The voluntary way to boost sustainability

What if, after so much discussion and elaboration on binding European regulations, we were to return to voluntariness, just as where sustainability had begun? And if this voluntariness were to affect not only large companies but also SMEs that are part of the value chain of the big ones, where should we start again? The answer is already ready and within reach: the Efrag Vsme standard, a voluntary standard for SMEs.

The Voluntary sustainability reporting standard for unlisted SMEs (Vsme) is a voluntary standard for micro, small and medium-sized unlisted companies, designed to support them in their ESG (environmental, social and governance) reporting. Promoted by Efrag and requested by the EU Commission as part of the 2023 Sme Relief Package, it aims to reduce the burden of numerous uncoordinated ESG requests from banks, partners and investors, provide a uniform format to facilitate access to green finance and help SMEs participate in the transition to a sustainable economy. Furthermore, this standard allows for alignment with European sustainability reporting standards (Esrs), while maintaining a simplified approach proportionate to company size.

The standard was published in December 2024 after the public consultation phases. It envisages a 'basic module' for simplified initial ESG reporting with a minimum level of disclosure for micro and small companies without experience in the topic. This module includes: general information with basic elements for preparing the report and practices for the transition to a more sustainable economy; an environmental part with details on energy consumption and greenhouse gas emissions, air, water and soil pollution, biodiversity, water, resource use, circular economy and waste management. But also a social part with general characteristics of workers, occupational health and safety; pay, collective bargaining and training and workers in the value chain and one on governance (convictions and penalties for corruption and bribery). Then there is an 'advanced module' for more detailed and mature reporting designed for companies with more resources and/or more experience, with a modular structure, similar to the Esrs for those small companies that are more organised or already involved in the supply chain of companies required to comply with the CSRD. It should include general information (strategy, business model and sustainability initiatives) and a description of future practices, policies and initiatives for the transition to a more sustainable economy. For the environmental part the greenhouse gas reduction and climate transition targets and climate risks, for the social part additional (general) workforce characteristics, further information on the workforce, human rights policies and processes, serious and negative human rights incidents. In the governance part, revenues in certain sectors and exclusion from EU benchmarks and the gender diversity index in governance bodies are to be indicated.In May 2025, the standard was supplemented with a digital version. The digital model includes interactive elements, automatic calculations, consistency checks and direct links to the Vsme text and guidelines.

For companies not subject to mandatory sustainability reporting requirements, the Commission proposes in the Omnibus Package to apply a proportionate standard for voluntary use that would be based on the Vsme standard developed by Efrag. Under this proposal, the Commission would adopt this voluntary standard as a delegated act.

This revised voluntary standard is expected to be published within four months of the adoption of the final Omnibus package, supposedly between late 2025 and early 2026. With the support ecosystem in place, 2025 could turn out to be a key year for its deployment in the Italian landscape as well. And then eventually, perhaps, a kind of 'regulated voluntariness' will be achieved. A new sustainability that is necessary, conscious, reduced to the bone, practicable and hopefully truly recognised and accepted by all.