VSME for Tourism & Hospitality

What is VSME?

The Voluntary Sustainability Reporting Standard for SMEs, commonly known as VSME, is a framework developed by the European Financial Reporting Advisory Group (EFRAG) to help small and medium-sized enterprises report on their environmental, social, and governance (ESG) performance. Unlike the mandatory Corporate Sustainability Reporting Directive (CSRD), which targets large companies, the VSME provides a proportionate and accessible reporting structure designed specifically for the scale and capacity of smaller businesses. It was published in January 2024 and offers SMEs a credible, standardised way to communicate their sustainability efforts to clients, investors, and supply chain partners.

VSME and the Tourism and Hospitality Industry

The tourism and hospitality sector is one of Europe's most fragmented industries, dominated by independent hotels, family-run restaurants, tour operators, travel agencies, and accommodation providers — the vast majority of which qualify as SMEs. This makes the VSME particularly relevant for the sector as sustainability pressures mount from multiple directions simultaneously.

Large hotel chains, booking platforms, and corporate travel buyers are increasingly requiring their suppliers and partners to demonstrate measurable ESG credentials. A boutique hotel in Barcelona or a regional tour operator in the Alps may not fall under the CSRD directly, but if it supplies services to a large company that does, it will face indirect pressure to provide sustainability data in a structured format. The VSME is designed precisely to meet this demand without overwhelming small businesses with the complexity of full ESRS compliance.

Beyond supply chain pressure, consumers are making booking decisions based on environmental and social factors. A guesthouse that can demonstrate reduced carbon emissions, fair employment practices, and responsible water consumption has a concrete competitive advantage. The VSME gives such businesses a standardised narrative to communicate these credentials, whether on a website, to a tour aggregator, or to a sustainability-focused corporate client booking a conference.

The hospitality sector also faces specific environmental exposures — coastal resorts threatened by climate change, mountain destinations dependent on snowfall, heritage sites affected by overtourism — that make ESG reporting not just a compliance exercise but a genuine strategic tool.

Key Requirements

The VSME standard is structured around two modules: a basic module (Module B) covering fundamental disclosures, and a comprehensive module (Module C) for businesses that want or need to go further. For most tourism and hospitality SMEs, the following requirements represent the practical core of the standard:

• Energy consumption and efficiency: Companies must report total energy consumed, broken down by source, including electricity, natural gas, heating fuels, and any renewable energy used on-site. A hotel, for example, would report kilowatt-hours consumed per year and the share sourced from renewables such as rooftop solar panels or green energy tariffs.
• Greenhouse gas emissions: Scope 1 emissions (direct combustion, such as a hotel's boiler) and Scope 2 emissions (purchased electricity) must be disclosed. The VSME does not mandate full Scope 3 reporting for SMEs, though companies may include it voluntarily, which is useful for tour operators whose main footprint lies in flights and transport.
• Water consumption: Total water withdrawal and any water recycling or efficiency measures must be reported. This is especially relevant for spa hotels, golf resorts, and large catering operations that consume water intensively.
• Waste generation and management: The amount of waste generated and how it is handled — recycled, composted, sent to landfill — must be disclosed. Restaurants and event catering businesses face particular scrutiny here given food waste volumes.
• Workforce disclosures: Basic information about the workforce, including the number of employees, breakdown by gender, and use of temporary or seasonal contracts. Hospitality businesses with high seasonal staffing levels should pay close attention to this requirement.
• Health and safety: The number of work-related accidents and the existence of a health and safety management system must be reported. Given the physical nature of hospitality work — kitchen hazards, manual handling in housekeeping, lone working in reception — this is a material topic.
• Business conduct: A statement on policies related to anti-corruption, anti-bribery, and ethical business practices is required, even if only a brief policy confirmation exists.
• Supply chain sustainability: At the comprehensive module level, businesses must describe how they consider sustainability factors in selecting suppliers, relevant for hotels sourcing food, linens, or cleaning products.

Implementation Steps for Tourism and Hospitality Companies

1. Assess your current data collection capabilities. Before producing any report, understand what data you already have. Review your utility invoices to establish energy and water consumption baselines. Check your payroll records for workforce data. Identify gaps — for example, if you do not currently separate waste streams, you will need to introduce a system before you can report meaningfully.
2. Decide whether to start with Module B or Module C. Most SMEs in tourism and hospitality should begin with the basic module. It requires fewer data points and is achievable within a single reporting cycle. Companies with significant corporate clients or those seeking sustainability certifications may wish to complete Module C from the outset.
3. Assign internal responsibility. Designate one person — whether an operations manager, finance lead, or general manager in a smaller property — to own the VSME reporting process. Sustainability data collection is not a one-person task in practice, but having a single accountable owner prevents the work from falling through the cracks across departments.
4. Set up data collection systems. Install smart meters or at minimum consistent manual logging for electricity, gas, and water. Introduce waste separation at the point of generation. Create a simple incident log for health and safety events. These systems do not need to be expensive — a shared spreadsheet updated monthly is a valid starting point.
5. Measure your Scope 1 and Scope 2 emissions. Use your energy data alongside standard emission factors published by national environmental agencies or the IPCC. Many free online calculators exist specifically for hospitality businesses. A mid-sized hotel can typically complete this calculation in a few hours once the energy data is organised.
6. Draft your VSME disclosure. Work through each required data point systematically, using the EFRAG VSME template as a guide. Write qualitative descriptions alongside quantitative data — for example, not just the number of seasonal contracts but a sentence explaining your seasonal hiring model and any permanent employment commitments.
7. Obtain independent assurance if required. The VSME does not mandate external assurance, but large corporate clients may request it. A local accounting or sustainability consulting firm can provide limited assurance on your disclosure, increasing its credibility without the cost of a full audit.
8. Publish and communicate your report. Make your VSME disclosure accessible — on your website, in your booking documentation, or as an attachment to supplier questionnaires from large clients. A disclosure that sits in a drawer does not deliver competitive value.

Frequently Asked Questions

Is the VSME mandatory for hotels and travel companies?

No. The VSME is a voluntary standard, as its name indicates. However, tourism and hospitality businesses may face indirect pressure to adopt it from large corporate clients subject to the CSRD, from banks requiring ESG information for green financing products, or from booking platforms introducing sustainability filters. Voluntary in regulation does not mean voluntary in practice for businesses operating in these supply chains.

How much does it cost to implement the VSME for a small hotel or restaurant?

For most small hospitality businesses, the primary cost is staff time rather than external expenditure. Installing basic metering and organising data collection typically requires between twenty and fifty hours of staff time in the first year. Subsequent years are significantly faster once systems are in place. External support from a sustainability consultant can range from a few hundred euros for a review of a completed draft to a few thousand for full guided implementation, depending on the scope and size of the business.

Can the VSME help a hospitality business access green financing?

Yes, increasingly so. European banks and development finance institutions offering green loans, sustainability-linked credit facilities, or EU taxonomy-aligned financing are requiring SME borrowers to demonstrate ESG performance. A completed VSME disclosure provides a standardised, EFRAG-endorsed document that satisfies most basic ESG due diligence requirements for these products. For a hotel seeking financing for solar installation, heat pump replacement, or energy-efficient refurbishment, having a VSME report in place can materially strengthen the application.

Does the VSME cover the emissions from guests travelling to a property?

Guest travel emissions fall within Scope 3, which is optional rather than required under the VSME's basic module. However, tour operators and destination management companies for whom transportation is a core service may find it useful to include this data voluntarily in the comprehensive module, particularly when marketing to climate-conscious corporate or leisure clients. The VSME framework accommodates this disclosure without requiring it.

Summary

The VSME offers tourism and hospitality SMEs a practical, proportionate route into sustainability reporting that matches both the capacity of smaller businesses and the growing expectations of clients, financiers, and regulators across the European market. Implementing the standard builds the internal data infrastructure that underpins better operational decisions — lower energy bills, reduced waste costs, stronger workforce retention — while simultaneously producing the external credentials that win contracts and unlock green financing. Companies in the sector that begin their VSME journey now will be better positioned as sustainability disclosure moves from a differentiator to a baseline expectation across the industry.