THE CONTENT OF THIS SUPPORTING GUIDE IS PREPARED FOR UNDERTAKINGS WITH FEWER THAN 250 EMPLOYEES

Disclaimer

The European Commission in the Omnibus proposal released on 26 February 2025 proposes, to use the VSME Standard as the basis of a future voluntary standard for undertakings up to 1000 employees. The VSME Standard has been developed for use by undertakings with fewer than 250 employees including micro-enterprises and has not been tested for use by other larger and more complex undertakings . It is important to note that on 30 July 2025 the European Commission officially adopted EFRAG's VSME as a Recommendation for use by undertakings with fewer than 250 employees.

With regard to the issuance of a proportionate voluntary standard to be adopted by the Commission as a delegated act, based on the VSME standard, to be used for undertakings with more than 250 employees but excluded from the scope of the CSRD. The VSME supporting guides currently being developed are to be understood as supporting the application of the VSME Standard for undertakings with fewer than 250 employees. The content of these VSME supporting guides has been developed in line with the scope of the VSME. Consistency checks and adjustments may be needed in light of development under omnibus and revised ESRS.

Introduction

Section 1

Examples of practices, policies, and future initiatives

Section 2

Case studies

Introduction

This supporting guide complements disclosure C2 - Description of practices, policies and future initiatives for transitioning towards a more sustainable economy (paragraph 48, 49) of the VSME.

Disclosure C2 builds upon disclosure B2 (Basic Module). In disclosure B2, the undertaking is asked to disclose whether it has practices, policies and future initiatives that tackle the list of sustainability issues (Annex B of the VSME). In disclosure C2, undertakings are asked to describe this information. An extract of both disclosures is displayed on the right.

Structure and aim of the supporting guide

The content of this supporting guide is non-mandatory, non-exhaustive, non-binding, or prescriptive. This supporting guide does not set any expectations for the specific content to be reported, but aims to help SMEs by providing possible elements for their disclosures.

This supporting guide is composed of two sections:

Section 1: List of examples of practices, policies and future initiatives by sustainability topics
Section 2: Case studies

Practices (paragraph 26(a)): Practices in this context may include, for instance, efforts to reduce the undertaking’s water and electricity consumption, to reduce GHG emissions or to prevent pollution, and initiatives to improve product safety as well as current initiatives to improve working conditions and equal treatment in the workplace, sustainability training for the undertaking’s workforce and partnerships related to sustainability projects.

Policies (Appendix A: Defined terms): A set or framework of general objectives and management principles that the undertaking uses for decision-making. A policy implements the undertaking’s strategy or management decisions related to a sustainability issue. Each policy is under the responsibility of defined person(s), specifies its perimeter of application, and includes one or more objectives (linked when applicable to measurable targets). A policy is implemented through actions or action plans. For example, undertakings with less resources may have few (or no) policies formalised in written documents, but this does not necessarily mean they do not have policies. If the undertaking has not yet formalised a policy but has implemented actions or defined targets through which the undertaking seeks to address sustainability issues, it shall disclose them.

Policies (clarifications based on definition above and par. 48, 49 VSME and related guidance):

The definition of policy clarifies that formalised policies in SMEs are written. Policies can also be "unwritten" i.e. informal. In this case they coincide with a set of practices or a set of implemented actions or defined targets.

Future initiatives (paragraph 26(c)): future initiatives or forward-looking plans that are being implemented on sustainability issues.

Targets (Appendix A - Defined terms): Measurable, outcome-oriented and time-bound goals that the SME aims to achieve in relation to sustainability issues. They may be set voluntarily by the SME or derive from legal requirements on the undertaking.

Many undertakings already have practices, policies and future initiatives in place, either due to legal requirements (national and/ or European legal requirements such as the European Energy Performance for Buildings Directive, the EU Whistleblowing Directive, health and safety-related national laws, etc.), management of business risks, or as part of their value proposition.

When reporting on their practices, policies, and future initiatives, undertakings may adapt the presentation to their operational organisation, without strict separation between Environment, Social, and Governance topics.

Section 1: Examples of practices, policies, and future initiatives

The examples in dropdown below are sector-agnostic and do not take into account the specificities of sectors, geographical dimensions, or business models. SMEs are encouraged to adapt the examples in Section 1 to their specificities, sector and geography.

This list serves to provide practical illustrations of what Small and Medium Undertakings (11-250 employees) could report under disclosure C2 for practices (current or past), policies (current or past) and future initiatives if they have them in place.

It should be noted that the same examples can also be used by micro undertakings, even though undertakings below 10 employees are in principle not expected to use the Comprehensive Module. They may look at the initial part of the list (less complex), while examples at the end of the list are better suited for medium undertakings.

The list of examples of practices, policies, and future initiatives provided in this supporting guide (Section 1) have been arranged in order gradual increasing complexity.

ESG Topics — Subcategory Tables

Pick a topic from the dropdown. Each table displays subcategory columns and the example items you provided (or similar examples) organized by lettered rows.

Section 1: Examples of practices, policies, and future initiatives

Note: The content of some of the examples can also be part of a Supplier Code of Conduct (Business Conduct). A Supplier code of conduct may cover Environmental, Social, and Governance aspects within. See example i. in Business Conduct.

Section 1: Examples of practices, policies, and future initiatives

Select topic

Climate Change

Climate Change Mitigation: Energy Efficiency

Climate Change Mitigation: Low-Carbon Transport

Climate Change Mitigation: Renewable Energy

Climate Change Mitigation: Low-Carbon Products Or Processes

Climate Change Adaptation/Resiliency: Stormwater And Floods

Climate Change Adaptation/Resiliency: Heat Stress Mitigation

Climate Change Adaptation/Resiliency: General Actions

Inform employees on daily energy-saving habits and use of installed energy-efficient equipment

Conducting an energy audit and implementing key recommendations

Replacing conventional lighting with LED systems (which are supported by an official energy label or other reliable standard) and installing motion or daylight sensors in appropriate areas

Replace older electronic appliances with more energy-efficient appliances such as printers, computers, monitors and servers, compressors, pumps, kitchen appliances

Installing smart energy meters, monitoring dashboards, and battery storage to enable efficient energy use

Upgrading building insulation and windows, or applying reflective coatings to improve thermal efficiency

Optimising or retrofitting energy-intensive equipment (e.g. compressors, HVAC, ovens) to reduce peak energy use

Installing heat recovery systems to capture and reuse waste heat from production or building processes

Enhance employee awareness of the company's GHG emissions in order to ensure internal alignment on the prioritisation of actions to be implemented

Use energy-efficient server solutions or moving to cloud-based services hosted in data centres powered by renewable energy

Providing low-emission infrastructure or incentives for employee's daily commuting (e.g. e-bike storage, public transport passes, remote work options)

Replacing company vehicles and machinery (e.g. forklifts) with electric or low-emission alternatives and providing on-site EV charging

Implementing route optimisation for company fleets and logistics operations to reduce fuel consumption (e.g. reduce employee’s business air travel, switch from air freight to sea freight)

Switching to a renewable energy provider or signing a long-term green power purchase agreement (PPA) or a Guarantee of Origin (GO)

Installing on-site renewable energy sources, such as rooftop solar panels (PV) and energy storage systems or participating in a renewable energy cooperative

Using heat pumps or connecting to district heating systems to reduce reliance on fossil-fuel heating

Replacing high-GWP refrigerants with low-impact alternatives and installing electronic refrigerant leak detectors

Integrating low-emission materials or processes into production (e.g. water-based coatings, green chemistry, circular inputs)

Installing flood barriers or mobile gates and sealing basement walls in floodprone areas

Elevating critical equipment and retrofitting buildings with sump pumps and backflow valves

Training staff on heat stress risks and adaptation measures

Allowing flexible working hours, and monitoring workplace heat conditions

Installing shading structures and cool roofs to reduce indoor temperatures

Improving ventilation and thermal insulation to maintain indoor comfort during heatwaves

Preparing for wildfires, windstorms, or hurricanes by securing infrastructure and maintaining fire-resistant landscaping

Sourcing products from suppliers that are exposed to few climate risks or from those that have taken actions to reduce their exposure to climate related risks - thus increasing overall value chain resiliency and reducing supply chain disruption risks

Diversifying suppliers and logistics channels to reduce vulnerability to climate disruptions

Developing multi-risk emergency response plans and conducting employee training

Restoring ecosystems and greening operational sites to buffer climate-related risks (e.g. to act as nature-based infrastructure for stormwater and flood prevention)

Manage the financial consequences of physical climate risks when it materialise, consider purchasing climate risk insurance to protect assets from physical climate impacts

Pollution

Air pollution

Water pollution

Soil pollution

Monitoring and managing pollution

Polluting materials

Installing air quality sensors for indoor air quality monitoring

Using low-volatile Organic Compound/ Aerosol materials (inks, paints, solvents)

Implementing solvent management plans

Installing basic air filtration, purification or ventilation systems (e.g. in the painting area to reduce particulate emissions)

Installing oil-water separators or bioswales

Planning for the proper treatment of hazardous discharges (either through own efforts or in partnering with local wastewater treatment plants)

Neutralising basic or acidic wastewater before discharge

Using biological and/or chemical treatments to degrade pollutants

Avoiding chemical-heavy processes near local water bodies through containment or process relocation

Minimising the use of plant protection agents (e.g. pesticides, herbicides, fungicides)

Recovering unused chemicals for reuse in subsequent batches or leasing of chemicals

Preventing runoff with stormwater measures (e.g. permeable surfaces, retention tanks)

Soil remediation plans for polluted sites with a collection of strategies for decontaminating such sites

Considering risks related to pollution (e.g. incidents leading to emissions to soil, air, and/or water) when managing environmental risk

Regularly tracking emissions of pollutants (e.g. monitoring in real time through IoT sensors; recurring estimations; monitoring of nearby surface water quality to detect early signs of contamination; wastewater quality assessment)

Installing self-contained hydraulic units, spill containment kits, impermeable flooring, and/or barriers to prevent/ capture runoff/ accidental spills

Regularly checking and conducting maintenance (e.g. on equipment, vehicles) to prevent equipment failure, quickly detect leaks (e.g. on AC units, oil containers), and ensure an efficient use of fuel (e.g. vehicles)

Complementing staff on identification and safe handling of hazardous materials with instruction on specific substances used in operations

Using low-chemical cleaning method alternatives (e.g. steam cleaning, plant-based or non-toxic detergents, Eco-label products)

Implementing secure storage and disposal of hazardous substances (e.g. spill trays, sealed containers, dedicated storage rooms)

Biodiversity

Biodiversity management

Natural habitat protection

Soil Protection

Planting locally adapted native vegetation and pollinator-friendly species, and/or installing supports for the creation of different habitats for animals and insects

Encourage office landlords (e.g. through lease clauses) to adopt greener landscaping practice (e.g. creating no-mow areas, reducing mowing frequency, avoiding invasive and non-native species on company ground) to support enhanced habitats for pollinators

Creating green roofs, walls, or vegetated facades

Installing bioswales (e.g. grassed swales), rain gardens, or water retention ponds

Partnerships with local NGOs, communities, and scientific institutions to support on-site biodiversity conservation, restoration and monitoring (e.g. SMEs pooling resources into shared reforestation or habitat offset projects managed by NGOs, with local schools engaged in awareness and monitoring activities)

Provide sustainability training to staff, focusing on traceability, and species conservation, including marine conservation

Using sustainably certified materials (e.g. EU Organic label, or EU Ecolabel) and/or establishing relationships with suppliers that have biodiversity conscious practices or that adhere to biodiversity standards

Eliminating or minimising sourcing of products/ raw materials from biodiversity sensitive areas

Reintroducing greenery and unsealing of impermeable surfaces or unused company-owned land (e.g. converting old parking lots, rooftops, or unused corners into pocket forests or meadows or pollinator gardens, installing porous asphalt, and permeable interlocking concrete pavers

Establishing and/or maintaining buffer zones (e.g. hedgerows, setbacks, vegetated borders) near natural or protected areas

Minimise outdoor lighting and noise to reduce impact on wildlife

Avoiding or eliminating the use of harmful herbicides or pesticides, specifically near natural habitats (e.g. wetlands, meadows, pollinator habitats) to support the health of ecosystems

Preventing erosion using sediment control (e.g. geotextiles)

Adopting soil-friendly and regenerative site management practices to maintain soil health (avoid compactification, use natural filters etc.)

Circular Economy

Overarching actions

Circular economy

Resource efficiency

Waste management

Provide employees with clear rules on waste separation, circular practices, and material efficiency

Providing educational services or guides on ‘responsible consumption’ to consumers (e.g. how to extend product lifespan)

Train purchasing and design teams to integrate circular principles into their decisions

Collaborate with suppliers to improve the circularity of purchased materials and components

Invest in digital systems (e.g. QR-based system for tracking basic product information) to support reuse, repair, and recycling

Provide repair services, extended warranties or make products more repairable for customers

Promote reuse or low impact use strategies for products or components with clients and suppliers (e.g. shared containers)

Refurbish used products or components for extended life or resale

Repurpose waste materials or by-products for new uses (e.g. partnering with certified or licensed recyclers to recover solvents, oils, metals etc.)

Remanufacture parts or products using recovered components

Rethink business models for circularity (e.g. Product-as-a-Service instead of selling disposable end products), such as offering leasing or service contracts instead of product sales (e.g. providing modular furniture with maintenance/repair possibility to extend its lifecycle; providing subscription-based toner refills and reports showing kg of waste avoided as a service add-on), allowing recurring/new revenue streams and/or reduced material costs from new production

Sending waste streams that can no longer be reused or recycled to a facility for conversion to energy

Switching to additive manufacturing (e.g. 3D printing) to reduce scrap waste from production

Using packaging that is durable, recyclable, biodegradable, or contains recycled content, or participating in pallet pooling systems

Increase the share of recycled or bio-based materials in product manufacturing

Track material use and waste in production (e.g. through Life Cycle Assessment) to identify where reductions or savings are possible

Systematically reuse production scrap or secondary materials internally

Redesign products or processes to reduce production scrap or material input, or for easy product dismantling

Reduce material use at the workplace (e.g. eliminate the use of single-use paper, cups, plastic bottles)

Reduce food waste or compost organic waste on-site

Ensure proper waste separation in office and production areas, with clearly marked bins (e.g. for e-waste), minimising landfill and maximising reuse or recycling

Offer clients a takeback system (e.g. deposit-refund scheme) for used products or packaging (e.g. returnable packaging)

Own Workforce

Work-life balance

Health and safety

Collective bargaining

Freedom of association, the existence of work councils and the information, consultation and participation rights of workers and social dialogue

Gender equality, adequate wages

Measures against violence and harassment in the workplace; Diversity, gender equality; Non discrimination

Training and skills development

Provide flexible working hours while setting core hours (e.g. 10 am to 3 pm), notify shift schedules with an appropriate notice period, remote work options, and family-friendly policies to support employees in balancing work and personal responsibilities

Offer wellbeing benefits (e.g. health insurance, profit-sharing, right-to-disconnect, stress management, counselling, healthy food options, wellness initiatives)

Actions to improve workplace ergonomics

Workplace hazard identification and documentation

Emergency Preparedness Plans: e.g. evacuation routes, communication protocols, fire drills

Health & Safety Training including first aid and emergency responsiveness

Personal Protective Equipment (PPE), e.g. protective gloves, helmets, foot and eye protection, hearing devices, lift belts, respirators, full body suits, etc

Designate an employee or an external expert responsible for occupational health

Implement and monitor the existing collective bargaining agreement on working conditions

Regular consultations (e.g. periodic meetings) with workforce or representatives to discuss workplace policies, changes, and concerns

Conduct regular anonymous employee satisfaction and engagement surveys

Conduct a remuneration analysis to identify and analyse any possible reason for pay disparities, e.g. unequal access to opportunities for training and promotions, training on inclusive hiring and fair promotion

Develop and communicate a remuneration structure to establish clear and transparent pay scales and promotion criteria

Anonymous channels to report concerns and follow-up procedures

Train employees on measures against harassment and discrimination in the workplace, including gender stereotyping, ethnicity or minority groups, unconscious bias, neurodiversity, vulnerable workers like young workers and pregnant women, etc.

Promote parental leave and caregiving benefits to both men and women

Set-up non discriminatory gender neutral checklist in recruiting and job evaluations (performance reviews, promotion negotiations, etc.)

Provide leadership coaching, mentoring programmes, and training and development opportunities to foster employee growth

Workers in the Value Chain

Working conditions and Other work-related rights

Definition and implementation of a Supplier Code of Conduct that identifies the minimum standards that suppliers are to meet in terms of, (e.g.) safe working conditions and wages, collective bargaining, prevention of forced or child labour, and/or freedom of association. This could be cross-referenced to a wider Code of Conduct that includes these points and may be described under Business Conduct

Demonstrate a commitment to respecting the rights at work in the value chain, and the responsibility may be given to a senior person (e.g. conducting regular audits of suppliers including an evaluation of labour conditions and interviews with workers)

Establish an approach including collaborative actions with supply chain partners that focuses efforts on key areas in supply chain working conditions, e.g. the use of mobile platforms to collect anonymous feedback from factory workers on safety, wages, and treatment, the provision of safe transport for seasonal workers, the implementation of shaded rest areas, hydration stations, and adjusted work hours to protect workers from extreme heat

On-site visits of suppliers includes an evaluation of workforce conditions

Participate with or formally reference industry-wide initiatives that promote fair labour conditions and protect human rights across the value chain

Implementing digital alerts or setting up browser alerts for key terms (e.g. "[Industry] labour violations," "forced labour in [Supplier’s Country]") to begin mapping and collecting risk factors (e.g. geographies, sectors)

Check legal compliance of international suppliers in their home countries using publicly available records

Use existing business meetings (e.g. supplier reviews) to include human rights awareness discussions

Implementation of a supplier engagement program that includes training on Health and Safety best practices and training on human rights impacts tailored for suppliers’ procurement teams

Consumers and End-users

Information-related impacts for consumers and social inclusion of consumers

Personal safety of consumers and/or end-users

Responsible marketing

Making sure consumers and/or end-users are not discriminated against on the basis of ethnicity, gender, religion etc

Incorporating products or services are accessible for all (the use of braille labels, machine readable text for pictures, large print, or QR codes that link to audio instructions)

Assess whether your product or service has the potential to impose barriers to access for or use by disabled persons, elderly people or other groups for whom accessibility can be a problem. If yes, take action to remove those barriers, whether they are physical or of a different nature, e.g. excessively small fonts in written descriptions

Ensuring that consumers and/or end-users receive complete, understandable and accurate information about products or services, such as product labels, on-product descriptions, separate information brochures, online content etc.

Train relevant staff on customer handling practices to provide and respond to consumer product/ service-related information requests

Establish channels through which consumers and/or end-users can ask or complain questions and monitor them regularly. Use them for interaction with you consumers and/or end-users

Protecting the data of consumers and end-users (e.g. GDPR and privacy rights, responsible use of AI or algorithms, etc.)

Train customer-facing staff on assisting customers with accessibility problems

Make non-discrimination and accessibility awareness training mandatory for all relevant staff, i.e. not just customer-facing staff, but also, for example, product designers

Establish contact point for accessibility-related feedback and a formal tracking system for complaints related to discrimination and inaccessibility

Collaborate with organisations that represent the interests of disabled, elderly or others for whom accessibility can be a problem to improve the design of products or services

The undertaking applies continuous monitoring and best efforts to ensure that products or services are safe for consumers and/or end-users and do not harm their health in the longer term (e.g. through the use of standardised tests applicable to the sector and country, reduction or elimination of specific chemical inputs into the product or production process)

Making sure products or services are safe for children

Ensuring that marketing is not misleading or manipulative and does not target vulnerable groups, such as minors

Business Conduct

Corporate culture

Corruption and bribery

Conflicts of interest

Management of relationships with suppliers

Political influence

Ensuring that the undertaking’s mission and values as well as the undertaking’s principles regarding business conduct matters are understood by all relevant stakeholders. They can be conveyed implicitly through everyday practices, leadership behaviour, and internal communication. They can also be made explicit, through, for example a Code of Conduct, which stipulates the company's expectations regarding behaviour, on topics such as anti-discrimination and harassment, dress code, use of company resources, anti-bribery, etc.

If relevant for operations, considering establishing clear policies on anti-corruption, the management of supplier relationships, and political influence

Ensuring leadership upholds the company values in their decision-making, for example by regular mandatory training on business conduct topics

Reinforcing culture through activities (e.g. teambuilding events, employee surveys assessing their adherence to ethical procedures and identifying areas for improvement) and communication (e.g. internal presentations, posters, newsletters)

Establishing internal reporting channels (e.g. direct reporting to a manager or HR or anonymous options, such as a suggestion box, a dedicated email or third-party service). Clearly communicating the reporting process, ensuring employees feel safe and protected from retaliation, and that appropriate follow-up measures are taken

Reviewing cases of misconduct, identifying common patterns, and improving policies accordingly

Committing to strengthening the whistleblowing procedures over the next years, including by ensuring it is available in the languages relevant to the workforce

Providing training for employees, which can take the form of real-life scenario modules on ethical dilemmas (e.g. "how to recognise and address inappropriate gifts") and can be delivered via e-learning

Having a policy in place that prohibits employees from offering, making, seeking or accepting gifts, payments, entertainment, or services from current or potential business partners if reasonably assumed that they will influence business transactions and do not fall within the limits of corporate hospitality. This policy supports the broader aim of identifying and mitigating corruption risks, particularly in high-risk areas such as: - Hiring: favouring relatives or friends over more qualified candidates - Selection of suppliers: receiving bribes from (potential) suppliers in exchange for contracts - Customer contracts: offering gifts or payments to secure deals or unauthorized price reductions for personal gains - Licensing & regulatory compliance: paying bribes to obtain business licenses (e.g. environmental permit)

Setting appropriate actions that leadership/employees must take in situations where they are facing conflicting interests. Some examples of (potential) conflicts of interest are: - Family members and close personal relationships: Closing contracts with a company that is managed or owned by a family member or partner. Good practice: If working with a company linked to family or close relations, ensuring the decision is transparent, based on fair market conditions, and documented to avoid unfair advantage - Investments: Acquiring/owning a stake in a property or business in which the undertaking is interested to buy or invest. - Board membership: Acting as or accepting a position as an officer, consultant, or director of a company or organization that collaborates with the undertaking (such as a partner, supplier, or customer).

Establishing a Supplier Code of Conduct (SCoC) that covers E, S, G aspects such as green procurement, human rights for value chain workers, and anti-bribery

Making explicit what the undertaking expects from its suppliers. E.g. "the undertaking expects its suppliers to actively work on reducing packaging waste and CO2 emissions"

Having clear payment terms for your suppliers and communicate them accordingly. For example: "In compliance with national law, the undertaking pays invoices within 30 days, unless agreed otherwise in writing (not to exceed 60 days)

Considering a particular social or environmental dimension when selecting suppliers. This can also include checking whether suppliers have relevant third-party certification or labelling (e.g. EU organic label, Eco-label, etc.)

Working with suppliers to set shared sustainability targets

Ensuring that any lobbying or membership in business associations are in line with the company’s values and sustainability goals

Section 2: Case Studies

This section contains 5 case studies that are based on the list of examples of practices, polices, and future initiatives (from section 1).

The case studies cover different business sectors, each giving an example for small (12 employees) and medium (200 employees) undertaking. The case studies are given in the form of mock-up disclosure. The aim of these case studies is to show how undertakings could disclose C2-related information.

The sectors of the case studies below have been chosen according to the distribution of the main SME sectors in the EU (Eurostat’s Structural Business Statistics (2022)).

Case Study	Reference Sector	Sector share (%) of total SMEs
Case Study 1 - Food & beverage: Ready-made meals shop or chain	Wholesale & Retail Trade	18%
Case Study 2 - Manufacturing: Automotive parts producer	Manufacturing	7%
Case study 3 - Agriculture: Milk and dairy producer	Others	<9%
Case Study 4 - Construction: Housing construction company	Constructions	12%
Case Study 5 - E-commerce / Digital services: Online retailer	Wholesale & Retail Trade	18%