The Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) has be-come the European Union's main voluntary sustainability reporting framework for un-dertakings outside of the Corporate Sustainability Reporting Directive (CSRD) scope. While the standard was designed to be applicable across all sectors, little research has examined its suitability for financial institutions. This study explores the extent to which the VSME provides a suitable sustainability reporting framework for small German sav-ings and cooperative banks. A qualitative research design combining a structured docu-mentary analysis of the VSME combined with three expert interviews is used to evaluate the standard against the criteria of sectoral relevance, reporting feasibility, and stake-holder utility. The findings indicate that the VSME provides a generally suitable and proportionate framework for small German banks, particularly regarding reporting bur-den and practical implementation. However, its cross-sectoral design only partially re-flects the distinctive sustainability profile of financial intermediaries, whose most signif-icant impacts arise through financing activities rather than their own operations. As a result, the standard presents a trade-off between simplicity and sector-specific relevance. The study concludes that the VSME represents a useful foundation for voluntary sus-tainability reporting by small German banks, while highlighting the importance of sector-specific guidance to improve the meaningfulness of disclosures.