what is our impact on the environment or local community

Environmental impact has no fixed question in VSME

There is no separate data point "impact on the local community" in the basic module of EFRAG VSME. What your customer means usually breaks down into separate components that are already elsewhere in the file: nuisance (noise, emissions, traffic), land and water use, and the relationship with residents or local stakeholders. Within the basic module itself, this topic is not standard to the mandatory data points; it appears mainly in customer formats that go beyond VSME, or in the extended module.

If you recognize this question in a list, the practical approach is: break it down. If the customer asks about nuisance to the neighbourhood, link it to what you already have on environmental incidents or permits. If they ask about social impact more broadly, it often touches the same themes as human rights policy in the supply chain or the existence of a permanent reporting channel for misconduct — because a complaints mechanism for the chain is also used in practice by residents or local parties. If you have recorded nothing specific about local community, then "no" or "no policy" is a valid answer — better than a yes without underlying documentation.

Why this is missing from the basic module

The basic module of VSME is structured with a limited, fixed set of data points for micro and small enterprises, focused on the most requested environmental, social and governance indicators. A separate data point on "local community" does not belong there; this concept does recur in the broader CSRD reporting obligations from Directive (EU) 2022/2464, which apply to larger enterprises and where the double materiality analysis determines which social topics, including environment and community, must be reported. For an SME supplier that receives a questionnaire from a larger customer, this is often the source of the question: the customer translates their own CSRD reporting obligation to their suppliers, even if the supplier itself is not subject to that directive.