What’s happening?
Since the "stop-the-clock" decision was approved, the implementation of CSRD has been delayed locally since the thresholds for mandatory sustainability reporting are still under discussion. In the meantime, the Commission has published its recommendation on a voluntary sustainability reporting standard for small and medium-sized enterprises (SMEs).
What are the implications?
While fully-fledged sustainability reporting will remain important for some, many organisations may fall outside the scope of formal CSRD reporting and would benefit from a more proportional approach to reporting to meet stakeholder needs, which is exactly what the VSME standard provides.
Why does reporting remain important?
| Sustainability expectations are not being relaxed for regulated entities, not least banks. Financial institutions remain under growing pressure to understand climate and environmental risks, which flows down to SMEs via lending and supply chain assessments. | Larger suppliers, customers and contractors increasingly request comparable ESG data to manage value chain risks and meet their own obligations. | Even without a mandate, reporting builds stakeholder trust, improves access to funding opportunities, and prepares SMEs for future regulatory requirements. |
What is VSME reporting?
- VSME (Voluntary SME Standard) is EFRAG’s proportionate sustainability reporting framework for smaller businesses - up to medium-sized undertakings*. It is designed to be easy, practical and aligned with market needs.
*Undertakings that do not exceed two of the following: €25 million in balance sheet total, €50 million in net turnover, and an average of 250 employees. It offers reporting at two levels:
- Basic: a concise set of disclosures suitable for most SMEs.
- Comprehensive: a slightly expanded set for SMEs with more complex operations or stakeholder demands.
- The standard primarily focuses on own operations and provides “if applicable” instructions within each disclosure. It is therefore intended to help SMEs respond consistently to banks or business partners, without assurance requirements.
VSME vs ESRS
Key differences
ESRS
|
VSME | |
| Number of DRs | 86 | 20 (11 Basic, 9 Comprehensive) |
| Number of data points | C. 1,183 data points (expected to be reduced by 50%) | C. 96 data points |
| Materiality assessment | Double materiality assessment is mandatory | The VSME applies an “if applicable” approach at the disclosure level: each disclosure includes instructions that explain when it applies and what information to provide. If a disclosure is omitted, it is treated as not applicable. The VSME does not require explicit reporting of impacts, risks, and opportunities (IROs). |
| Value chain focus | CSRD considers IROs across VC | VSME focuses primarily on own operations |
| Limited assurance | Required | Not required |
Aligning to the VSME standard will likely result in a digestible, punchy report that can double as a management tool. By organising baseline data, SMEs can use this to identify impacts, set simple policies, define actions, and establish achievable targets where it matters most. Over time, this is shown to improve resilience and support access to finance, while allowing reporting to be scaled up if business needs or regulation evolve.
Adopting VSME reporting helps protect value at risk and unlock growth by turning ESG insights into practical inputs for product design, procurement, and risk and performance management, without the burden of full ESRS reporting. Focusing on reliable, decision-ready information strengthens internal discipline and competitiveness, and starting early streamlines future upgrades and reduces transition costs as reporting needs evolve.
What can businesses do now?
How can we help?
Our team can help you navigate the VSME standard to determine whether this is the right fit for your organisation and help you implement a practical reporting process. This may include identifying stakeholder requirements, setting policies/actions/targets, streamlining data collection, preparing a concise VSME report, and building a pathway to ESRS, should your regulatory context change. We can also provide ongoing ESG training and simple tooling to keep the reporting effort light yet reliable.
To explore how VSME can work in your organisation, please contact the PwC Malta Sustainability team.
This content is for general information only and does not constitute professional advice.
Stay up to date
with our latest Thought leadership
Contact us
