The Corporate Sustainability Reporting Directive (CSRD) poses major challenges for companies. Small and medium-sized enterprises (SMEs) in particular are faced with high bureaucratic hurdles when it comes to fulfilling the new sustainability reporting requirements. The Omnibus Initiative was launched to simplify the implementation of the CSRD. With the latest proposal to streamline the CSRD, many companies are likely to be relieved of the reporting obligation. However, as sustainability reporting is still important for SMEs too, the focus is now shifting to the VSME standard (Voluntary standard for non-listed micro-, small- and medium-sized enterprises), which was developed as a pragmatic alternative for smaller companies.
What is the VSME standard?
The VSME standard was developed specifically for smaller companies in order to reduce the sustainability reporting requirements to a practicable level. While the CSRD entails extensive reporting obligations and detailed disclosure requirements, the VSME standard is based on a simplified yet meaningful reporting structure.
In December 2024, the standard was updated and simplified once again. Compared to the comprehensive requirements of the European Sustainability Reporting Standards (ESRS), which include over 1,000 data points, the VSME standard significantly reduces the administrative workload. It contains only two modules with 20 overreporting points. A double materiality analysis is not necessary.
The Omnibus Initiative - driver of CSRD streamlining
The EU’s omnibus initiative is a response to criticism that the original CSRD requirements place an excessive burden on smaller companies in particular. The aim of this initiative is to remove bureaucratic hurdles, reduce the reporting burden and create realistic requirements for SMEs. A proposal has now been submitted by the Commission, although it has not yet been finalized.
The most important changes to the proposal at a glance:
- Numerous companies exempt from CSRD reporting requirements: Only companies with over 1,000 employees are required to report according to the proposal. This would reduce the number of companies that have to publish a sustainability report by 80%.
- Later reporting obligations: Companies do not have to report for the 2027 financial year until 2028.
- Fewer reporting obligations: 25% fewer data points, no sector-specific standards, limitation of supply chain reporting obligations.
- No stricter review: The planned “Reasonable Assurance” is no longer applicable, “Limited Assurance” remains.
- EU taxonomy simplified: OpEx reporting obligation only for ≥ 25% taxonomy-eligible turnover, materiality threshold, voluntary reporting possible.
- CSDDD relaxations: Due diligence obligations only for direct business partners, no EU-wide liability, inspections only every 5 years.
The EU Commission's omnibus amendments are proposals. These proposals must be consulted on and first adopted by the EU Parliament and the European Council and converted into a directive. The ESRS must then be adapted by means of a delegated act and transposed into the national law of the EU member states.
Why the VSME standard is now gaining in importance
The Omnibus Initiative presents many companies with an unclear future. The CSRD has not yet been transposed into German law, and with the initiative, this implementation is likely to take even longer. If the proposals are adopted, the majority of companies will no longer be required to report. At the same time, investors, customers and other stakeholders continue to expect clear ESG data. This makes the VSME standard interesting for many companies. Companies that are not directly affected by the new CSRD requirements can use the VSME standard to create a sustainability report that is of great interest to their stakeholders, such as investors, customers and suppliers, with reduced effort.
The VSME standard also enables companies to develop an ESG strategy at an early stage and collect the necessary data in order to be well prepared for future reporting requirements, even if the legal situation is still unclear at present.
The VSME standard is not only a response to current requirements, but also a proactive measure to ensure competitiveness. Companies that improve their ESG transparency at an early stage position themselves as responsible players and can benefit from a positive reputation in the industry. The standard could therefore become the go-to sustainability standard alongside the comprehensive CSRD.
Companies that proactively opt for voluntary sustainability reporting now can position themselves as best as possible for the future despite the uncertain legal situation.
Practical implementation of the VSME standard for companies
The implementation of the VSME standard requires a structured approach to ensure that companies can produce a meaningful sustainability report efficiently and without unnecessary effort. Below is a step-by-step guide to implementing the VSME standard:
1. clarify understanding of the VSME standard and internal responsibilities
Before a company starts reporting, it should familiarize itself with the requirements of the VSME standard:
- Which topics and key figures need to be recorded?
- Which internal departments are responsible for data collection?
- Is there already existing ESG data that can be used?
A clearly designated person (e.g. sustainability officer, controlling or management) should be appointed to coordinate the process. If your company lacks expertise in this area, you can take advantage of our practice-oriented VSME workshop, which provides the necessary know-how and efficient tools for successful reporting. There will also be a free webinar on March 25 on the topic of understanding and applying the VSME standard.
2. perform inventory and data analysis
In order to determine what information is required for the report, an inventory should be made:
- What ESG data is already being collected (e.g. energy consumption, CO₂ emissions, social responsibility)?
- What gaps still exist?
- Where can missing data be obtained from (e.g. suppliers, external consultants)?
This analysis helps to create a realistic plan for data collection.
3. define sustainability strategy and measures
The VSME standard goes beyond mere reporting and offers companies the opportunity to develop a well-founded ESG strategy. Companies should ask themselves:
- What sustainability goals do we want to pursue in the long term?
- What measures can we take to improve our ESG performance?
- Are there any existing initiatives that could be included in the report?
A clear strategy not only helps with reporting, but also with positioning yourself positively in a competitive environment. Especially now that many companies are no longer expected to be affected by the CSRD, resources can be used to focus on specific sustainability measures.
4. report creation with the VSME template
To simplify the reporting process, companies can use the VSME template template. This offers the following advantages:
✅ Structured report template that only needs to be filled in with your own data
✅ Step-by-step instructions for filling in
The template enables companies to create a complete sustainability report efficiently and without extensive external consulting.
Conclusion
The VSME standard represents a practical, resource-saving and yet transparent alternative to extensive CSRD reporting. It offers a way for smaller companies in particular to meet sustainability requirements, even if there is a lot of uncertainty at the moment due to the Omnibus Initiative.
With our VSME template, companies have the opportunity to apply the standard directly and create a structured sustainability report. Companies that address the VSME standard at an early stage can position themselves as responsible players in the sustainable economy and are also prepared for future reporting guidelines.
