The ABC of sustainability: basic terms and relevance for SMEs

What does sustainability mean for a Swiss SME?

Many Swiss SMEs are not directly subject to sustainability reporting requirements, but are increasingly feeling the expectations of banks, customers and tenders. Much of it seems like EU bureaucracy, yet it is clear: it is no longer possible to ignore the topic entirely.
This ABC of sustainability offers a clear overview and shows how SMEs can find a meaningful starting point with manageable effort, one that can be implemented with existing capacities.

In recent years, sustainability has become a term that appears everywhere: in political debates, in annual reports, in conversations with banks and insurers, and increasingly also in tenders and supplier evaluations. For large companies, the topic may by now be part of routine, but for many small and medium-sized enterprises it still feels like a complex, sometimes almost impenetrable field. Between global goal frameworks, new legal conditions and a multitude of abbreviations, the impression quickly arises that one would have to become an expert in climate policy, human rights, energy efficiency and reporting all at once.

Yet sustainability is not complicated at its core. This article presents the most important building blocks of the modern sustainability landscape, explains why they matter for SMEs, and shows how a company with limited resources can find its way to structured, step-by-step sustainability management. 

1. How it all began: from the environmental movement to sustainable development

Today's discussion of sustainability does not originate in spreadsheets of greenhouse gas emissions, but in the fundamental social insight that economic growth and the resilience of our planet cannot be viewed separately. A decisive impetus came from the report "Our Common Future", published by the Brundtland Commission in 1987 on behalf of the United Nations.

It contains the definition of sustainable development that still applies today:

"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs."¹⁾

These words are remarkable because they define sustainability not as an ecological problem, but as a question of justice between generations. They combine ecology, economy and social responsibility into a triad that later became popular as "Triple Bottom Line": people, planet, profit (also known as the 3 Ps: People, Planet, Profit.) In the 1990s, companies began to adopt this view. Sustainability was increasingly seen not only as a moral responsibility, but as a strategic necessity: as part of risk management, reputation, innovation capacity and long-term competitiveness. Today, sustainability is one of the most defining forces of transformation in the economy, and it reaches (through regulation, customer requirements and financial market logic) also those companies that for a long time did not see themselves as part of the debate.

2. The basic concepts: CSR, corporate sustainability and the logic of responsibility

Before there were concrete rules or reporting standards, a number of basic concepts emerged that still shape thinking about corporate responsibility today.

Corporate Social Responsibility (CSR) was one of the first. It rests on the idea that companies take responsibility for their actions, regardless of whether a law requires them to. For a long time, CSR was the moral compass of the economy: a promise to measure one's decisions not only by business efficiency, but also by their social impact.

From this developed corporate sustainability, a broader management concept that integrates sustainability into strategic planning, operational processes and internal control. Unlike CSR, which was often implemented in a project-based and selective way, sustainable corporate management sees sustainability as part of value creation: something that is planned, steered and controlled just like quality or finance.²

Closely linked to this is sustainability management. It describes the concrete implementation: setting goals, developing measures, measuring progress, defining responsibilities.³ Many SMEs have long practised sustainability management informally. They work with regional suppliers, invest in the development and long-term retention of their employees, or modernise production processes. They just don't call it that.

3. Global goals: the SDGs as a guide

In 2015, the United Nations adopted the 2030 Agenda with its 17 Sustainable Development Goals (SDGs).⁴ They cover topics such as climate protection, health, education, innovation, human rights and biodiversity. The strength of the SDGs lies not in their legal bindingness (they are not laws), but in their role as a global guiding framework.

For companies (and especially for SMEs), they help to understand the bigger picture. The SDGs show in which areas social transformation is taking place and which expectations will be placed on companies in the long term. They create a shared language that is understood in reports, tenders and sustainability strategies worldwide. Many companies today use the SDGs as a "map" to identify their own positive and negative impacts.

4. ESG: the shared language of business and finance

While the SDGs provide orientation, ESG provides structure.

ESG stands for Environmental, Social and Governance (in short: environment, social and corporate governance). What was initially a tool of the financial sector is today a globally used framework for sustainability assessment. Banks, investors, insurers, rating agencies and large companies use it to assess risks, opportunities and responsibilities.

The importance for SMEs has grown enormously. Many are receiving ESG questionnaires for the first time, because their customers are themselves subject to reporting. Banks increasingly take sustainability risks into account in lending decisions. Insurers ask about climate risks or occupational safety.

ESG is therefore less a legal requirement than a shared language that defines how sustainability information is structured, compared and assessed.

5. Reporting standards: GRI, CDP, TCFD & Co.: voluntary, but setting the direction

If ESG provides the structure, reporting standards answer the question of how concretely to report. These standards are often voluntary, but in many sectors they are regarded as a quality benchmark.

The best known is GRI (Global Reporting Initiative).⁵ GRI describes in detail which topics a company should report on if it wants to make the material impacts of its business transparent (from water consumption through supply chains to occupational safety).

Also important is CDP (Carbon Disclosure Project), the global platform for disclosing climate data. Large companies are increasingly asking their suppliers to take part.

The TCFD recommendations (Task Force on Climate-related Financial Disclosures), published by the Financial Stability Board (FSB), in turn redefined reporting on climate risks. In several countries they are already mandatory.

Finally, the IFRS Foundation (International Financial Reporting Standards) created two new global standards, IFRS S1 and  IFRS S2 , which are strongly oriented towards the information needs of investors.

For SMEs: nobody demands that all of these standards be followed at the same time. However, they set a framework for quality and transparency, which customers and banks increasingly use as a reference point.

6. Legal developments: from transparency obligations to supply chain laws

Alongside voluntary standards, some states have created binding rules that increasingly affect SMEs, directly or indirectly.

The EU is driving this development forward with the new EU directive Corporate Sustainability Reporting Directive (CSRD) and its associated, detailed reporting standards ESRS (European Sustainability Reporting Standards) .⁶ From 2025, many large companies have to disclose very detailed sustainability information. Switzerland has created its own requirements, oriented towards the TCFD, with OR 964a ff. and climate reporting.⁷

For SMEs, these rules are usually not directly binding, but they take effect through the supply chain. Large companies have to disclose their own ESG data, and with it the data of their suppliers.

This becomes even clearer with due diligence obligations: the German Supply Chain Due Diligence Act (LkSG), the emerging EU framework CSDDD (Corporate Sustainability Due Diligence Directive) as well as the Swiss due diligence obligations on conflict minerals and child labour⁸ under OR 964j require companies to identify and address risks in the supply chain.

Added to this are climate policy instruments such as the EU CBAM (Carbon Border Adjustment Mechanism), which applies a cost surcharge to CO₂-intensive imports. For export-oriented or industry-related SMEs, this is becoming increasingly relevant.

7. Why the VSME standard matters so much for SMEs

The voluntary reporting standard VSME (short for Voluntary Sustainability Reporting Standard for Non-Listed SMEs) was developed by the European Financial Reporting Advisory Group (EFRAG) with a clear aim: to give SMEs a feasible path into sustainability reporting that neither overwhelms them nor ignores the needs of smaller companies. ⁹

The background is simple but crucial. With the new EU directive CSRD and the associated ESRS standards, sustainability reporting for large companies has become more detailed than ever before. The logic is well thought out, but the scope is enormous. What is appropriate for an internationally active group is simply not feasible for an SME, neither financially nor organisationally.

And yet SMEs feel this development directly. Under the CSRD, large companies must disclose the impacts of their own business activities and those of their supply chain. Banks must assess climate-related risks and collect ESG data for this. Insurers are expanding their risk models. This increases the pressure on smaller companies to provide information that was actually intended for the reporting of much larger organisations, large reporting obligations.

This is exactly where the VSME comes in. It was created because it was recognised that:

• SMEs need their own reporting format, designed in proportion to the effort involved,
• ESRS and CSRD would be far too extensive for SMEs,
• stakeholders still need comparable information,
• and a European-compatible standard that convinces both banks and customers is missing.

The VSME is therefore not a light ESRS, but an independent SME standard that reduces the logic of large frameworks to the essentials. It focuses on those sustainability topics that SMEs can realistically capture and that are at the same time relevant.

The result is a clearly structured standard that distinguishes two modules according to complexity and maturity: a Basic module, which covers the minimum information that internal and external stakeholders can expect, and a Comprehensive module, which SMEs with greater maturity or more complex requirements can use. Both are strongly aligned with common frameworks such as the ESRS. 

For SMEs (especially in Switzerland), the VSME is therefore a decisive step in the right direction. Game changer. It creates:

• Clarity: Which topics really matter?
• Feasibility: What can we achieve with our resources?
• Compatibility: How do we deliver information that banks, customers and auditors understand?
• Proportionality: How do we avoid over-regulation and unnecessary effort?
• Future-proofing: How do we make sure we keep pace when requirements rise?

The VSME thus solves a problem that has long preoccupied many SMEs: the gap between the oversized requirements of large standards and the wish to report professionally, credibly and in a structured way all the same.

For Swiss SMEs there is one further aspect: Switzerland is not part of the EU, but its companies are deeply integrated into European value chains. They therefore feel ESG requirements earlier and more directly than many assume. The VSME enables them to respond to these requirements independently and on their own terms , without the effort of the CSRD and without the impression of having to adopt a European regulatory corset.

In short:
The VSME brings order where many SMEs have so far felt uncertainty.
It creates a shared language, reduces complexity and makes sustainability reporting realistic, feasible and value-creating for smaller companies for the first time.

Banks, auditors and large companies are increasingly beginning to accept VSME reports as a reliable basis.¹⁰ For SMEs, this creates a format that is understandable, structured and future-proof.

8. A simple sustainability cycle for SMEs

Sustainability is not a project that is completed at a fixed point in time. It is a cycle of learning, structuring, implementing and improving. Based on the structure of the VSME standard, SMEs can use the following five-step approach:

1. Understand
At the start comes orientation: which topics really affect our business model? What expectations do customers, banks or insurers have? This understanding ensures that measures are targeted.

This approach helps to align sustainability activities with one's own needs and possibilities, and creates continuous, learning-oriented development.

9. Where ZEROvia comes in

ZEROvia builds on exactly this logic: a lean entry, clear structure, smart data preparation and a report that respects both SME pragmatism and external requirements. The baseline assessment offers the first orientation for this, before the actual data capture and report creation begin.

The aim is simple: to make sustainability feasible for SMEs, without complexity, but with real impact.

The first step is simple

Start your baseline assessment

Get a first baseline assessment in a few minutes, free of charge and without obligation.

For questions, help or a guided introduction:

Arrange an appointment  or  Get in touch

Footnotes / Sources

[1] World Commission on Environment and Development (1987). Our Common Future. Oxford University Press.
https://sustainabledevelopment.un.org/content/documents/5987our-common-future.pdf

[2] Wikipedia (n.d.). "Nachhaltige Unternehmensführung". https://de.wikipedia.org/wiki/Nachhaltige_Unternehmensf%C3%BChrung

[3] Wikipedia (n.d.). "Nachhaltigkeitsmanagement". https://de.wikipedia.org/wiki/Nachhaltigkeitsmanagement

[4] United Nations (2015). Transforming our world: the 2030 Agenda for Sustainable Development.
https://sdgs.un.org/2030agenda

[5] Global Reporting Initiative (2023). GRI Standards. https://www.globalreporting.org/standards

[6] European Commission (2023). Corporate Sustainability Reporting. https://commission.europa.eu

[7] Swiss Code of Obligations (OR), Art. 964a–964c; Swiss Climate Ordinance (2023). https://www.fedlex.admin.ch

[8] Federal Office of Justice (2023). Due diligence and transparency obligations (OR 964j–l). https://www.bj.admin.ch

[9] EFRAG (2024). Voluntary Sustainability Reporting Standard for SMEs (VSME). https://www.efrag.org

[10] European Commission (2024). FAQ on CSRD & SME reporting. https://commission.europa.eu