New opportunities for SMEs:
Voluntary ESG reporting standard for competitive advantage
A historic step has been taken in the field of sustainability reporting by European small and medium-sized enterprises: the European Commission adopted the Recommendation on Voluntary Sustainability Reporting by SMEs on 30 July 2025. This development opens up new opportunities for Hungarian SMEs in the field of sustainability.
What is the VSME standard?
The VSME (Voluntary Sustainability Reporting Standard for non-listed Micro, Small and Medium-sized Enterprises) is a voluntary sustainability reporting standard developed by EFRAG. It offers a structured and simplified ESG reporting framework for unlisted micro, small and medium-sized enterprises and all companies outside the scope of the CSRD (Corporate Sustainability Reporting Standards).
Recommendation of the European Commission
The European Commission has not only adopted the standard, but also encourages large companies and financial institutions to do so on the basis of the voluntary standard, if possible, when requesting sustainability information from SMEs. This unifies market expectations and reduces the administrative burden for SMEs.
Benefits of the VSME standard
Increase transparency
The application of the standard contributes to increasing the transparency of corporate operations, which increases stakeholder trust and improves the company’s reputation.
Strengthen business trust
Structured reporting strengthens the trust of business partners, which helps to build long-term business relationships.
Gain a competitive advantage
Early adopters can gain a competitive advantage over companies that are not yet consciously addressing sustainability issues.
Practical benefits for SMEs
Improved access to finance
SMEs can improve their access to sustainable finance through voluntary reporting. Banks and investors are increasingly taking ESG considerations into account in their lending and investment decisions.
Performance monitoring
The standard helps companies better understand and monitor their own sustainability performance, which also supports strategic decision-making.
Increased resilience and competitiveness
Taking into account sustainability considerations increases companies’ resilience to economic and environmental challenges.
Core Module Content
The VSME Core Module contains eleven reporting requirements covering:
- General sustainability guidelines and initiatives
- ESG-related core areas
- Environmental impact measurement and management
- Elements of social responsibility
- Corporate governance practices
- Preparing for CSRD
The VSME standard also provides a way to gradually prepare for CSRD. Companies that may eventually fall under the scope of CSRD can already start practicing sustainability reporting within a simpler framework.
Hungarian implications
This development is particularly important for Hungarian SMEs because:
Administrative simplifications
While the scope of the Hungarian ESG Act has been significantly narrowed, the VSME standard provides an opportunity for voluntary reporting without imposing an excessive administrative burden.
Market expectations
Hungarian large companies increasingly need sustainable suppliers, so reporting according to VSME can be a competitive advantage in supplier tenders.
EU subsidies
EU subsidies increasingly take sustainability aspects into account, so reporting according to VSME can be an advantage in tenders.
Implementation strategy
Gradual introduction
SMEs are not obliged to introduce all elements at once. The standard allows for gradual implementation, starting with the most important areas.
External support
Consulting companies provide assistance in implementing the standard and preparing reports.
Training programs
It is expected that training programs will be launched for SMEs to learn how to apply the VSME standard.
Future prospects
The adoption of the VSME standard represents a paradigm shift in the sustainability approach of SMEs. Companies that adopt the standard early can gain a significant competitive advantage.
The standard is expected to contribute to:
- The spread of sustainable business practices
- Expanding financing opportunities for SMEs
- Improving the sustainability of the Hungarian economy
Conclusions
The introduction of the VSME standard represents a historic opportunity for Hungarian SMEs.
Although the application is voluntary, companies that take advantage of this opportunity can gain significant advantages in terms of financing, business partnerships and market position.
Source: PwC Hungary