VSME becomes VS – What the new EU draft means for SMEs

Update on the
VSME Standard

On 6 May 2026, the European Commission published a draft for a new voluntary sustainability reporting standard. The so-called “Voluntary Standard” (VS) is intended to replace the existing VSME. It expands the scope of application, gains the status of a delegated regulation for the first time and introduces several substantive changes. We explain what exactly is changing and what impact this could have on small and medium-sized enterprises.

What is fundamentally changing?

The most significant structural difference is that the VS is designed as a delegated regulation. Once the delegated regulation enters into force, the standard will gain legal status under EU law – even though reporting itself will remain voluntary. The previous VSME did not have this legal status. For our clients, this means the standard is gaining regulatory relevance, even if the decision to publish a report still ultimately rests with the company itself.

At the same time, the scope of application is being significantly expanded. While the VSME was aimed at non-listed SMEs with up to 250 employees, the new VS addresses companies with up to 1,000 employees within the value chain that are not themselves subject to the CSRD – regardless of whether they are listed or not.

Value Chain Cap: Protection against excessive burocracy

Closely linked to the VS is the concept of the “Value Chain Cap”. In future, companies subject to the CSRD may not request sustainability information from supply chain and value chain partners with up to 1,000 employees beyond what the VS defines as necessary.

In practice, we regularly see how burdensome individual ESG questionnaires from large clients can become for medium-sized businesses. The Value Chain Cap establishes a clear limit here – and the VS defines what is considered “sufficient”.

Companies with ten or fewer employees benefit from additional protection against disproportionate bureaucracy: certain disclosures are classified as voluntary for this group. The Value Chain Cap is expected to apply for financial years beginning on or after 1 January 2027.

The main changes at a glance

The new draft is considerably more compact: 29 pages instead of 66. The explanatory guidance and practical examples previously included in the standard will now be moved to the EFRAG website.

Based on our experience supporting VSME projects, we know that these guidelines were an important point of orientation for many companies. Businesses requiring support with practical implementation should therefore plan for this at an early stage.

The VS also introduces a more systematic classification of data points. Each disclosure is now explicitly labelled as either “required”, “if applicable” or “voluntary”, with additional differentiation based on company size. This facilitates a more structured implementation process, but it does not replace the need for an individual assessment of which disclosures are actually relevant in the specific business context.

Compared with the VSME, several previous requirements have been removed:

• GHG intensity is no longer included as a mandatory disclosure.
• The gender pay gap is no longer automatically required.
• Detailed biodiversity disclosures have been significantly simplified.

At the same time, additional disclosures have been introduced elsewhere. For example, balance sheet totals, revenues and employee turnover rates for companies with more than ten employees have been added.

Another important practical aspect: VS reports will not require assurance. The decision whether to publish the report remains with the company itself. Certain trade secrets may also be excluded from reporting.

The draft is open for public consultation until 3 June 2026.

Our assessment for our clients

For companies we are already supporting with the VSME, the immediate need for action remains manageable, as the overall structure largely stays the same and most changes are gradual in nature. However, the new legal framework and expanded scope are highly relevant, as the VS is now becoming a reference framework even for companies beyond the traditional SME threshold.

For companies that have not yet established a structured approach to sustainability reporting, the VS draft confirms a development we have observed in practice for some time. The voluntary standard is increasingly becoming the de facto point of reference for SMEs – with growing relevance for supply chain relationships, financing discussions and negotiations with business partners.

As a boutique firm focused on the Mittelstand, we support companies not only with formal implementation, but also in understanding what ESG reporting means economically in their specific situation and how it can be used strategically and pragmatically.

We would be pleased to discuss what the new VS draft means specifically for your company.