Sustainability and responsible business practices are no longer the domain of large corporations only. More and more, small and medium-sized enterprises (SMEs) are realizing that ESG (Environmental, Social, Governance) topics affect their business relationships, tenders, and brand perception. Suppliers, investors, and customers increasingly expect at least a basic overview of how a company addresses environmental and social responsibility.
If you supply to larger clients or are planning to explore new business opportunities, now is the right time to start – by using the voluntary ESG reporting framework developed at the European level: VSME.
What is VSME Reporting?
VSME (Voluntary Sustainability Reporting Standard for Micro and Small Enterprises) is a voluntary ESG reporting framework created by the European advisory group EFRAG. It’s designed for companies not (yet) subject to mandatory CSRD reporting but who want to demonstrate their commitment to sustainability in a proportionate way.
VSME allows companies to:
present their sustainability efforts in a way that fits their size,
structure ESG information according to the expectations of business partners, clients, or customers,
build a credible foundation for a future ESG strategy.
VSME reporting is not mandatory. However, it’s becoming an important tool for companies that want to: • collaborate more effectively with large customers, • stand out from the competition in tenders, • prepare for future regulatory developments.
VSME Reporting as a Launchpad for Business Growth
One of the key advantages of the VSME standard is that its structure and scope match the type of information that larger companies in your supply chain are likely to expect. A VSME report can help you cover the kinds of data your partners may ask for – including topics such as environmental impacts, working conditions, business ethics, or risk management. These are often included in supplier questionnaires or audit requirements. Having this information ready in a structured format makes communication easier, speeds up processes, and increases your company’s credibility in the eyes of your business partners.
A VSME-aligned report also serves as a practical tool to assess your current state and reflect internally on how to link sustainability with your business. The insights gained can be used effectively in negotiations with both suppliers and customers, in marketing materials, or as part of documentation for tenders and audits. If the report is approached strategically, it can become a competitive advantage – especially when followed by a realistic, long-term ESG strategy.
Carbon Footprint Calculation as Part of an ESG Strategy Based on VSME
The VSME standard includes a focus on environmental impact – and greenhouse gas emissions are one of the key areas. While the template does not require a detailed carbon footprint calculation, it allows companies to indicate whether they monitor emissions, what their energy consumption looks like, and whether they aim to reduce their environmental impact.
For companies looking to build credibility in ESG, it’s ideal to complement VSME reporting with at least a basic carbon footprint calculation (Scope 1 and 2). This helps communicate environmental responsibility more clearly and also identify potential savings – for example, in energy use, transportation, or supplier choices.
The carbon footprint thus becomes a natural add-on to the VSME report – and an important source of information for business partners who are collecting ESG data themselves.
Note: Scope 1 includes emissions the company produces directly, such as from its own boilers or company vehicles. Scope 2 includes emissions from the production of electricity, heating, or steam that the company purchases and uses. Read more in our blog post about emissions: https://flagshipimpact.com/tpost/923tc88pp1-management-uhlkov-stopy-od-teorie-k-prax
Why the Template Alone Isn’t Enough
EFRAG has published basic templates and illustrative sector examples – but these are just aids, not a full-fledged ESG strategy.
Generic templates don’t take into account:
your specific industry,
your operational realities and value creation logic,
your strategic goals, cost-saving initiatives, growth plans, or business partners.
A Tailored ESG Strategy = Concrete Benefits
A well-structured ESG strategy based on the VSME framework adds real value to your business:
Stronger position in the supply chain – building trust and transparency with partners.
Advantage in tenders – being prepared for ESG requirements.
Opportunities for savings – identifying inefficiencies (energy, waste, processes).
Higher team motivation – providing a clear direction and value framework.
Readiness for future ESG regulation.
Companies that approach ESG strategically – not just formally – gain a true competitive edge.
What Could ESG Reporting Look Like in Practice?
Checklist: What We Can Create Together
ESG overview (report) aligned with the VSME framework
Analysis of key impact areas and risks
Carbon footprint calculation
Strategic ESG recommendations for the next 2–3 years
Communication framework for partners (e.g. for tenders)
Internal overview of ESG priorities based on company size
Frequently Asked Questions (FAQ)
Are we required to complete a VSME report? No, the VSME report is voluntary. But using it will help you respond to buyer expectations and stand out from the competition.
Isn’t a simple spreadsheet enough? In some cases, yes – but if you want to approach ESG strategically and use it to your advantage, a spreadsheet alone won’t do. What matters is the quality and relevance of the information for your business.
Is it time-consuming? In its basic form, the report can be completed within a few weeks. Our goal is to take the operational burden off your shoulders and deliver a practical outcome that supports your business and aligns with your company strategy.
We’ll deal with this when it actually applies to us. Is it worth tackling now? Yes – because ESG requirements are emerging from the bottom up (from partners) before they’re imposed top-down (via regulation). Getting ahead pays off and gives you a competitive edge even now.
Curious what a VSME report and ESG strategy could do for your business?
We help companies build ESG strategies that make sense, are realistic, and open up new business opportunities.