VSME Reporting for SMEs

Sustainability is no longer a topic solely on the agenda of large companies.

With the European Union’s Corporate Sustainability Reporting Directive (CSRD), which entered into force in January 2023, and the Corporate Sustainability Due Diligence Directive (CSDDD), which will soon enter our lives, sustainability is becoming a mandatory requirement that closely concerns the entire value chain, particularly for SMEs exporting to the European Union.

Your large EU-based customers, who are obligated to report under the CSRD, have begun demanding Environmental, Social, and Governance (ESG) data from you—the SMEs in their supply chains—to complete their own reporting. Moreover, these demands will continue to grow.

So, how will you cope with countless data requests coming from so many different customers?

What is VSME and Why is it Important for SMEs?

The VSME standard, developed by the European Financial Reporting Advisory Group (EFRAG), is a voluntary sustainability reporting standard specifically prepared with the needs of SMEs in mind. Its main purpose is to support SMEs in the following areas:
Utilising VSME to Meet Data Requests from Large Companies

This is exactly where the Voluntary standard for non-listed micro-, small- and medium-sized undertakings (VSME), also known as the “SME Shield,” comes into play.

At 10k we help you present the sustainability data requested by your large EU-based clients under CSRD/CSDDD in a standardized format, as required by the VSME standard.

Facilitating Access to Finance

By helping you implement VSME and provide the ESG data required by banks and investors, we facilitate your access to green financing sources.

Improving Your Corporate Governance and Resilience

VSME enables you to manage your own environmental and social issues (GHG emissions, pollution, occupational health and safety, human rights,etc.) more effectively, which in turn increases your competitiveness and resilience to risks.

Facilitating the Transition to a Circular Economy

VSME serves as a guide for you to implement circular economy principles.

Why is VSME a “Shield” for SMEs?

Due to their CSRD and CSDDD obligations, large companies are required to request detailed ESG data from the SMEs in their supply chains. The demand for data in varying formats and levels of detail from every major customer can create a significant operational burden and complexity for SMEs.

VSME serves as an “SME Shield”:

  • Ensures Standardization: It provides a clear framework for which data SMEs need to present and how.
  • Meets Data Requests: A report prepared in accordance with VSME meets the data needs of large companies arising from CSRD and CSDDD.
  • Facilitates Access to the EU Market: VSME compliance enables you not only to remain permanent in the EU market but also to seize new opportunities.

Risks and Opportunities for SMEs Exporting to the EU

Risks

Market Loss: If you fail to provide the ESG data requested by your EU customers, you risk being removed from the supply chain or losing business.

Competitive Disadvantage: Your inability to provide this data, while your competitors can, will put you at a significant disadvantage and cause you to lose ground in the market.

Reputation Loss: Failing to meet sustainability expectations can damage your brand image.

Opportunities

Competitive Advantage: SMEs that adapt early become the preferred choice for customers and investors who value sustainability.

New Markets and Customers: Sustainability-focused work can open new export doors.

Access to Finance: Banks and investors tend to provide finance more easily and on better terms to companies with good ESG performance and the reports to prove this.

Efficiency and Resilience: Sustainability efforts (energy efficiency, waste reduction, etc.) lower your costs and make your company more resilient against crises.

What Kind of Data Do You Need to Report with VSME?

VSME offers a modular structure to simplify the reporting process for SMEs: the Basic Module and the Comprehensive Module.

The Basic Module includes information targeted at micro-enterprises and serves as the minimum requirement for others, while the Comprehensive Module covers additional data that may be requested, especially by banks, investors, and large corporate customers.

Your EU customers may request at least the following Basic Module data from you:

  • Energy Consumption: Based on obtained from your utility invoices and other sources, a breakdown of your total energy consumption in MWh (Megawatt-hours), disaggregated by renewable and non-renewable sources.
  • Greenhouse Gas Emissions: The amount of your Scope 1 (emissions from sources owned or controlled by your undertaking) and Scope 2 (emissions from the generation of purchased energy, such as electricity, heat, etc.) greenhouse gas emissions in tCO2e (tonnes of carbon dioxide equivalent).
  • Water Usage: Your undertaking’s total water withdrawal quantity, and specifically whether your operating facilities are located in or near areas of high water stress, including the water withdrawal quantity in those areas.
  • Waste Management: Your annual total waste generated, disaggregated into hazardous and non-hazardous waste, and information on how much of this waste is diverted to recycling or reuse.
  • Occupational Health and Safety: The number and rate of accidents related to your employees, and the number of fatalities resulting from work accidents or occupational diseases.
  • Biodiversity: Whether the facilities you own, lease, or manage are located in or near a biodiversity-sensitive area.
  • Human Rights Policies: Whether you have a human rights policy or code of conduct covering issues like child labor, forced labor, or discrimination in your workforce, and whether you have a grievance mechanism.

10k Consulting simplifies this process for you, helping you prepare a high-quality, VSME-compliant report that will satisfy your stakeholders.

How do we step in? Let’s go step-by-step:

Step 1: Information and Awareness Training (VSME-Focused)

The first step to success is for both managers and employees to understand what VSME is, why it is important, and what it means for your SME. We offer VSME training tailored to you and your team, enriched with numerous examples and sectoral case studies.

Step 2: Establishing Internal Coordination

VSME reporting is a process that concerns the entire company.

Different departments such as accounting, HR, and operations need to work together to collect the data for your report. We facilitate in-house collaboration and jointly plan your data collection processes by organizing customized workshops and brainstorming events for your company.

Step 3: Data Collection – Reliable and Continuous Data Flow

VSME requires reliable and verifiable data. We help you identify the necessary data and establish the systems and processes needed for its regular, continuous, and accurate collection in the required format

Step 4: Preparation of the Report

Converting the collected data into a report in a format compliant with the VSME standard (Basic and/or Comprehensive Module) requires expertise for transparency and clarity. We work collaboratively with your team to prepare your report and ensure you meet the expectations of your EU stakeholders.