Two acronyms recur in supplier conversations: CSRD and VSME. They are related, apply to different companies, and involve very different levels of effort. Before responding to a customer who uses either, establish which one applies to you.
| First question | Short answer |
|---|---|
| Does CSRD apply to my company? | Only if you exceed both 1,000 employees and €450 million net turnover. Most suppliers are out of scope. |
| Then why is my customer asking? | Your customer is in CSRD scope and must report on its value chain. It needs your data. |
| Is VSME mandatory? | No. It is the recognized format for the data large companies request from suppliers, and it is now EU law as the standard, but using it stays voluntary for companies outside CSRD. |
| How much of VSME do I need? | The Basic Module: 11 disclosures. Most small suppliers do not need the Comprehensive Module. |
| What do I say if asked "are you CSRD compliant"? | That you are not directly in scope and can provide VSME-aligned data for their reporting. |
CSRD: the law for large companies
The Corporate Sustainability Reporting Directive is EU legislation requiring the largest EU companies to publish detailed sustainability reports. After the 2026 Omnibus reform (Directive (EU) 2026/470) it applies only to companies exceeding both 1,000 employees and €450 million in net turnover — far narrower than the original 250-employee threshold, a change that removed an estimated 80% of previously in-scope companies. Listed SMEs are no longer in mandatory scope.
CSRD reporting follows the European Sustainability Reporting Standards (ESRS), which cover climate change, biodiversity, workforce conditions, business conduct, and more. A full ESRS report runs to hundreds of pages.
A supplier below the threshold does not report under CSRD and does not produce an ESRS report.
VSME: the standard for SMEs
The Voluntary Sustainability Reporting Standard for SMEs exists because of CSRD. Large companies reporting under CSRD need sustainability data from their supply chain, and asking a 50-person manufacturer for the same report as a multinational is not proportionate.
EFRAG developed the VSME as a simplified framework for micro, small, and medium-sized enterprises. The European Commission endorsed it as a recommendation in July 2025 and in July 2026 adopted it as a delegated act, making it the recognized EU standard for the sustainability data large companies request from suppliers. Using it remains voluntary for companies outside CSRD scope.
Two levels:
- Basic Module — 11 disclosures covering company profile, practices and policies, energy and emissions, pollution, biodiversity, water, waste, workforce, health and safety, remuneration and training, and corruption convictions. Designed for the smallest companies.
- Comprehensive Module — additional disclosures for larger SMEs that want or need more detail.
Most small suppliers need only the Basic Module.
The differences
| CSRD (ESRS) | VSME | |
|---|---|---|
| Applies to | Large companies (1,000+ employees and >€450M turnover) | Non-listed micro, small, and medium enterprises |
| Legal status | Mandatory (from financial year 2027) | Voluntary for companies outside CSRD scope |
| Depth | Comprehensive (hundreds of data points) | Simplified (11 Basic Module disclosures) |
| Double materiality | Formal assessment required | Not required in the Basic Module |
| Assurance | Limited assurance required | Not required |
| Format | XBRL digital taxonomy | Simple report or digital template |
| Effort | Months; a dedicated team | Days to weeks; one person can manage it |
| Cost | Software, consultants, assurance | Minimal; free tools available |
Why both arrive in the same inbox
Your large customers are subject to CSRD and need your data to complete their reports. Under CSRD they report on their full value chain: Scope 3 emissions, supply chain labor practice, supplier governance. They cannot do so without supplier data.
VSME gives you one format to provide it. Instead of responding to ten questionnaire formats from ten customers, you produce one VSME-aligned dataset and share it with everyone who asks. Report once; share everywhere.
What this means for your business
Under 250 employees and not listed. CSRD does not apply to you directly. Customers in CSRD scope will increasingly request VSME-aligned data. "Voluntary" means no fine; it does not mean no commercial consequence.
Already responding to ESG questionnaires. The questions you answer map to VSME disclosures. EcoVadis, CDP, and most customer-specific questionnaires cover the same core topics. VSME-aligned tracking means one dataset for all of them.
Not started. Start with the VSME Basic Module. The 11 disclosures cover the data most customer questionnaires ask for.
How to start
- Check your status with the free VSME readiness tool.
- Track monthly data — energy, water, waste, workforce.
- Document your policies — which exist, which need writing.
- Calculate emissions — Scope 1 (fuel) and Scope 2 (electricity).
- Produce a VSME-aligned report when a customer requests it.
ESG Passport covers this in the browser: data tracking, emissions calculation, questionnaire response. The free tier covers tracking; the paid version (€499, one-time) generates answers from tracked data, including document extraction.
For each VSME disclosure in detail, see the VSME 11 disclosures guide.
What customers actually want from suppliers
Large companies subject to CSRD do not expect a small supplier to produce an ESRS report. They need specific data points for their own value-chain reporting: energy use, Scope 1 and 2 emissions, basic workforce numbers, health and safety information, water and waste data where relevant, and governance policies. VSME gives SMEs a proportionate structure for exactly that data.
If a customer asks whether you are "CSRD compliant", clarify the request. A small non-listed supplier is usually not in CSRD scope, but it can provide VSME-aligned data that supports the customer's CSRD reporting. The distinction prevents you promising a compliance status you do not need and cannot demonstrate.
The plain-language answer
We are not directly subject to CSRD. We are preparing VSME-aligned sustainability data for customer reporting requests and can provide company profile, energy, emissions, workforce, water, waste, and policy information for the requested reporting period.
That frames the answer around usable data rather than a legal claim.