol)
• GHG intensity (e.g., tCO₂e per € turnover)

Manufacturing example:

• Natural gas for ovens and heating
• Electricity for compressors, CNC machines, moulding machines
• LPG for forklifts
• Refrigerant losses from cooling units

For a practical walkthrough of these calculations, see: Scope 1 & 2 Emissions for Manufacturing SMEs

B4 — Pollution (When Applicable)

Report pollutants only if already measured or reported to regulators — e.g., permit requirements, wastewater sampling or emissions monitoring.

Manufacturing examples:

• VOCs from paint lines
• Metals from plating wastewater
• Oily discharge from machining coolant treatment
• Particulates from grinding or welding

VSME requires SMEs to disclose pollutants that are already measured or reported to authorities or environmental systems .

For more detail on industrial pollutants, see: Pollution Topic Hub

B6 — Water Consumption

SMEs disclose water consumption (not total withdrawal) and describe water risks if relevant.

Manufacturing examples:

• Water used in rinsing, cleaning, coolant makeup or heating
• Evaporation from heated baths
• Water incorporated into products or lost in sludge

If discharging wastewater, factories may also describe treatment steps.

B7 — Waste and Resource Use

Manufacturers must report:

• Total waste (hazardous + non-hazardous)
• Waste diverted from disposal (recycling, recovery)
• Material flows in material-intensive sectors

Manufacturing examples:

• Scrap metal from machining or fabrication
• Hazardous sludge from coolant or wastewater treatment
• Solvent/paint waste from finishing operations
• Packaging waste from inbound components

For guidance on waste tracking, see: Water & Waste Requirements for Factories

B8–B9 — Own Workforce

Covers staff numbers, contract types, diversity and training; B9 also includes health & safety (injuries, lost days, safety practices).

Manufacturing examples:

• Safety induction programme for machinists and welders
• Annual training hours for forklift operators
• Near-miss reporting for production lines

4. When a Manufacturing SME Should Consider the Comprehensive Module

The Comprehensive Module becomes useful when:

• Customers require deeper sustainability documentation
• Your sector involves hazardous chemicals, plating, painting or complex social risks
• You have significant environmental permits (air emissions, wastewater treatment)
• You handle large international supply chains
• You are preparing to scale into CSRD scope within 1–3 years

Manufacturers often adopt selected Comprehensive disclosures rather than the full set — for example:

• Detailed energy performance indicators
• Expanded workforce well-being topics
• More granular waste or pollution metrics

This modularity is one of the advantages of VSME.

5. How to Build a Simple VSME Reporting System for Your Factory

A small manufacturing site can complete most VSME disclosures using:

1. Monthly energy and water logs

• kWh electricity
• Gas or fuel use
• Water meter readings
• Any wastewater discharge volumes

2. Quarterly waste tracking

• Weights by type (scrap metal, general waste, hazardous waste)
• Recycling and reuse volumes
• Contractor documentation

3. Annual workforce summary

• Contract types
• Training hours
• H&S statistics

4. Short narrative statements for policies and initiatives

These can be 2–4 paragraphs covering the year’s improvements.

For manufacturers just starting data collection, the guide below is helpful: Value Chain Mapping & Data Collection for CSRD SMEs

6. Manufacturing Examples: What VSME Reporting Looks Like in Practice

Example A — Injection moulding facility (25 employees)

• Tracks monthly electricity for moulding machines
• Reports water consumption from cooling systems
• Reports hazardous waste: purged material, contaminated solvent wipes
• Describes initiatives to reduce rejects and maintain closed-loop cooling

Example B — Metal fabrication workshop (40 employees)

• Tracks energy intensity per tonne of steel processed
• Reports scrap metal reuse rates under B7
• Discloses gas use for heating and welding
• Notes a target to replace diesel forklifts with electric models

Example C — Surface treatment and coatings SME

• Reports water consumption and pollutants measured under permits
• Tracks hazardous waste from paint sludge and filters
• Notes ongoing investment in low-VOC materials
• Includes safety metrics for chemical handling

Frequently Asked Questions

Do manufacturing SMEs need to report under CSRD?

Most small manufacturers are not directly in CSRD scope, but many must supply sustainability data to CSRD-reporting customers. VSME provides a structured way to meet these requests without full ESRS reporting. For more detail, see the comparison guide: VSME vs CSRD: Which Applies to My Business?

How long does VSME reporting take for a small factory?

Most SMEs complete their first Basic Module in 20–40 hours because much of the data already exists in utility bills, waste invoices and HR records. Subsequent years take far less time because the structure is already in place.

What is the difference between VSME environmental metrics and ESRS metrics?

VSME simplifies the CSRD requirements. Instead of detailed ESRS breakdowns, SMEs report core energy, GHG, water and waste metrics using straightforward units. Manufacturers with higher environmental impacts sometimes add Comprehensive Module topics to meet customer expectations.

Can VSME replace multiple customer questionnaires?

Yes, in many sectors OEMs increasingly accept VSME reports — especially when suppliers provide consistent year-on-year metrics. VSME’s comparability requirement (paragraph 12) supports stable reporting for customer assessments .

Key Terms

• VSME Standard: Voluntary sustainability reporting standard for SMEs.
• Basic Module: Core disclosures covering policies, energy, GHG, water, waste and workforce.
• Comprehensive Module: Optional extended disclosures for more complex impacts.
• GHG intensity: Emissions relative to turnover or production.
• Material flows: Tracking materials used and recovered in production processes.

Conclusion

VSME offers manufacturing SMEs a practical, achievable way to meet growing sustainability data demands. By using simple logs, clear metrics and short narrative disclosures, factories can present credible information that aligns with CSRD principles while staying proportionate to their size and resources. Whether you are supplying large OEMs or improving internal processes, VSME helps organise sustainability work into a manageable, repeatable structure.

With a clear structure and consistent effort, CSRD becomes an advantage — not an obstacle.