The VSME standard: Why it is gaining in importance
The omnibus initiative relaxes CSRD obligations - the VSME standard becomes an alternative. Find out how companies can use it now.
- The VSME standard offers smaller companies a practical, low-effort way to produce a meaningful sustainability report.
- Since the Omnibus package came into force on 18 March 2026, only companies with more than 1,000 employees AND more than €450m in turnover are required to report under the CSRD.
- Companies outside that scope can use the VSME standard to meet stakeholder expectations and build ESG readiness.
- The VSME is being broadened into the "VS (Voluntary Standard)", making it relevant beyond SMEs.
- Early adopters gain a competitive edge through stronger ESG positioning and better preparation for future requirements.
The Corporate Sustainability Reporting Directive (CSRD) poses major challenges for companies. Small and medium-sized enterprises (SMEs) in particular face high bureaucratic hurdles when fulfilling the new sustainability reporting requirements. The Omnibus package was designed to simplify CSRD implementation. With the revised rules now in force, many companies have been relieved of the mandatory reporting obligation. Yet sustainability reporting remains important for SMEs. The focus is therefore shifting to the VSME standard (Voluntary standard for non-listed micro-, small- and medium-sized enterprises), developed as a pragmatic alternative for smaller companies.
What is the VSME standard?
The VSME standard was developed specifically for smaller companies to bring sustainability reporting down to a practicable level. While the CSRD entails extensive reporting obligations and detailed disclosure requirements, the VSME standard is built 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 reporting points. A double materiality analysis is not required.
The VSME is being broadened into the "VS (Voluntary Standard)", expected through a delegated act later in 2026. The VS is based on the VSME (EFRAG December 2024) with small content adjustments. It will also cover non-SMEs with fewer than 1,000 employees or under €450m in turnover that fall outside the CSRD scope.
The Omnibus package and the new CSRD thresholds
The EU's Omnibus package came into force on 18 March 2026 in response to criticism that the original CSRD requirements placed an excessive burden on smaller companies. The package raises reporting thresholds sharply, reduces data point obligations and removes several requirements that added significant cost with limited benefit.
Reporting is now only mandatory for companies with:
- more than 1,000 employees, AND
- more than €450m net turnover.
Both criteria must be met. This single cumulative rule replaces the previous "2 of 3" approach. The change reduces the number of companies in scope by around 80%.
The most important changes at a glance:
- Only companies meeting both the 1,000-employee and €450m-turnover thresholds must report
- Reporting timelines extended by two years for Wave 2 and Wave 3 companies
- Mandatory data points reduced by over 60%; total data points by over 70%
- No "Reasonable Assurance". "Limited Assurance" remains
- EU taxonomy simplified: OpEx reporting only for turnover with at least 25% taxonomy eligibility
- CSDDD: due diligence obligations limited to direct business partners only
Germany's national CSRD transposition law is not yet adopted. Entry into force is expected during 2026 following a public hearing in April 2026. For reporting year 2025 there is no obligation to apply the new ESRS unless the law enters into force retroactively.
Why the VSME standard is now gaining in importance
The Omnibus package leaves many companies in an unclear position. If you no longer fall under the mandatory CSRD scope, you still face expectations from investors, customers and other stakeholders who want clear ESG data. That is where the VSME standard becomes valuable.
Companies outside the new CSRD thresholds can use the VSME standard to produce a sustainability report that matters to their stakeholders, with far less effort than a full ESRS report.
There are three concrete reasons to act now:
- Build an ESG strategy early and collect the data you will need when requirements tighten again
- Position your company as a responsible player and strengthen your reputation with customers and partners
- Meet value-chain reporting requests from larger CSRD-obligated companies, who may not demand more than the voluntary standard from partners with 1,000 employees or fewer
Companies that proactively choose voluntary sustainability reporting now are best placed for future requirements, whatever shape they take.
Practical implementation of the VSME standard
Implementing the VSME standard requires a structured approach so that reporting is efficient and meaningful without unnecessary effort. The following steps provide a practical guide.
Step 1: Understand the standard and assign responsibilities
Before starting, your company should get clear on the basics:
- 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?
Appoint a clearly designated person (for example a sustainability officer, someone in controlling, or management) to coordinate the process. If internal expertise is limited, a structured VSME workshop can provide the necessary knowledge and efficient tools.
Step 2: Carry out an inventory and data analysis
To determine what information the report requires, take stock first:
- What ESG data is already being collected (energy consumption, CO₂ emissions, social responsibility)?
- What gaps still exist?
- Where can missing data be obtained from (for example, suppliers or external consultants)?
This analysis creates a realistic plan for data collection and avoids last-minute surprises.
Step 3: Define your sustainability strategy and measures
The VSME standard goes beyond reporting and gives companies an opportunity to develop a grounded ESG strategy. Ask yourself:
- What sustainability goals do you want to pursue in the long term?
- What measures can improve your ESG performance?
- Are there existing initiatives that could be included in the report?
A clear strategy helps with reporting and with positioning your company positively in a competitive environment. Companies no longer in CSRD scope can redirect resources toward specific sustainability measures rather than pure compliance work.
Step 4: Create your report using the VSME template
To keep the reporting process as efficient as possible, use a ready-made VSME report template. A good template provides a structured report framework that you fill with your own data, along with step-by-step instructions to guide you through each section.
A Word-format template for a VSME sustainability report you can fill in yourself. Includes a step-by-step guide with tips for each section.
Conclusion
The VSME standard is a practical, resource-saving and transparent alternative to full CSRD reporting. It gives smaller companies a clear path to meet sustainability expectations, even in a period of considerable regulatory uncertainty.
Companies that engage with the VSME standard early position themselves as responsible players and stay prepared for whatever reporting requirements come next.
- Reduced reporting effort compared to full ESRS
- Meets stakeholder expectations for ESG transparency
- Builds data and strategy foundations for future requirements
- Strengthens competitive positioning
- Supports value-chain requirements from larger partners
Frequently asked questions about the VSME standard
Who does the VSME standard apply to?
The VSME standard is designed for non-listed micro, small and medium-sized enterprises that are not required to report under the CSRD. Under the Omnibus rules in force since 18 March 2026, that now also includes many non-SMEs with fewer than 1,000 employees or under €450m in turnover. The standard is being broadened into the "VS (Voluntary Standard)" to reflect this wider scope.
Is the VSME standard mandatory?
No. The VSME standard is voluntary. It provides a structured framework for companies that want to produce a sustainability report without being legally required to do so. However, larger CSRD-obligated companies in your supply chain may ask you to report according to the standard. They are not permitted to demand more than this from value-chain partners with 1,000 employees or fewer.
Does the VSME standard require a double materiality analysis?
No. Unlike the full ESRS under the CSRD, the VSME standard does not require a double materiality analysis. This is one of the key reasons it is significantly less burdensome than mandatory CSRD reporting.
How does the VSME template help with implementation?
A ready-made VSME sustainability report template gives you a structured Word document pre-formatted to the standard, with step-by-step guidance for each section. You fill in your own data rather than building the structure from scratch, which saves considerable time and reduces the risk of missing required disclosures.
