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.
- The Omnibus Directive has been in force since 18 March 2026: from financial year 2027, 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 has become the "VS (Voluntary Standard)", in force since 24 September 2026 as Delegated Regulation (EU) 2026/1560 and open to all companies not subject to CSRD reporting.
- Early adopters gain a competitive edge through stronger ESG positioning and better preparation for future requirements.
The voluntary reporting standard VSME was adopted by the EU Commission on 3 July 2026 as the VS (Voluntary Standard). It has been in force as Delegated Regulation (EU) 2026/1560 since 24 September 2026, is open to all companies not subject to mandatory CSRD reporting, and builds on the VSME in terms of content. This article still uses the former name VSME. Read what has changed in Final ESRS and VS Standard 2026.
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 in force (thresholds applying from financial year 2027), 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 original 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 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 (from financial year 2027), reduces data point obligations and removes several requirements that added significant cost with limited benefit.
From financial year 2027, reporting is 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 and significantly reduces the number of companies in scope.
The most important changes at a glance:
- Only companies meeting both the 1,000-employee and €450m-turnover thresholds must report
- Wave 2 companies above the new thresholds report for the first time for financial year 2027; listed SMEs (Wave 3) drop out of scope
- Revised ESRS (Delegated Regulation (EU) 2026/1563, mandatory from financial year 2027): mandatory data points reduced by over 60%; total data points by over 70%
- No "Reasonable Assurance". "Limited Assurance" remains
- EU taxonomy simplified (Delegated Regulation (EU) 2026/73): reporting follows the new CSRD scope, 10% materiality threshold, much leaner templates
- CSDDD: only companies with more than 5,000 employees and more than €1.5bn turnover, applying from 26 July 2029; no climate transition plan obligation, no EU-wide civil liability, fines capped at 3% of turnover
Germany's national CSRD transposition law is not yet adopted (as of September 2026). A public hearing took place on 13 April 2026, but there is no fixed date for adoption: according to the federal government (27 August 2026), the further timetable is up to the Bundestag. For reporting year 2025, the CSR-RUG still applies under current law and there is no obligation to apply the ESRS. However, the coalition amendment of 31 March 2026 would apply the new rules retroactively to financial years beginning on or after 1 January 2025; the DRSC and IDW consider this constitutionally questionable.
Why the VSME standard is now gaining in importance
At EU level, the framework is now settled with the Omnibus package, the revised ESRS and the VS. What remains open is mainly the German transposition. 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 for future requirements
- 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, our VS 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 VS report template (formerly VSME 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 VS 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 while the German transposition of the CSRD is still pending.
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. As the "VS (Voluntary Standard)", in force since 24 September 2026 as Delegated Regulation (EU) 2026/1560, it is now open to all companies not subject to CSRD reporting, including many non-SMEs below the new Omnibus thresholds.
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. From financial year 2027, 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 VS 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.
