What is VSME?
VSME stands for the Voluntary Sustainability Reporting Standard for non-listed SMEs.
It was officially issued by the European Financial Reporting Advisory Group (EFRAG) on December 17, 2024, and adopted as an official European Commission recommendation on July 30, 2025.
Is VSME a legal requirement?
No. As the name suggests (“Voluntary”), there’s no statutory obligation to submit a VSME report.
But the practical reality is different. As European prime contractors implement their CSRD disclosure obligations, they’ve started requiring VSME-aligned data from their suppliers. Legally voluntary, commercially compulsory — that’s the position the standard now occupies for export-oriented SMEs.
Why does this standard matter now?
Understanding the cascade clarifies how to prepare.
CSRD → supply chain → SME suppliers
Large EU enterprises are subject to mandatory ESG disclosure under the CSRD (Corporate Sustainability Reporting Directive). Crucially, the disclosure scope covers not just the reporting entity but the entire value chain.
That means European primes are under pressure to report on their suppliers’ ESG status as well. The result: ESG data requests started arriving in the inboxes of SME manufacturers across Asia, including Korea.
So why VSME specifically?
Before VSME, every buyer used a different format. Buyer A asked only for GHG emissions. Buyer B wanted human-rights policy documentation. Buyer C sent a 30-page custom questionnaire. From the supplier’s side, every customer was a separate project.
EFRAG built VSME explicitly to fix this: “SMEs use one standard to respond to all buyers’ ESG requests in a consistent way.”
When the European Commission adopted VSME as an official recommendation in July 2025, banks, investors, and large enterprises were encouraged to use it as the basis for their SME data requests.
VSME structure: the Basic Module (B1–B11)
VSME has two layers:
VSME
├── Basic Module — B1 ~ B11
│ The starting point for every SME. 46 data points.
│
└── Comprehensive Module — C1 ~ C9
Used when buyers ask for additional context. 42 data points.
The Basic Module (B1–B11) is essentially: “Tell us your ESG status with numbers and facts.” The Comprehensive Module (C1–C9) is: “Now explain the strategy and plans behind those numbers.”
For a first-time VSME response, start with the Basic Module (B1–B11).
B1
Basis for Preparation
The first item to complete. Records your company’s basic identifying information.
Required data
- Legal form (corporation, LLC, etc.)
- Industry classification (NACE code — the European standard)
- Annual turnover (in EUR)
- Headcount (FTE basis)
- Main site location and geographic coordinates
- List of held ESG-related certifications (ISO 14001, EcoVadis medal, etc.)
B2
Practices, Policies and Future Initiatives
A check on whether you have policies or plans for environmental, social, and ethics matters. Yes/No format, so it’s relatively easy to complete.
Required data
- Whether an environmental policy exists
- Whether a labor / human rights policy exists
- Whether an anti-corruption policy exists
- Whether each policy includes quantitative targets
B3
Energy and GHG Emissions
The most-asked-about item. Sounds intimidating but is actually computable from your utility bills.
Required data
- Total energy consumption (MWh) — electricity + gas + fuel combined
- Scope 1 GHG emissions (tCO₂eq) — direct fuel combustion at your sites
- Scope 2 GHG emissions (tCO₂eq) — purchased electricity
- GHG intensity (emissions ÷ turnover)
Quick Scope 1 & 2 calculation
Scope 1 (tCO₂eq) = natural gas (Nm³) × 0.002176
+ diesel (L) × 0.002619
+ LPG (kg) × 0.002996
Scope 2 (tCO₂eq) = electricity (MWh) × 0.4154
(Korean grid emission factor, 2023 reference, MOTIE)
Pull together your electricity bills, gas bills, and fuel purchase records, and sum to annual totals.
B4
Pollution of Air, Water and Soil
Applies only if you have legal pollutant reporting obligations or operate an environmental management system (ISO 14001, etc.).
B5
Biodiversity
Applies only if your sites are near ecologically sensitive areas (wetlands, protected zones, etc.).
Required data
- Number and area (hectares) of sites near sensitive areas
B6
Water
Required data
- Annual total water consumption (m³ or kl)
B7
Resource Use, Circular Economy and Waste
Required data
- Annual total waste generation (tonnes)
- Recycling / incineration / landfill ratio
- Hazardous waste volume
B8
Workforce General Characteristics
Required data
- Total headcount (FTE / non-FTE breakdown)
- Gender ratio (male / female / not disclosed)
- Nationality (domestic / foreign)
- Age distribution (under 30 / 30–50 / over 50)
B9
Workforce Health and Safety
Required data
- Annual workplace incident count and TRIR (Total Recordable Incident Rate)
- Annual fatality count
- Annual lost workdays due to incidents
TRIR formula
TRIR = (incident count × 200,000) ÷ total annual hours worked
B10
Remuneration, Collective Bargaining and Training
Required data
- Compliance with minimum wage (Yes/No)
- % of employees covered by collective bargaining agreements
- Average annual training hours per employee
B11
Convictions and Fines for Corruption and Bribery
Required data
- Convictions or fines for corruption / bribery in the last 3 years
A brief tour of the Comprehensive Module (C1–C9)
Used after the Basic Module is complete, when buyers ask for additional information. For a first VSME response, finish the Basic Module first.
| Code | Item |
|---|---|
| C1 | Business model and sustainability strategy |
| C2 | Detail on the policies and plans flagged in B2 |
| C3 | GHG reduction targets and climate transition plan |
| C4 | Climate-related risks |
| C5 | Additional workforce detail (non-FTE / contractor breakdown) |
| C6 | Human rights policies and processes |
| C7 | Severe human rights cases in the supply chain |
| C8 | Revenue from specific activities and EU benchmark exclusions |
| C9 | Gender diversity (board / management gender ratio) |
How to actually respond to a VSME request — 5 steps
Confirm the exact scope of the request
First, find out whether the buyer is asking for the Basic Module (B1–B11) only or also the Comprehensive Module (C1–C9).
If you aren’t sure, just ask the buyer:
“Which module are you requesting — Basic Module only, or also the Comprehensive Module?”
For a first request, prepare against the Basic Module (B1–B11) by default.
Map data to source departments
The VSME items themselves aren’t difficult. The hard part is that the data is scattered across multiple departments and pulling it together takes coordination.
| VSME item | Source department |
|---|---|
| B1 Basic info | Corporate / General Affairs |
| B3 Energy / GHG | General Affairs / Facilities (utility bills) |
| B4 Pollution | EHS / Quality |
| B5 Biodiversity | General Affairs / Facilities |
| B6 Water | General Affairs (water bills) |
| B7 Waste | EHS / Production |
| B8–B10 Workforce | HR |
| B11 Corruption / bribery | Legal / Corporate |
Take this table to each owner upfront and request cooperation. Trying to do this alone takes weeks.
Audit your current data position
Use the checklists below to assess where you stand today.
Environmental data
- Annual electricity (kWh) — utility bill
- Annual natural gas — gas bill
- Annual diesel / gasoline — purchase records
- Annual water — water bill
- Waste volume and disposal method — waste handler receipts
- Whether you hold ISO 14001 or similar environmental certification
Workforce / social data
- Total headcount (FTE / non-FTE)
- Gender ratio
- Workplace incidents and fatalities in the last year
- Average annual training hours per employee
Governance data
- Convictions or fines for corruption / bribery in the last 3 years
Use the official EFRAG digital template
EFRAG provides a free VSME digital template (Excel) on its website. It includes auto-calculation, dropdowns, and consistency validation that catches most common preparation mistakes.
Final pre-submission check
- Confirm the reporting year is consistent across all items (e.g., FY2024)
- Re-verify items marked “Not Applicable” actually are
- Confirm you’ve prepared the format the buyer requested (Excel, PDF, portal entry)
FAQ
Q How is VSME different from EcoVadis?
EcoVadis is a third-party assessment — an external analyst evaluates the supplier and assigns a score / medal. VSME is a self-reporting framework — the supplier prepares the data and submits directly to the buyer. Some buyers ask for the EcoVadis score; others ask for a VSME report; some ask for both.
Q What if we haven't started measuring some of the data yet?
Be honest — enter “currently not measured” and, if you have a measurement plan, note that too. Submitting fabricated values risks a credibility issue if the buyer follows up with verification.
Q Should we do the Basic Module or Comprehensive Module first?
If the buyer hasn’t specified, start with the Basic Module (B1–B11). Once the Basic Module is complete, decide on the Comprehensive Module based on buyer feedback.
Q Do we need to resubmit every year?
VSME doesn’t legally mandate a submission frequency, but buyers usually expect updated data annually. Building a routine now to update the data once a year is far more efficient long-term than redoing it from scratch each time.
Q Can we submit in Korean?
If the buyer requires English, you’ll need to submit in English. The EFRAG official template supports multiple languages, but there’s no official Korean version yet. The practical approach is to use the English template and add Korean annotations where extra clarification is needed.
Things worth preparing in advance
The reason a first VSME request feels overwhelming has one root cause: you don’t know where your data lives.
Just preparing these three things in advance makes the next request dramatically easier.
Track monthly energy use
Collect your electricity, gas, and fuel bills monthly. Annual sums alone solve the B3 item.
Take an annual workforce snapshot on a fixed date
Set a routine to update headcount (FTE / non-FTE), gender mix, and incident counts on a fixed annual date (e.g., the first week of January).
Maintain a single registry of held certifications
Track issuer, issue date, and expiry for each held certification (ISO 9001, ISO 14001, CE, etc.) in one place. These feed directly into B1. Adding expiry alerts is even better.