---
title: "LSME and VSME under EU CSRD: what SMEs should know"
canonical_url: "https://www.sorena.io/artifacts/eu/corporate-sustainability-reporting-directive/faq/lsme-and-vsme"
source_url: "https://www.sorena.io/artifacts/eu/corporate-sustainability-reporting-directive/faq/lsme-and-vsme"
author: "Sorena AI"
description: "FAQ on LSME and VSME under the EU CSRD: listed SME reporting, the temporary opt-out, voluntary SME reporting, and value-chain requests."
published_at: "2026-05-09"
updated_at: "2026-05-09"
keywords:
  - "CSRD LSME"
  - "CSRD VSME"
  - "listed SME reporting"
  - "voluntary SME sustainability reporting"
  - "ESRS for SMEs"
  - "CSRD"
  - "ESRS"
  - "LSME"
  - "VSME"
  - "listed SMEs"
  - "voluntary sustainability reporting"
  - "value chain reporting"
---
**[SORENA](https://www.sorena.io/)** - AI-Powered GRC Platform

[Home](https://www.sorena.io/) | [Solutions](https://www.sorena.io/solutions) | [Artifacts](https://www.sorena.io/artifacts) | [About Us](https://www.sorena.io/about-us) | [Contact](https://www.sorena.io/contact) | [Portal](https://app.sorena.io)

---

# LSME and VSME under EU CSRD: what SMEs should know

FAQ on LSME and VSME under the EU CSRD: listed SME reporting, the temporary opt-out, voluntary SME reporting, and value-chain requests.

*FAQ* *CSRD* *SMEs*

## EU CSRD and ESRS LSME and VSME reporting for SMEs

LSME and VSME are different SME reporting tracks under the CSRD ecosystem: one is for listed SMEs in scope, and the other supports voluntary SME sustainability information.

Use this FAQ to separate mandatory listed-SME reporting, the grounded opt-out, voluntary VSME context, and value-chain information requests.

Under the EU CSRD, most SMEs do not get new mandatory sustainability reporting duties solely because they are SMEs. The key exception is listed SMEs, except micro-undertakings, which are brought into the CSRD reporting framework and may use proportionate SME standards. VSME is different: it is voluntary context for SMEs that are outside mandatory CSRD reporting but receive sustainability data requests from customers, banks, investors, or other stakeholders.

## What is the difference between LSME and VSME under the EU CSRD?

LSME is the listed-SME track. The CSRD amends the Accounting Directive so that small and medium-sized undertakings, except micro-undertakings, whose securities are admitted to trading on an EU regulated market are in scope for sustainability reporting. Those undertakings may limit reporting to specified SME information and report under sustainability reporting standards for small and medium-sized undertakings.

VSME is the voluntary SME track. It is aimed at SMEs that are not subject to mandatory CSRD sustainability reporting but still need a proportionate way to answer sustainability information requests from large companies, financial institutions, customers, banks, investors, or other stakeholders.

- Use LSME analysis when the company is an SME issuer on an EU regulated market and is not a micro-undertaking.
- Use VSME analysis when the company is outside mandatory CSRD reporting and wants a voluntary, proportionate response format for sustainability data requests.
- Do not treat VSME as a substitute for mandatory CSRD reporting by a listed SME unless the applicable legal standard permits that result.

Sources for this answer:

- [Directive (EU) 2022/2464 on corporate sustainability reporting](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022L2464&ref=sorena.io) - Supports the listed-SME scope rule, the exclusion of micro-undertakings, and the SME reporting derogation in the CSRD amendments.
- [Commission Q&A on the adoption of ESRS](https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_4043?ref=sorena.io) - Explains that the Accounting Directive as amended by CSRD imposes no new reporting requirements on SMEs except listed SMEs.
- [Commission voluntary sustainability reporting standard for SMEs](https://finance.ec.europa.eu/publications/commission-presents-voluntary-sustainability-reporting-standard-ease-burden-smes_en?ref=sorena.io) - Supports the VSME context for voluntary reporting by SMEs responding to CSRD-related value-chain information requests.

## When does the CSRD listed-SME opt-out matter?

The listed-SME opt-out matters only for SMEs in the CSRD listed-SME category. The CSRD text says that, for financial years starting before 1 January 2028, the relevant small and medium-sized public-interest undertakings may decide not to include the sustainability information in their management report.

That opt-out is not silent non-reporting. If used, the undertaking must briefly state in its management report why the sustainability reporting was not provided. A listed SME should therefore track whether it is relying on the opt-out, where the explanation appears, and when the opt-out window ends for its reporting calendar.

- Confirm the company is a listed SME in scope and not a micro-undertaking before relying on the opt-out.
- Record the financial year for which the opt-out is used and the management-report explanation.
- Do not apply the listed-SME opt-out to non-listed SMEs; their issue is usually voluntary reporting or value-chain requests, not a CSRD reporting deferral.

Sources for this answer:

- [Directive (EU) 2022/2464 on corporate sustainability reporting](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022L2464&ref=sorena.io) - Supports the temporary opt-out for listed SMEs and the requirement to explain why sustainability reporting was not provided.
- [Commission Q&A on the adoption of ESRS](https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_4043?ref=sorena.io) - Provides Commission context that listed SMEs may opt out for a further two years after the initial listed-SME reporting start.

## How should a non-listed SME use VSME in practice?

A non-listed SME should use VSME as a voluntary response framework, not as a new mandatory CSRD obligation. The Commission says the voluntary standard is intended to reduce administrative burden by helping SMEs respond to sustainability information requests from large companies and financial institutions that are themselves subject to mandatory CSRD reporting.

The practical use is to standardize the SME's answers, keep repeatable evidence behind them, and avoid bespoke questionnaires expanding beyond what is proportionate for an SME. The Commission also encourages large companies and financial institutions seeking sustainability information from SMEs to base requests on the voluntary standard as far as possible.

- Map incoming sustainability questionnaires to VSME topics before creating custom answers.
- Keep the source request, the VSME response, the evidence owner, and any unavailable-data explanation together.
- Flag requests that appear to exceed the voluntary standard or the grounded value-chain cap context for commercial or legal review.

Sources for this answer:

- [Commission voluntary sustainability reporting standard for SMEs](https://finance.ec.europa.eu/publications/commission-presents-voluntary-sustainability-reporting-standard-ease-burden-smes_en?ref=sorena.io) - Supports using VSME to answer sustainability information requests from CSRD-reporting large companies and financial institutions.
- [Commission Q&A on the VSME Recommendation](https://finance.ec.europa.eu/publications/questions-and-answers-recommendation-voluntary-sustainability-reporting-standard-small-and-medium_en?ref=sorena.io) - Supports the Commission's context that VSME can replace a substantial portion of recurring bank and large-undertaking information requests.

## What should teams avoid when deciding between LSME and VSME?

The main mistake is mixing the two tracks. A listed SME needs a CSRD scope and reporting analysis, including whether it can rely on the temporary opt-out and whether a proportionate listed-SME standard applies. A non-listed SME usually needs a voluntary reporting and customer-request strategy, not a statement that CSRD directly applies to it.

Teams should also avoid treating proposed or voluntary material as if it were already the same as binding CSRD reporting. The Commission's VSME Q&A says the future voluntary standard proposed under the Omnibus simplification package might differ from the current VSME Recommendation and depends on negotiations between co-legislators.

- Do not cite VSME as mandatory CSRD reporting for every SME.
- Do not rely on an opt-out without confirming listed-SME status and the required management-report explanation.
- Do not promise a final LSME or future voluntary-standard position unless the current legal source supports it.

Sources for this answer:

- [Commission Q&A on the adoption of ESRS](https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_4043?ref=sorena.io) - Supports separating listed-SME reporting from non-listed SME voluntary reporting under the CSRD framework.
- [Commission Q&A on the VSME Recommendation](https://finance.ec.europa.eu/publications/questions-and-answers-recommendation-voluntary-sustainability-reporting-standard-small-and-medium_en?ref=sorena.io) - Supports caution that a future voluntary standard may differ from the current VSME Recommendation.

## Primary sources

- [Directive (EU) 2022/2464 on corporate sustainability reporting](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022L2464&ref=sorena.io) - Primary legal text for listed-SME CSRD scope, the SME reporting derogation, and the temporary opt-out explanation requirement.
  - Quote: "small and medium-sized undertakings, except micro undertakings"
- [Commission Q&A on the adoption of ESRS](https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_4043?ref=sorena.io) - Commission context distinguishing listed-SME reporting from voluntary non-listed SME standards and value-chain safeguards.
  - Quote: "no new reporting requirements on SMEs, except listed SMEs"
- [Commission voluntary sustainability reporting standard for SMEs](https://finance.ec.europa.eu/publications/commission-presents-voluntary-sustainability-reporting-standard-ease-burden-smes_en?ref=sorena.io) - Commission source for the VSME Recommendation and its purpose in easing SME responses to CSRD-related information requests.
  - Quote: "voluntary standard for SMEs (VSME)"
- [Commission Q&A on the VSME Recommendation](https://finance.ec.europa.eu/publications/questions-and-answers-recommendation-voluntary-sustainability-reporting-standard-small-and-medium_en?ref=sorena.io) - Commission source for VSME due process, support materials, value-chain cap context, and possible differences from any future delegated act.
  - Quote: "future voluntary reporting standard might differ"

## Topic Guides

- [CSRD and ESRS Compliance Obligations](/artifacts/eu/corporate-sustainability-reporting-directive/compliance.md): Grounded CSRD and ESRS compliance guide covering scope checks, sustainability statements, double materiality, value-chain data, assurance, and digital tagging.
- [CSRD and ESRS FAQ: scope, materiality, assurance, tagging, and value chain](/artifacts/eu/corporate-sustainability-reporting-directive/faq.md): CSRD and ESRS FAQ hub covering company scope, reporting waves, ESRS structure, double materiality, assurance, digital tagging, Taxonomy Article 8, and value chain data.
- [CSRD and ESRS Reporting Checklist](/artifacts/eu/corporate-sustainability-reporting-directive/checklist.md): A practical CSRD and ESRS checklist for confirming reporting scope, sustainability statement content, double materiality, value-chain evidence, assurance readiness, and digital tagging.
- [CSRD and ESRS requirements: scope, reporting, assurance, and evidence](/artifacts/eu/corporate-sustainability-reporting-directive/requirements.md): Grounded guide to CSRD and ESRS requirements: who reports, what the sustainability statement must cover, double materiality, value-chain data, assurance, publication, digital tagging, and controls.
- [CSRD and ESRS value-chain data, estimates, proxies, and evidence](/artifacts/eu/corporate-sustainability-reporting-directive/value-chain-data-and-estimation.md): How to handle ESRS value-chain information when supplier or customer data is incomplete: reasonable efforts, estimates, limitations, controls, and assurance evidence.
- [CSRD Applicability Test for EU and Non-EU Company Groups](/artifacts/eu/corporate-sustainability-reporting-directive/applicability-test.md): Check whether CSRD and ESRS reporting may apply by testing undertaking size, listed status, group reporting, non-EU branches or subsidiaries, and phase-in evidence.
- [CSRD Article 40a third-country group reporting FAQ](/artifacts/eu/corporate-sustainability-reporting-directive/faq/third-country-groups.md): FAQ on when CSRD Article 40a applies to third-country groups, which EU subsidiary or branch publishes the report, and what happens with assurance and missing information.
- [CSRD assurance and ESRS digital tagging evidence](/artifacts/eu/corporate-sustainability-reporting-directive/assurance-and-digital-tagging-evidence.md): Evidence checklist for CSRD assurance readiness, ESRS datapoint traceability, and digital tagging preparation under the ESRS XBRL and ESEF reporting framework.
- [CSRD assurance evidence FAQ: what to keep for limited assurance](/artifacts/eu/corporate-sustainability-reporting-directive/faq/assurance-evidence.md): What CSRD and ESRS assurance evidence should support: management-report publication, the assurance report, national assurance procedures, and EU limited assurance milestones.
- [CSRD assurance evidence pack workflow for ESRS reporting](/artifacts/eu/corporate-sustainability-reporting-directive/assurance-evidence-pack-workflow.md): A CSRD and ESRS workflow for building an assurance-ready evidence pack covering scope, double materiality, ESRS datapoints, controls, estimates, and digital tagging.
- [CSRD assurance-ready controls and evidence for ESRS reporting](/artifacts/eu/corporate-sustainability-reporting-directive/assurance-ready-controls-and-evidence.md): Build CSRD and ESRS evidence around GOV-5 controls, double materiality, IROs, value-chain data, assurance files, and XBRL tagging checks.
- [CSRD data point inventory FAQ for ESRS disclosure readiness](/artifacts/eu/corporate-sustainability-reporting-directive/faq/data-point-inventory.md): How to build an ESRS data point inventory for CSRD reporting: disclosure requirements, materiality filters, evidence ownership, value-chain data, XBRL readiness, and assurance support.
- [CSRD deadlines and ESRS compliance calendar](/artifacts/eu/corporate-sustainability-reporting-directive/deadlines-and-compliance-calendar.md): A grounded CSRD and ESRS calendar covering the original reporting waves, enacted postponement caveats, publication duties, assurance, and digital reporting workstreams.
- [CSRD digital tagging and XBRL readiness FAQ](/artifacts/eu/corporate-sustainability-reporting-directive/faq/digital-tagging-xbrl.md): What CSRD teams should do now about XHTML, Inline XBRL, ESRS taxonomy materials, tagging controls, and limits before final digital taxonomy rules apply.
- [CSRD Double Materiality Interview Question Bank for ESRS](/artifacts/eu/corporate-sustainability-reporting-directive/double-materiality-interview-question-bank.md): Interview prompts for ESRS double materiality work: context, affected stakeholders, value chain IROs, impact materiality, financial materiality, thresholds, and evidence.
- [CSRD double materiality method under ESRS](/artifacts/eu/corporate-sustainability-reporting-directive/double-materiality-method.md): A grounded method for ESRS double materiality assessment: impact materiality, financial materiality, value-chain coverage, thresholds, evidence, and documentation.
- [CSRD double materiality scoring: IRO assessment and ESRS data points](/artifacts/eu/corporate-sustainability-reporting-directive/double-materiality-scoring.md): A grounded scoring guide for CSRD and ESRS double materiality: impact materiality, financial materiality, thresholds, evidence, governance, and disclosure mapping.
- [CSRD Double Materiality Workflow for ESRS Assessment](/artifacts/eu/corporate-sustainability-reporting-directive/double-materiality-workflow.md): A CSRD and ESRS workflow for running a double materiality assessment, from value-chain scoping and stakeholder inputs to IRO scoring, governance approval, and audit trail evidence.
- [CSRD omnibus stop-the-clock status: enacted delay vs proposed scope changes](/artifacts/eu/corporate-sustainability-reporting-directive/faq/omnibus-stop-the-clock-status.md): FAQ on the CSRD stop-the-clock directive, the separate Omnibus proposal, and how reporting teams should treat enacted and proposed changes.
- [CSRD penalties and fines: Member State enforcement, controls, and evidence](/artifacts/eu/corporate-sustainability-reporting-directive/penalties-and-fines.md): A conservative guide to CSRD penalty exposure: why fines depend on Member State implementation, which reporting failures create risk, and what evidence teams should keep.
- [CSRD reporting waves and Omnibus status](/artifacts/eu/corporate-sustainability-reporting-directive/reporting-waves-and-omnibus-status.md): Track what is enacted, postponed, final, or still in the Omnibus process for CSRD reporting waves, ESRS reporting, and Stop-the-Clock changes.
- [CSRD reporting waves FAQ: who reports first and what changed](/artifacts/eu/corporate-sustainability-reporting-directive/faq/reporting-waves.md): FAQ on original CSRD reporting waves, stop-the-clock caveats, listed SME opt-out, third-country reporting, and why local transposition law still matters.
- [CSRD scope and phasing by company type](/artifacts/eu/corporate-sustainability-reporting-directive/scope-and-phasing-by-company-type.md): Map CSRD reporting scope by company category, original Article 5 wave, listed SME opt-out, third-country group rules, and stop-the-clock caveats.
- [CSRD topical ESRS scoping: what must be reported?](/artifacts/eu/corporate-sustainability-reporting-directive/faq/topical-esrs-scoping.md): FAQ on CSRD topical ESRS scoping: ESRS 2, double materiality, topical disclosure requirements, omitted topics, climate, and Appendix B datapoints.
- [CSRD value chain data and estimation methodology under ESRS](/artifacts/eu/corporate-sustainability-reporting-directive/value-chain-estimates.md): How ESRS lets CSRD reporters use sector averages, proxies, and other estimates when direct value-chain data is not available after reasonable effort.
- [CSRD vs CSDDD: Reporting vs Due Diligence](/artifacts/eu/corporate-sustainability-reporting-directive/csrd-vs-csddd.md): Compare CSRD sustainability reporting with CSDDD human rights and environmental due diligence, including scope, evidence, assurance, penalties, and overlap.
- [CSRD vs EU Taxonomy Article 8](/artifacts/eu/corporate-sustainability-reporting-directive/csrd-vs-taxonomy-alignment.md): Compare CSRD and ESRS sustainability reporting with EU Taxonomy Article 8 KPI disclosures, including scope, evidence, tagging, and reuse limits.
- [CSRD vs GRI: ESRS Interoperability](/artifacts/eu/corporate-sustainability-reporting-directive/csrd-vs-gri.md): Compare CSRD/ESRS reporting with GRI-based reporting using grounded ESRS interoperability, materiality, value-chain, and disclosure-reuse rules.
- [CSRD vs IFRS S1 and S2 Comparison](/artifacts/eu/corporate-sustainability-reporting-directive/csrd-vs-ifrs-s1-and-s2.md): Compare CSRD and ESRS with IFRS S1 and S2 across scope, materiality, disclosures, value chain reporting, assurance, digital tagging, and interoperability.
- [CSRD vs SEC Climate Disclosure Rule](/artifacts/eu/corporate-sustainability-reporting-directive/csrd-vs-sec-climate-disclosure-rule.md): Grounded comparison notes for CSRD and the SEC climate disclosure rule, focused on CSRD and ESRS duties and conservative limits where SEC facts are not sourced.
- [CSRD vs SFDR: ESRS and Financial Disclosures](/artifacts/eu/corporate-sustainability-reporting-directive/csrd-vs-sfdr.md): Compare CSRD/ESRS corporate sustainability reporting with SFDR financial-market disclosures, including scope, materiality, PAI data, assurance, tagging, and reuse limits.
- [CSRD XBRL Tagging Checklist for ESRS and Article 8 Readiness](/artifacts/eu/corporate-sustainability-reporting-directive/xbrl-tagging-checklist.md): A grounded CSRD XBRL tagging readiness checklist for XHTML, Inline XBRL, ESRS taxonomy mapping, Article 8 taxonomy mapping, ESEF validation, and source-controlled review.
- [ESRS 1 and ESRS 2 structure under CSRD](/artifacts/eu/corporate-sustainability-reporting-directive/esrs-1-and-esrs-2-structure.md): A grounded explanation of how ESRS 1 sets the reporting architecture and how ESRS 2 provides the mandatory general disclosures for CSRD sustainability statements.
- [ESRS data point inventory workflow for CSRD reporting](/artifacts/eu/corporate-sustainability-reporting-directive/esrs-data-point-inventory-workflow.md): Build an ESRS data point inventory that links disclosure requirements, materiality outcomes, evidence owners, XBRL tagging readiness, and assurance controls.
- [ESRS structure and data model for CSRD reporting](/artifacts/eu/corporate-sustainability-reporting-directive/esrs-structure-and-data-model.md): Map ESRS architecture, disclosure requirements, datapoints, materiality, XBRL taxonomy, Article 8 tagging, and report data ownership for CSRD reporting.
- [FAQ: CSRD double materiality scoring — thresholds, weighting, and evidence](/artifacts/eu/corporate-sustainability-reporting-directive/faq/double-materiality-scoring.md): How to score CSRD double materiality under ESRS without invented thresholds: impact materiality, financial materiality, evidence, and documentation.
- [FAQ: CSRD value chain estimates — methods and proportionality under ESRS](/artifacts/eu/corporate-sustainability-reporting-directive/faq/value-chain-estimates.md): When ESRS permits value chain estimates, what to disclose about assumptions, accuracy, limits, and improvement plans.
- [How do ESRS 1 and ESRS 2 structure CSRD reporting?](/artifacts/eu/corporate-sustainability-reporting-directive/faq/esrs-1-and-2-structure.md): FAQ explaining how ESRS 1 general requirements and ESRS 2 general disclosures fit into CSRD reporting, materiality, and topical ESRS disclosures.
- [Taxonomy Article 8 KPIs for CSRD reporting](/artifacts/eu/corporate-sustainability-reporting-directive/taxonomy-article-8-kpis.md): Grounded guide to Article 8 Taxonomy KPI disclosures in CSRD sustainability statements, including KPI templates, ESRS links, XBRL readiness, and evidence controls.
- [Taxonomy Article 8 KPIs under CSRD and ESRS](/artifacts/eu/corporate-sustainability-reporting-directive/faq/taxonomy-article-8-kpis.md): FAQ explaining how EU Taxonomy Article 8 KPI disclosures relate to CSRD, ESRS, and the Article 8 XBRL taxonomy.

*Recommended next step*

*Placement: after SME reporting section*

## Separate mandatory CSRD reporting from voluntary SME responses

Use the LSME and VSME distinction to decide whether the work is a listed-SME reporting obligation, an opt-out record, or a voluntary response to value-chain sustainability requests.

- [Open Research Copilot](/solutions/research-copilot.md): Check CSRD and ESRS questions against cited source material.
- [Discuss CSRD SME reporting](/contact.md): Review listed-SME scope, opt-out records, and VSME response workflows with Sorena.


---

[Privacy Policy](https://www.sorena.io/privacy) | [Terms of Use](https://www.sorena.io/terms-of-use) | [DMCA](https://www.sorena.io/dmca) | [About Us](https://www.sorena.io/about-us)

(c) 2026 Sorena AB (559573-7338). All rights reserved.

Source: https://www.sorena.io/artifacts/eu/corporate-sustainability-reporting-directive/faq/lsme-and-vsme