Are banks, large companies, authorities and investors ready for VSME?

“We report the same information – just in different templates”

Many small and medium-sized enterprises are experiencing the same challenge: reporting fatigue.

They are asked to provide sustainability data, ESG information, human rights disclosures, compliance documentation and supplier information, often to several stakeholders at the same time. Banks have their questionnaires. Investors have their own. Large customers have theirs. Authorities request something else.

Yet beneath the surface, it is often the same underlying data.

The same information is filled in repeatedly, just in different formats. The result is additional work, fragmentation, and inconsistent quality. At the same time, many companies lack both the structure and the capacity to actually use the data internally. When information is not comparable or usable over time, reporting becomes more of an administrative exercise than a foundation for demonstrating real governance and action related to climate risk and value chain risk.

As a consequence, companies lose the opportunity to make visible their actual contributions in areas that matter to customers and banks, and to use this as a competitive advantage.

The EU has described this as the “trickle-down effect” when complex requirements at the top of the value chain cascade downward and disproportionately impact SMEs. This is one of the key reasons sustainability reporting has become heavier than intended across the broader business landscape.

A standard only works if it is used

As part of the EU simplification initiative, EFRAG has developed VSME, which is a voluntary sustainability reporting standard for small and medium-sized enterprises. The ambition is to provide SMEs with a proportional, manageable, and comparable structure.

However, a standard does not create value on its own.

It only creates value when banks, investors, large companies, and authorities align around it and actively use it.

If stakeholders continue to develop their own ESG questionnaires alongside VSME, nothing really changes. Companies will still face multiple versions of the same questions, while data quality declines and resource demands increase.

We have already solved this in financial reporting. No one requests a customized accounting format. Financial statements follow a standard, are analyzed, and are used for management and decision-making.

The same principle must apply to ESG.

Why should SMEs report under VSME if they have no legal reporting obligation?

“This is not about PDFs. It is about repayment capacity.”

When a bank assesses a loan, it evaluates future risks. Exposure to climate risk, regulatory changes, energy prices, supply chain dependencies and governance challenges directly influence a company’s ability to deliver results and repay debt.

The SME segment represents a significant share of banks’ portfolios, yet ESG data has often been fragmented. Without a common structure, ESG assessments become manual, difficult to scale, and inconsistent.

VSME introduces a shared standard and common way of structuring data. This makes information comparable across companies and over time, enabling ESG data to be treated more like financial data. As a result, it can be integrated into credit processes, pricing models, and portfolio management.

For companies, this is about more than banking

This is not only a banking issue, nor is it relevant only for companies seeking loans.

For businesses, structured ESG work affects access to capital, competitiveness and the ability to win contracts. In a more geopolitically unstable world, it is also about trust.

• Who has control over their supply chain?
• Who understands their exposure?
• Who can document governance and risk management?

“Risk is priced – whether it is structured or not.”

Companies with clarity and structure are stronger. Not because they report more, but because they understand more.

The turning point

We are in the middle of a shift.

ESG is no longer an add-on to credit assessment. It is becoming an integrated part of financial risk evaluation, alongside cash flow and solvency.

The question is not whether we should address it.
The question is whether we can do it together.

VSME provides a real opportunity to establish one common structure for the SME market. A structure that makes data comparable, actionable and genuinely useful, both for the bank and for the company providing it.

What if we began treating VSME data the way we treat financial statements? Not as an attachment or questionnaire, but as structured information that can be imported, analyzed and actively used in decision-making. Information that flows seamlessly between companies, banks, investors and customers.

Then it is no longer about reporting burden.
It becomes better insight.
Better dialogue.
Better decisions.

Imagine the position a bank could take by saying:

“We support the EU’s VSME proposal. We build around it. We make it easier for our customers.”

That is not just efficient.
It is a clear strategic choice.

In a more uncertain world, structure, transparency and risk understanding become the foundation of trust. VSME gives us a common language.

The question is who chooses to use it – and who chooses to lead the market by aligning around it.

24 February 2026