Voluntary sustainability reporting is a powerful strategic tool

An increasing number of Belgian companies are embracing the Voluntary Sustainability Reporting Standard for SMEs (VSME), a flexible framework for voluntary sustainability reporting. Originally designed as a helpful tool for SMEs, it has now become a strategic asset for businesses of all sizes.

The VSME was developed by the European Financial Reporting Advisory Group (EFRAG) as an accessible framework for non-listed SMEs. However, the relevance of this reporting standard now goes much further.

The European Union’s recent choice to delay CSRD requirements for thousands of large companies via the Omnibus regulation has increased the significance of voluntary sustainability reporting.

“The VSME provides a way to start structured sustainability reporting today, even if you are (not yet) subject to a legal obligation,” says Ann Verlinden, sustainability reporting expert at KPMG in Belgium.

The VSME provides clear, standardized guidelines while allowing room for customization. “Companies themselves identify which sustainability topics are relevant to their operations. This makes the system both flexible and achievable,” says Verlinden.

According to Verlinden, the demand for reliable sustainability data is rapidly increasing. Not only do large companies expect this information from their suppliers, but banks, investors, and customers are also setting ever higher standards for ESG performance.

“That demand will come to every company sooner or later,” says Verlinden. “Those who start working on it now will have all the data ready in the future. That gives you an advantage over those who still have to begin.”

Additionally, the VSME provides companies with valuable insights into their own operations. “By collecting ESG data, you gain visibility into your consumption, costs, risks, and opportunities for improvement. This puts your company firmly in control. You can manage more precisely, save costs, and invest thoughtfully. Simply put, this makes your organization stronger and more future-proof.”

The VSME provides a great starting point for the upcoming, more detailed reporting requirements. “Businesses that want to grow sustainably or will later be subject to the CSRD have already built a strong base with the VSME,” Verlinden explains.

“They set up a framework, gather relevant data, and establish the right internal processes. Many of these efforts - for example, related to climate, safety, or social impact - remain reusable later on.”

Anyone looking to use the VSME should take time beforehand to think carefully about what’s relevant to their own operations. “It’s best to focus on the themes that are truly applicable,” says Verlinden.

She recommends that companies perform a double materiality analysis, even though it’s not required. “It helps you and your stakeholders identify where your impact is, what risks you see, and where opportunities lie.”

A double materiality analysis looks at a company’s sustainability issues from two angles: first, the impact the business has on people, the environment, and society; and second, how external sustainability risks could affect the company and where opportunities exist.

Verlinden anticipates that the VSME framework will develop further over the next few years, similar to other European sustainability standards. Still, companies that start now don’t have to worry about their efforts being in vain.

The foundation of the VSME remains intact. There may be some adjustments, but the data you collect now and the structures you build will continue to be valuable. It is a smart, accessible way to firmly embed sustainability within your organization.”

This article was created in collaboration with De Tijd and L'Echo.