Are you a small or medium-sized business (SME) feeling overwhelmed by the growing demands for sustainability data? Do you find yourself filling out multiple, uncoordinated questionnaires for banks, investors, or large corporate clients? You're not alone.
The European Financial Reporting Advisory Group (EFRAG) has developed a solution: the Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME).
What is the VSME?
The VSME is a voluntary reporting standard specifically designed for non-listed micro, small, and medium-sized enterprises that are not subject to the Corporate Sustainability Reporting Directive (CSRD). It provides a simplified and standardized framework for reporting on environmental, social, and governance (ESG). The VSME is not a delegated act, meaning it’s not a legal requirement, but a tool to help SMEs navigate the sustainability landscape.
Why is the VSME important?
Reduces Reporting Burden: The VSME aims to replace the multitude of questionnaires SMEs currently receive with a single, standardized reporting framework. This reduces the administrative burden and costs associated with responding to various data requests.
Improves Access to Finance: By providing a clear picture of your sustainability performance, the VSME can help you attract green financing from banks and investors.
Enhances Business Relationships: The VSME offers a credible way to demonstrate your commitment to sustainability, which is increasingly important to business partners and clients.
Supports Internal Management: It provides a useful framework for monitoring your sustainability performance and identifying areas for improvement.
Facilitates the transition to a sustainable economy: By standardizing sustainability reporting, the VSME contributes to a more sustainable economy.
Key Features of the VSME
The VSME is structured into two modules:
Basic Module: This module is designed as an entry point, primarily for micro-SMEs and is intended to be simple to implement, even without external consultants. It includes a set of 11 core disclosures on various sustainability topics.
It includes general information, practices and policies for transitioning to a more sustainable economy, energy and greenhouse gas emissions, pollution, biodiversity, water, resource use, workforce, and business conduct information.
The Basic Module is a prerequisite for using the Comprehensive Module.
Comprehensive Module: This module addresses more comprehensive requests from business partners such as banks, investors, and large corporate clients. It includes additional metrics relevant to financial market participants and corporate clients.
Key benefits of using the VSME
Market acceptance: designed to be widely accepted by both users (business partners) and preparers (SMEs).
Flexibility: SMEs can choose to use just the Basic Module or add the Comprehensive Module depending on their needs and the requests they receive.
Online tools and platforms: a key request is to have free online templates, GHG calculators, and data repositories to make reporting easier.
Addresses confidentiality concerns: the VSME is designed primarily for bilateral exchange of information, but SMEs can choose to publish their report.
What does the VSME cover?
The VSME covers a broad range of environmental, social, and governance topics, including:
Environmental Metrics: Greenhouse gas emissions, pollution, biodiversity, water usage, and resource management.
Social Metrics: Workforce characteristics, health and safety, remuneration, and human rights policies.
Governance Metrics: Anti-corruption measures.
Practices, policies and future initiatives: For transitioning towards a more sustainable economy.
How Can Madaro Global Help?
Navigating the complexities of sustainability reporting can be challenging, even with a simplified framework like the VSME. Madaro Global offers expert consulting services to assist your business in:
Understanding the VSME: We'll help you decipher the requirements and determine which modules are most appropriate for your business.
Implementing the VSME: We provide assistance in gathering the necessary data, preparing your sustainability report, and navigating the online reporting tools.
Integrating Sustainability into Your Strategy: We can help you develop sustainability policies, actions, and targets aligned with the VSME framework, using the data provided by the standard to improve management.
Maximizing the Benefits: We can help you leverage your sustainability efforts to improve access to finance, strengthen business relationships, and enhance your brand reputation.
Ready to get started?
The VSME is a valuable tool for SMEs looking to improve their sustainability practices and meet the growing demands for ESG transparency. Don't let sustainability reporting be a burden. Let Madaro Global guide you toward a more sustainable and successful future.
Contact us today for a free consultation and explore how we can help you prepare your VSME report.
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