A VSME Guide for EU Sustainability Reporting: A Proposal for Establishing Comprehensive Module Reporting in Three Years

Abstract

This study supports European micro, small, and medium-sized enterprises MSMEs in preparing for the Voluntary Sustainability Standard for SMEs (VSME) Comprehensive Module reporting (which expands the Basic Module) over three years. While listed firms must meet Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS) disclosure requirements starting in 2024/2025, non-listed MSMEs face increasing pressure from financial institutions and other stakeholders for more detailed environmental, social, and governance (ESG) data. The study guides SMEs to meet these extended requirements. In year one, MSMEs define their business model in depth, along with their sustainability strategy, and set environmental and social goals, such as GHG reduction targets and workforce metrics. By year two, they develop climate transition strategies, including net-zero commitments and measures to mitigate physical climate risks. In the third year, companies disclose advanced ESG metrics, which include human rights requirements in supply chains, gender diversity in leadership, and revenue exclusions. Standardized frameworks such as VSME allow MSMEs to showcase their sustainability performance, build trust, access new opportunities, and contribute to a sustainable economy.