VS vs. VSME Standard: Differences, similarities and implications for businesses

With the CSRD, sustainability reporting in Europe became significantly more binding. At the same time, the EU has narrowed the group of companies directly subject to mandatory reporting through the Omnibus I package. As a result, many companies that originally expected to fall under the CSRD reporting obligation are no longer, or no longer directly, required to report under the ESRS.

However, this does not mean that sustainability data is becoming less important for these companies. Banks, investors, customers, parent companies, public contracting authorities, and larger business partners will continue to require ESG information, for example, for credit decisions, supplier assessments, tenders, risk management, or their own CSRD reports.

This is exactly where the VSME standard and the new VS come in. Both are intended to simplify voluntary sustainability reporting, harmonize ESG data requests, and protect smaller and non-reporting companies from excessive ESG questionnaires. At the same time, one key question is currently emerging: will the VS replace the VSME in the future?

The short answer: most likely yes, at least in the longer term. The new VS is largely based on the existing VSME. If adopted as planned as a delegated act, it would institutionalize the previous voluntary EFRAG standard and continue it as the official voluntary EU sustainability reporting standard. The VSME, therefore, remains the technical starting point, but as a standalone reference framework, it is likely to lose relevance over time.
 

What is the VSME standard?

The VSME standard is the voluntary sustainability reporting standard for non-listed small and medium-sized enterprises. It was developed by EFRAG, the technical advisory body to the European Commission for sustainability reporting standards.

The standard is primarily aimed at companies that are not subject to mandatory CSRD reporting but still want or need to provide structured sustainability information. This is particularly relevant for SMEs whose ESG data is requested by customers, banks, or investors.

The VSME pursues three practical objectives:

• Standardizing ESG data requests: companies should no longer have to answer separate ESG questionnaires for every customer, bank or platform.
• Facilitating access to finance: banks and investors receive a transparent and comparable data set.
• Improving internal sustainability management: companies can identify, assess, and develop environmental, social, and governance topics more systematically.

The VSME is structured in modules. The Basic Module provides an entry point and covers general information, environmental metrics, social metrics, and governance aspects. The Comprehensive Module includes additional disclosures that are typically requested by banks, investors, or larger business partners.

In terms of content, the VSME is aligned with the ESRS, but is much shorter and tailored to the resources of smaller companies. It is voluntary and does not have the same legal status as the ESRS for companies subject to mandatory reporting.

What is the VS?

The VS is the European Commission’s planned voluntary sustainability reporting standard for companies outside the mandatory CSRD reporting scope. It builds on the VSME, but is intended to be adopted as a delegated act.

This changes the function of the standard: the VS is not only a voluntary reporting framework, but is also intended to serve as a reference point for the Value Chain Cap. This cap limits which sustainability information CSRD-reporting companies may request from certain business partners in their value chain.

According to the current draft, this protection applies to companies with 1,000 employees or fewer. These companies are not required to report under the VS. However, the standard defines which information larger CSRD companies may request at most as part of their own sustainability reporting.

The VS is therefore more closely aligned with the CSRD logic than the original VSME. At the same time, its use remains voluntary for non-reporting companies. In practice, the VS should therefore not be understood as a completely parallel standard to the VSME, but rather as its planned official continuation within the EU regulatory framework.

As of the end of June 2026, the VS has not yet entered into force as a final standard. The European Commission published the draft on May 6, 2026, and conducted a feedback period until June 3, 2026. Following the consultation, the Commission is expected to adopt the delegated acts as soon as possible. In its original 2026 work program, EFRAG assumed that the delegated act for the VS would be adopted in June 2026.
 

VS and VSME in direct comparison

The following table shows the key differences and similarities between the VSME standard and the VS standard at a glance. It helps companies better understand both approaches in terms of their target groups, purposes, and regulatory relevance.

The most important differences for companies

1. The VSME is a voluntary reporting standard; the VS will become a regulatory reference framework

The VSME was developed as a pragmatic tool for SMEs. It is designed to help companies provide sustainability information in a structured and proportionate way.

The VS adopts this basic idea, but adds an additional legal function: it is intended to define which information CSRD-reporting companies may request from smaller or non-reporting business partners as part of their own sustainability reporting.

This shifts the focus. With the VSME, voluntary reporting is the main priority. With the VS, the protective function against excessive ESG data requests is added. At the same time, the VS continues the VSME logic and is likely to replace it in the long term as the main voluntary EU sustainability reporting standard.
 

2. The scope of the VS is broader

Although the VSME is applied more broadly in practice, it was originally designed for non-listed SMEs. Under the traditional EU SME definition, this refers to companies with up to 250 employees, provided that the relevant turnover and balance sheet thresholds are also met.

The VS is designed more broadly. It is intended to be relevant for companies outside mandatory CSRD reporting and, in particular, for companies with up to 1,000 employees that are indirectly affected by supply chain requests. This also includes companies that are no longer SMEs in the narrow sense, but would not be subject to mandatory reporting under the reformed CSRD framework.
 

3. The Value Chain Cap is a key difference

The Value Chain Cap is intended to limit the so-called trickle-down effect. This refers to situations in which large CSRD-reporting companies pass on their own reporting obligations to smaller suppliers via extensive questionnaires.

The VS is intended to set an upper limit here. According to the current draft, CSRD companies may not request more information from protected companies than is defined as relevant in the VS, at least where the request is made for CSRD reporting purposes.

This is important, but it is not complete protection against every ESG request. Information may still be requested for other reasons, such as due diligence, risk management, financing, product specifications or contractual requirements. Companies should therefore assess why an ESG request is being made and whether it falls under the Value Chain Cap.
 

4. The VS uses data point categories more strongly

The draft VS makes a clearer distinction between disclosures that are necessary, relevant only under certain conditions, or voluntary. For the Value Chain Cap, it is decisive which disclosures are classified as mandatory or “necessary”.

For companies, this categorization is practically relevant because it helps them assess ESG requests more effectively: Which information must be available for a standardized response? Which disclosures are optional? And which data points may be useful but go beyond the protected minimum scope?
 

5. Both standards remain significantly leaner than the ESRS

Neither the VSME nor the VS is a “small CSRD report”. Both are deliberately designed to be proportionate. The standards address key ESG topics, but do not include the same depth, complexity, or assurance logic as the ESRS.

For companies, this is an advantage: they can build up sustainability data in a structured way without immediately having to introduce a full ESRS reporting system. At the same time, companies should not underestimate the standards. Even voluntary sustainability reporting requires reliable data, clear responsibilities, and transparent documentation.
 

Which companies should focus on which standard?

Non-listed SMEs

For traditional SMEs, the VSME remains the most obvious starting point, especially as long as the VS has not yet been finally adopted and entered into force. Companies that already receive ESG data requests from customers, banks or investors can use the VSME to collect data in a structured way and respond to recurring requests more efficiently.

Once the VS has been finally adopted, SMEs should assess whether to align their sustainability reporting with the VS or adapt their existing VSME approach accordingly.
 

Companies with 250 to 1,000 employees

This group is particularly relevant. Many of these companies are no longer SMEs in the narrow sense, but may fall outside mandatory reporting under the reformed CSRD framework. At the same time, they are often part of professional supply chains and receive ESG requests from large corporations, financial institutions, or public contracting authorities.

For these companies, the VS is likely to become more important than the original VSME because it is specifically being developed for the broader group of non-reporting companies and the Value Chain Cap.
 

CSRD-reporting companies

Companies that remain in scope of the CSRD must report in accordance with the ESRS. Nevertheless, the VS is relevant for them because it influences the design of supplier questionnaires.

In practice, this means that ESG, procurement, compliance, and finance teams should review their requests for ESG data from suppliers. Not every piece of information desired internally may be passed on to smaller value chain partners as a mandatory request in the future. The VS can therefore also become a governance topic for large companies.
 

Companies in supply chains

For suppliers, the VS can become an important point of reference and negotiation tool. It creates a common language for sustainability data and helps distinguish between justified standard information and additional requirements that go beyond this scope.

This does not replace an individual assessment. But it strengthens the position of companies that have so far faced inconsistent ESG questionnaires, Excel lists, and platform requirements.
 

Recommendation for companies

For practical purposes, the current situation can be summarized as follows:

• VSME is useful if a company wants to get started now, especially as a non-listed SME with recurring ESG requests from customers, banks, or investors.
• VS will become central once the delegated act is final, especially for companies with up to 1,000 employees outside the CSRD reporting obligation and for companies that want to rely on the Value Chain Cap.
• ESRS remain decisive for companies directly subject to CSRD reporting. These companies should not view the VS or VSME as a substitute, but as a reference for proportionate data requests to smaller business partners.
   

Conclusion: More guidance, not more complexity

The VS and VSME pursue the same fundamental objective: voluntary sustainability reporting should become simpler, more comparable, and more practical. The VSME provides the technical starting point for this. The VS transfers this logic into a more regulated framework and connects it with the Value Chain Cap.

As a result, the VSME and VS are unlikely to remain two equivalent parallel standards in the long term. The VS is based on the existing EFRAG VSME, institutionalizes its content as the official voluntary EU sustainability reporting standard, and is likely to replace or continue the standalone EFRAG VSME over time.

For companies, the key takeaway is this: voluntary sustainability reporting will not disappear; it will become more standardized. Companies that build a solid ESG data foundation early can respond to requests more efficiently, reduce duplicate work, and better assess which information is actually required.

However, the current status remains dynamic. As of the end of June 2026, the VS is still available as a consulted draft. Companies should therefore not stop existing VSME preparations, but closely monitor the final version of the VS and build their data structures in a way that keeps them adaptable.