What VSME is
The Voluntary Sustainability Reporting Standard for non-listed SMEs, usually called VSME, was written by EFRAG, the body that drafts the EU's sustainability reporting standards, and published in December 2024. The European Commission adopted it as Recommendation (EU) 2025/1710 on 30 July 2025. It gives businesses that are not required to report one common format for the sustainability information their customers, banks and investors ask for, instead of a different questionnaire from each of them.
It is voluntary and it is not UK law. It matters to UK businesses for a practical reason: EU companies that report under the Corporate Sustainability Reporting Directive need data from their value chain, and VSME is the format they increasingly ask for.
Why EU customers are asking UK suppliers for it
The EU's Omnibus I directive, Directive (EU) 2026/470 of 24 February 2026, narrowed the Corporate Sustainability Reporting Directive to the largest companies and added a "value chain cap". A company reporting under the directive may not require businesses in its value chain with an average of up to 1,000 employees to provide more than the Commission's standards for voluntary use, which the directive says must be based on Recommendation (EU) 2025/1710. Those businesses can decline requests that go further, and the reporting company has to tell them so.
The result is that large EU companies are standardising their supplier requests on VSME. Banks are starting to do the same, because the standard was written with their data needs in mind. If you sell into the EU, or borrow from an EU bank, expect the request to name VSME or to ask for its datapoints by number.
What the Basic Module asks for
The Basic Module has eleven disclosures, B1 to B11. Each one is reported only where it applies to you, and the standard lets you leave out classified or sensitive information as long as you say what you left out. The environmental part that supplier requests focus on is B3.
| Disclosure | What it asks for |
|---|---|
| B1 Basis for preparation | Option A (Basic Module only) or B; individual or consolidated; legal form; NACE code; balance sheet total; turnover; employees (headcount or full-time equivalent); country of primary operations; where your sites are; any certifications; anything left out as sensitive |
| B2 Practices, policies and future initiatives | Whether you have practices, policies, plans and targets on climate, pollution, water, biodiversity, circular economy, workforce and business conduct |
| B3 Energy and greenhouse gas emissions | Total energy consumption in MWh, split renewable and non-renewable for electricity and fuels where you can; gross Scope 1 and location-based Scope 2 emissions in tCO2e; GHG intensity per unit of turnover |
| B4 Pollution of air, water and soil | Pollutants and amounts, only if you already report them to a regulator or through an environmental management system |
| B5 Biodiversity | Number and area of sites in or near biodiversity sensitive areas |
| B6 Water | Total water withdrawal, and the amount at sites in areas of high water stress |
| B7 Resource use, circular economy and waste | Whether you apply circular economy principles; waste by hazardous and non-hazardous; waste sent for recycling or reuse |
| B8 Workforce: general characteristics | Employees by contract type, gender and country; employee turnover rate if you have 50 or more employees |
| B9 to B11 | Health and safety; pay, collective bargaining and training; convictions and fines for corruption and bribery |
B3 in detail: energy and emissions
Energy consumption
Report the final energy delivered to your business in MWh, in a table with renewable, non-renewable and total columns, and rows for electricity (as on your utility bills) and fuels. Bought heat and steam go with electricity. Renewable electricity you generate and use yourself, from solar panels for example, counts as electricity consumption; don't subtract anything you export. Fuel burned to make your own electricity or heat is counted once, as fuel.
Electricity can be counted as renewable when it is backed by certificates or the supplier's stated fuel mix. In the UK that means a tariff backed by Renewable Energy Guarantees of Origin (REGOs). Without that evidence, treat grid electricity as non-renewable.
Greenhouse gas emissions
Report gross Scope 1 emissions (fuel burned in your boilers and vehicles, refrigerant leaks) and location-based Scope 2 emissions (electricity, heat, steam and cooling you buy, at the grid-average factor) in tonnes of CO2e, following the GHG Protocol Corporate Standard. Market-based Scope 2, which reflects your tariff, is optional but worth adding if you buy renewable electricity. VSME covers the whole business, so include sites outside the UK, using each country's grid factor. See our guide to Scope 1, 2 and 3 if the scopes are new to you.
GHG intensity
Divide your Scope 1 and location-based Scope 2 total by your turnover. EU customers compare suppliers per million euros, so convert sterling turnover at a stated rate. For example, 120 tCO2e on turnover of £4.2 million, converted at €1.17 to £1 (€4.914 million), is 24.4 tCO2e per € million.
Scope 3
Scope 3 isn't required in the Basic Module, but the standard encourages it where it is significant, and many customers will ask. If you include it, cover the significant categories from the GHG Protocol's 15 and show it alongside your Scope 1 and 2 figures. Our guide to the 15 Scope 3 categories explains each one.
How it compares with what you already report in the UK
If you prepare an SECR report or a Carbon Reduction Plan, most of B3 is already done. The differences are small but they matter:
- Units. VSME energy is in MWh, SECR in kWh. Divide by 1,000.
- Boundary. SECR asks large unquoted companies for UK energy only; VSME covers the whole business, including sites abroad.
- Business mileage. SECR's total includes business travel in employees' own cars, which is Scope 3. VSME's required total is Scope 1 and 2 only.
- Intensity. SECR lets you choose the ratio. VSME's is per unit of turnover, which EU customers expect in euros.
- Renewable split. VSME asks for renewable and non-renewable energy; SECR doesn't.
Step by step: answering a VSME request
- Check what the customer actually wants. Many requests only need B1 and B3. Answer what is asked; the value chain cap means you don't have to go beyond VSME.
- Use your financial year. VSME asks for the same period as your financial statements, and comparatives for the previous year from your second report.
- Gather a year of energy data for every site, including any abroad: electricity, gas and heat bills, fuel cards and refrigerant top-ups.
- Calculate Scope 1 and 2 with the DESNZ conversion factors for UK activity and each country's grid factor elsewhere, and state the factor years.
- Fill in B1: legal form, NACE code (close to your UK SIC code), turnover and balance sheet in euros with the rate you used, and employee numbers.
- Answer the other disclosures briefly, or say they don't apply. Most office-based businesses have nothing to report under B4.
- Send the same figures to everyone who asks about the same year, and keep a copy.
How Carbon Recycling produces it
Carbon Recycling builds an EU VSME report from the same activity data as your SECR report and Carbon Reduction Plan, on every plan. The B3 energy table, with the renewable split, and Scope 1, location-based and market-based Scope 2 and optional Scope 3 fill in automatically. Sites outside the UK, available on the Enterprise plan, are included with each country's own grid factor. You add your turnover and the euro exchange rate you used, your legal form, NACE code and employee numbers, and short answers for B4 to B8, and the report works out the intensity per € million and states the factor sets and methodology. Save it as a PDF, or copy the figures into your customer's portal.