ExecutESG's Official Response to the EU VSME Public Consultation: 4 Key Proposals

On June 3, 2026, the European Commission will close its public consultation on the draft Voluntary Sustainability Reporting Standard for Non-Listed SMEs (VSME). This voluntary standard is poised to become the single most important framework for supply chain ESG reporting in Europe.

As a digital implementation provider and ESG software vendor based in Helsinki, ExecutESG Oy works directly on the front line—digitizing sustainability workflows for SMEs navigating massive supply chain pressure. Based on our real-world experience onboarding dozens of SMEs, we have submitted our official feedback to the European Commission's "Have Your Say" portal.

We strongly support the European Commission's adoption of the VSME and its establishment as a statutory "value chain cap" via the Omnibus I Directive. This is a major victory that protects smaller enterprises from disjointed, non-standardized ESG questionnaires.

However, we believe the standard can be improved to make practical software implementation smoother and reporting more accurate. Here are the four key technical proposals we submitted to standard-setters in Brussels.

1. Close Loopholes in the "Value Chain Cap"

The Omnibus I Directive introduced a statutory "value chain cap," meaning large corporate buyers cannot demand more ESG data from their SME suppliers than what is outlined in the voluntary VSME standard. This is a game-changer for reducing administrative burden.

However, the current draft contains critical loopholes—specifically exceptions allowing corporates to request extra data if it is "commonly shared in a sector" or required by other EU legislation.

The Software Perspective:

From a data architecture standpoint, unpredictable exceptions break standardization. If large corporates can exploit exceptions to demand non-standard data, software vendors cannot build reliable, automated API integrations or standardized reporting flows.

Our Proposal:

We recommend that the European Commission mandate that any corporate entity requesting data beyond the VSME cap must formally cite the specific legal basis in a standardized, machine-readable format. Furthermore, CSRD-reporting companies must be required to structurally distinguish between "cap-compliant" and "beyond-cap" data when surveying their supply chains.

2. Introduce a Centralized "XBRL Sandbox" for Digital Validation

EFRAG is pushing for digital-first sustainability reporting by establishing an XBRL taxonomy for VSME reports. This is the correct approach to enable machine-readable data for banks and large corporate buyers, but SMEs cannot be expected to manually tag complex documents.

The Software Perspective:

Software platforms like ExecutESG can generate native XBRL exports programmatically, bypassing manual document tagging completely. However, without a central authority to validate these files, technical errors and data mismatches are highly likely.

Our Proposal:

We recommend that EFRAG and the Commission establish a centralized, EU-hosted validation portal (an "XBRL Sandbox"). This sandbox would allow SMEs or their software providers to automatically verify the technical and structural compliance of their XBRL files via API before sharing them with financial institutions or procurement partners.

3. Standardize GHG Emission Factors (Disclosure B3)

Disclosure B3 (Energy and GHG emissions) is the single highest barrier to entry for SMEs trying to compile their first sustainability report. While the VSME standard defines what must be reported, the mechanical task of identifying correct emission factors (e.g., country-specific electricity grid factors or localized district heating coefficients) is highly complex.

The Software Perspective:

To make carbon accounting accessible, software tools must perform these calculations automatically. However, local emission factors are scattered across multiple, disparate national databases, leading to inconsistencies.

Our Proposal:

The Commission should host or endorse an open, centralized API database of approved emission factors for Scope 1 and Scope 2 calculations across all Member States. Standardizing these factors at the EU level would ensure high comparability between VSME reports generated by different software tools and significantly reduce reliance on expensive sustainability consultants.

4. Replace Headcount with NACE-Code Environmental Thresholds

The current draft VSME standard applies a simplified 10-employee threshold to exempt micro-enterprises from certain environmental disclosures. However, physical headcount does not strictly correlate with a company's environmental materiality.

The Software Perspective:

In our experience onboarding users, a 5-person manufacturing, chemical, or logistics SME often has a significantly higher environmental footprint and operational data availability than a 40-person digital agency or professional services firm.

Our Proposal:

We suggest replacing or supplementing the 15-employee threshold with a NACE-code sector-based criterion. High-impact micro-enterprises should be guided to report environmental data, while low-impact service firms of larger size should be allowed simplified disclosures. This would make the voluntary standard more reflective of actual environmental impact.

The Path Forward for SMEs

The VSME standard is a massive step forward in transforming sustainability reporting from a corporate compliance burden into a practical, operational reality for the broader economy.

At ExecutESG, we are committed to making this transition as frictionless as possible. That is why our Basic Module remains permanently free for all European SMEs, offering a guided wizard covering all 11 disclosures (B1-B11), localized GHG calculations, and export tools.

We stand ready to assist EFRAG and the European Commission with ongoing technical feedback on the digital taxonomy implementation as the standard matures.

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Want to learn more about how the voluntary standard works? Read our Complete Guide to the VSME Standard.