Voluntary Sustainability Reporting (VSME) as a Premise for Accessing European Funds and Developing Sustainable Investment Strategies in SMEs

Abstract

The transition towards a sustainable economy requires to small and medium-sized companies (SMEs) to adopt transparent practices aligned with environmental, social and governance (ESG) principles. The Voluntary Sustainability Reporting Standards (VSME) for SMEs, introduced by the European Financial Reporting Advisory Group (EFRAG) offers a simplified framework for non-listed SMEs to disclose sustainability-related information without the complexity of mandatory standards, often associated with large corporations. VSME enable businesses to demonstrate their commitment to sustainability, improve stakeholders trust and gain competitive advantages in markets increasingly driven by ESG criteria. This research examines the role of VSME for SMEs, how this reporting influences eligibility and success rate in securing European funds, and also, analyses the strategies that SMEs implement in order to align with sustainability objectives. The proposed research aims to answer the following questions: To what extend does VSME adoption improve access to EU funds and drive strategic investments that enhance economic sustainability for SMEs? Using a mixed-method approach, the study combines qualitative interviews (Menti-quiz) with SME managers and quantitative analysis of funding success rates among forms that adopt VSME versus those are not. Expected outcomes include identifying best practices for integrating voluntary reporting with funding applications and developing a strategic framework for SMEs seeking to leverage sustainability as a growth driver. This research contributes to the academic discourse on sustainable finance and corporate reporting by highlighting the role of voluntary standards in bridging regulatory gaps and promoting resilience in the SME sector. Ultimately, the findings will inform policymakers, financial institutions and business leaders on how voluntary sustainability reporting cand transform compliance into a competitive advantage. UDC: [334.012.63/.64:005.35](478):339.96; JEL: Q01, M14, G30