VSME Standards: a guide to preparing for reporting against the standards 

The publication of the Omnibus I Directive marks a significant shift in the Corporate Sustainability Reporting Directive (CSRD) framework, particularly regarding value chain information sharing and sustainability reporting expectations for smaller businesses.

Reporting companies must disclose sustainability information relating not only to their own operations but also to their wider value chain. This means they will be required to gather and consider relevant sustainability data from value chain partners as part of meeting their reporting obligations.

For companies falling out of scope of CSRD, the European Commission will adopt a delegated act later this year setting out sustainability reporting standards for voluntary use (the new VSME Standard). The new VSME Standard is intended to facilitate simplified voluntary reporting and will also serve as a “value chain cap”. Under this mechanism, “protected undertakings” (those with fewer than 1,000 employees in the value chain of a reporting company) will not be required to provide information beyond the limits established in the new VSME Standard. They may decline any request for information that goes beyond the scope of the new VSME Standard. 

This safeguard is intended to address concerns that reporting companies might otherwise impose disproportionate or overly burdensome information demands on their smaller value chain partners. The value chain cap is designed to be proportionate and targeted:

• it will not prevent voluntary information sharing 
• it will not affect contractual or legal obligations to provide information within the scope of the new VSME Standard
• it will apply only to information sought for CSRD sustainability reporting purposes, meaning that it will not affect other due diligence or information gathering requirements

To fulfil the Commission’s commitment under the SME Relief Package to create a simple and standardised ESG reporting framework for SMEs, EFRAG developed the Voluntary Sustainability Reporting Standard for non-listed SMEs (the VSME Standard). This VSME Standard was subsequently adopted by the Commission in Commission Recommendation 2025/1710 (the Recommendation) and will form the basis of the delegated act establishing the new VSME Standard.

In this article, we provide an overview of:

• what the value chain cap means for reporting companies
• the benefits of voluntary reporting 
• the VSME Standard as set out in the Recommendation
• next steps

For further information in relation, please contact Jill Shaw, ESG & Sustainability Lead, Erin Ward, Solicitor, or any other member of the ESG & Sustainability Team.

Date published: 31 March 2026