How ESG voluntary reporting can be a strategic advantage for SMEs

The business world has irrevocably shifted into an era of transparency and accountability. ESG reporting (Environmental, Social and Governance) has become an essential pillar for the whole economy. However, the reality is that many small and medium enterprises are struggling to keep up: full sustainability reports are time-consuming, costly and often beyond available internal capacity.

Faced with complex data, fragmented information systems and stakeholder pressure, how can SMEs navigate the task without feeling overwhelmed?

The answer lies in taking a pragmatic, clear approach: an ESG voluntary report that integrates the requirements of the EU Voluntary SME Standard (VSME Standard) – which provides the foundation for ESG performance reporting – with the material impacts, risks and opportunities identified through a double materiality assessment.

ESG reporting

why it matters

A company’s impact is no longer measured solely by its financial performance. Customers, banks, investors, insurers and talent are demanding ever more tangible proof of a company’s commitment to sustainability – regardless of whether they are a large corporation or a smaller, even private, enterprise.

Market pressure: Major buyers are increasingly including ESG criteria in their tenders and supply chains, pushing SMEs to communicate about their practices.
Access to financing: Financial institutions are required to assess the ESG risks of their portfolios. Structured reporting can facilitate access to green loans and more favorable financing terms.
Attraction of talent: New generations of talent are looking for employers whose values align with sustainability. Demonstrating commitment and transparent communication are major assets.
Risk management: Identifying and measuring ESG impacts helps anticipate risks (climate, social, future regulation) and strengthens the company’s resilience.

An ESG voluntary report offers a practical, credible alternative. It lets SMEs communicate key sustainability actions, initiatives and outcomes over time – strengthening transparency without the burden of full-scale reporting.

This solution contributes to improve accountability and deepen trust with different stakeholders, while increasing the transparency of sustainability performance in a credible, effective way.

The VSME Standard

a solution designed for SMEs

In July 2025, the European Commission adopted a recommendation on a voluntary sustainability reporting standard for small and medium enterprises not subject to CSRD. The VSME Standard, developed by EFRAG (European Financial Reporting Advisory Group), is a lighter, simplified version of the ESRS (European Sustainability Reporting Standards), designed to support SMEs to respond to sustainability information requests from larger companies in their value chain and from financial institutions that evaluate and grant access to credit.

The structure is simple and clear: two modules provide essential, decision-useful information on sustainability performance.

The Basic Module, targeted at micro-enterprises and serving as minimum disclosure requirement for other SMEs
The Comprehensive Module, with additional disclosures likely to be requested by stakeholders

In addition, the standard introduces a new concept: the “if applicable” principle. Companies are asked to verify the applicability of specific disclosures in each module by considering the circumstances under which they apply. For example, a company might have the legal requirement to disclose specific information, so the disclosure becomes applicable for the company.

How an ESG voluntary report helps SMEs

Now the question is: what are the benefits of adopting an ESG voluntary report for small and medium enterprises? There are three key advantages:

Standardized responses: A uniform template makes it easier to answer the growing number of ESG data requests from customers, investors and partners
Reduced complexity: Clear guidance on data collection and a simple project-management approach enable cross-functional collaboration and efficient consolidation of diverse data sources
Resource efficiency: SMEs can demonstrate credible sustainability performance without investing in full-scale reporting

How to approach voluntary ESG reporting in practice

Far from being a heavy and resource-intensive project, adopting voluntary ESG reporting can be done step by step:

Double Materiality Assessment: Start by identifying the ESG impacts, risks and opportunities most relevant to your activity and value chain, and assess their materiality (either impact or financial materiality). This essential step enables you to select the key indicators to tailor your disclosure of ESG performance and focus on what truly matters. The goal is not exhaustiveness but relevance and reliability.
Data collection and validation: Put in place simple processes to collect and verify your data. Even existing tools (spreadsheets) can be structured. Consistency over time is what counts.
Report preparation: Present your information clearly, concisely and transparently. Highlight your commitments, actions and results. Don’t hesitate to tell your story.
Assurance (optional but recommended): To maximize credibility, consider having your report verified by an independent third party. This provides additional assurance to stakeholders.

A simple and credible approach to disclose sustainability

For SMEs, navigating the fast-evolving ESG landscape can feel overwhelming. The ESG voluntary report, combined with the flexibility offered by the VSME Standard, provides a balanced solution: it reduces complexity and costs while ensuring transparency and credibility. By adopting this approach, small and medium enterprises can not only respond more effectively to market and regulatory demands but also strengthen their position in the value chain, foster stakeholder trust, and access new opportunities for growth and financing. In other words, ESG reporting becomes less of a burden – and more of a strategic asset.