Sustainability reporting for SMEs: voluntary, but increasingly the market standard
A sustainability report is not mandatory for SMEs, but customers, banks and tender processes increasingly expect one. How to approach it pragmatically.
strait
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Most medium-sized companies are not required to produce a sustainability report. And yet, right now, more and more SMEs are voluntarily creating one – not out of idealism, but because someone suddenly demands it: a major customer, a bank, a tender. This article explains when a voluntary report is truly worth it and how to set it up without a mammoth project.
Why "voluntary" does not mean "unimportant"
Legal reporting requirements (CSRD) only affect a small circle of large companies. For medium-sized companies, however, the topic has still become highly relevant – coming from four directions:
Customers demand it. Large buyers pass the pressure from their own reporting requirements down to you (see Scope 3).
Banks link conditions to it. Sustainability metrics are increasingly incorporated into credit ratings.
Tenders require it. Public and private procurement evaluate sustainability evidence as a criterion.
Skilled workers ask about it. A credible report becomes an argument in recruiting.
The business case is therefore real – independent of the legal situation. This fundamentally distinguishes the "report yes/no" decision from a pure compliance exercise.
The pragmatic standard: VS (formerly VSME)
A lean EU standard has established itself for a voluntary start: VS, formerly known as VSME. It is explicitly aimed at companies with up to 1,000 employees, is significantly more compact than the full CSRD requirements at around 29 pages, and covers precisely the data points that customers and banks request most frequently. Anyone who guides themselves by VS does not have to guess what a report should contain – the structure is predefined. (Step-by-step guide: VSME is now called VS – to your report in 5 steps.)
Do you even need a report? An honest checklist
Not every SME needs a full report right away. The question is worth asking if at least one of the following applies:
A customer has already asked for ESG data, a questionnaire, or an EcoVadis assessment.
You regularly bid on tenders with sustainability criteria.
Your bank mentioned sustainability during your rating interview.
You want to differentiate yourself in the competition for skilled workers or new customers.
If none of these apply, a lean database kept "in stock" is often sufficient – without a full report. If several apply, a structured entry via VS is well worth it.
What actually goes into a voluntary report
"Sustainability report" sounds like a thick document – in VS practice, it is usually a manageable compilation of four areas:
Basic company details: Size, locations, sector, business model in just a few sentences.
Environmental metrics: Energy consumption, emissions (Scope 1 & 2, and relevant Scope 3 categories if applicable), resource and waste management.
Social metrics: Working conditions, safety, further training, diversity – usually already present in HR processes.
Governance: Ethics guidelines, anti-corruption measures, supplier management.
In practice, the environmental section is almost always the most time-consuming because it requires reliable measurement data instead of policy texts – and this is precisely where most initial attempts stumble.
When the effort is worth it timing-wise
A report can be started at any time, but the timing affects the effort: Anyone who starts shortly before a specific customer deadline or tender is almost inevitably put under time pressure and forced into a "guesstimate-instead-of-measure" mode. On the other hand, anyone who starts collecting data before a specific inquiry comes in already has a foundation at the first external appointment – the report itself then becomes a formality rather than a massive project.
What customers, banks, and tenders specifically expect
The three most common external occasions differ in what they actually want to see:
Occasion | What is typically asked | How deep must the response be? |
|---|---|---|
Customer questionnaire | Energy/emission data, sometimes certificates | Usually sufficient: Scope 1+2, rough Scope 3 assessment |
Bank meeting | Sustainability metrics as part of the rating | Often a compact summary is enough, no full reporting |
Tender | Proof of a structured sustainability approach | Varies greatly depending on the tender – from "present yes/no" to detailed metrics |
The practical point: very few external inquiries require a full, highly formalized report. Usually, a structured, credible response based on the same basic data is enough – the form (questionnaire, meeting, tender document) differs, but the core remains the same.
A practical example: a craft business's first report
An electrical business with 45 employees and two locations receives an inquiry from a new major customer for "sustainability metrics for supplier evaluation". Without preparation, this would take weeks – reviewing invoices, collecting meter readings, coordinating wording. With data collection already underway, the process looks very different:
Week 1: Existing energy data (already continuously recorded) is structured for the VS report.
Week 2: Social and governance details (occupational health and safety guidelines, existing certificates) are added – usually without new data collection, as they are already available.
Week 3: The report is reviewed internally, and gaps are transparently marked as "in progress of collection" instead of being estimated.
Week 4: The report is sent to the customer – well ahead of the originally set deadline.
The difference compared to a business without ongoing data collection: there, just gathering the energy data would have taken the first two to three weeks – with a correspondingly higher risk of missing the deadline or having to rely on estimates.
The biggest stumbling blocks – and how to avoid them
Stumbling block 1: Thinking too big. Many SMEs look at CSRD reports of large corporations and are intimidated by the scale. VS is deliberately leaner – the comparison is flawed.
Stumbling block 2: Data that doesn't exist. The biggest time-waster is not writing, but gathering consumption and emission data from scattered sources. Anyone who records this data continuously instead of reconstructing it once a year drastically reduces the effort.
Stumbling block 3: One-off project instead of a system. A report that starts from scratch every year ties up resources unnecessarily. A continuously growing database from which any report, EcoVadis assessment, and customer questionnaire can draw is far more sustainable.
How strait reduces the effort
strait continuously records energy and operational data via IoT sensors directly on site – comparable across multiple locations. Initially, this data lowers your own energy costs because it makes hidden consumption visible (for example, saving over €3,000 at Holzmanufaktur Decker through a single sensor). At the same time, it forms the basis for a VS-compliant, auditable sustainability report – without separate data collection. Sustainability reporting is thus transformed from an annual tour de force into a byproduct of your own efficiency work.
Ready to find out if and what report you need?
Take the free Sustainability Readiness Check – or book a demo, where we show how strait automatically turns operational data into a VS-compliant report.
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