VS vs. VSME: An Overview of the Voluntary Sustainability Reporting Standard

On 3 July 2026, the European Commission adopted the delegated act establishing a voluntary standard for sustainability reporting (the “Voluntary Standard” or “VS”). In the meantime, the two-month objection period for the European Parliament and the Council has also expired.

The objective of the Voluntary Standard is twofold. On the one hand, it provides companies that are not subject to statutory sustainability reporting obligations with a simple and standardised framework for reporting sustainability information. The standard is intended to support companies in better assessing and monitoring their own sustainability performance and in obtaining improved access to sustainable finance. On the other hand, the Voluntary Standard establishes the so-called Value Chain Cap, which sets an upper limit on the information that large companies may request from small companies for the purpose of their own sustainability reporting.

What is the Value Chain Cap?

The purpose of the Value Chain Cap is to protect small companies that form part of the value chain of reporting entities (i.e. companies within the scope of the CSRD) from excessive information requests. This limitation was already implemented in Austria in February 2026 through the NaBeG by means of Section 243ba of the Austrian Commercial Code (UGB).

Accordingly, a company that had fewer than 1,000 employees in the preceding financial year may refuse to provide information requested by reporting entities for sustainability reporting purposes where such requests go beyond the list of data points contained in Annex II of the VS. For micro-undertakings, i.e. companies with up to 10 employees, a reduced version of the VS serves as the applicable upper limit. Other purposes for information requests, such as due diligence obligations, remain unaffected.

This represents a significant relief, particularly for Austria’s SME sector, which often acts as a supplier to companies that are subject to sustainability reporting requirements. In this context, preparing a voluntary sustainability report under the VS and obtaining voluntary assurance can be an effective way of meeting potential information demands from key stakeholders.

How is the Voluntary Standard structured?

The Voluntary Standard essentially covers the same sustainability topics as the European Sustainability Reporting Standards (ESRS), which are applicable to companies subject to the CSRD, but in a substantially simplified form.

The Voluntary Standard consists of two modules: the Basic Module and the Comprehensive Module. The underlying logic of the VS is that micro-undertakings may limit themselves to the Basic Module, while other companies should regard the Basic Module as the minimum reporting requirement.

The Basic Module covers, in addition to general information, the following metrics:

• Environmental metrics (B3-B7): Energy and greenhouse gas emissions, pollution, biodiversity, water, resource use and waste
• Social metrics relating to own workforce (B8-B10): General characteristics, health and safety, remuneration, collective bargaining and training
• Governance metrics (B11): Convictions and fines relating to corruption and bribery

The Comprehensive Module supplements the Basic Module with additional information that is highly likely to be requested by banks, investors and business partners, for example to assess the company’s ESG risk profile as a potential supplier or borrower. The application of the Comprehensive Module presupposes reporting under the Basic Module.

The reported information must meet specific quality criteria. Accordingly, it must be relevant, faithfully represented, comparable, understandable and verifiable. Companies are permitted to supplement the required disclosures with additional relevant information, including both metrics and narrative disclosures.

Consistency with financial reporting must also be ensured. This requirement extends to the reporting period, which should correspond to the financial year. From the second reporting year onwards, comparative information for the preceding year should be disclosed.

Where the reporting entity is the parent company of a group, it is recommended that the sustainability report be prepared on a consolidated basis and include information relating to subsidiaries. With regard to publication, the Voluntary Standard does not prescribe a specific location or format. Depending on the company’s preference, the report may (1) be provided directly to relevant stakeholders, (2) be integrated into the management report, or (3) be published as a separate document, for example on the company’s website.

The omission of certain information is permitted where disclosure would prejudice the company’s competitive position or reveal trade secrets, classified information or other data that must be protected against unauthorised access. Where a company prepares an environmental statement under EMAS, it may combine the disclosures required under EMAS and the Voluntary Standard in a single report.

Looking back: What has happened so far?

• December 2024: Publication of the VSME by EFRAG (original target group: SMEs as defined by the Accounting Directive)
• 30 July 2025: Recommendation of the VSME by the European Commission for companies not subject to mandatory reporting (2025/1710)
• 6 May 2026: Consultation draft issued by the European Commission (scope expanded to companies with fewer than 1,000 employees; content amendments including the removal of data points)
• 3 July 2026: Delegated Act C(2026)5011 adopted (Value Chain Cap simplified, terminology refined, no changes to the data points)
• In addition, extensive public consultations were conducted in 2024 (prior to the publication of the VSME) and 2026 (prior to the publication of the final delegated act).

Differences between the VSME and the final Voluntary Standard

The key amendments to the voluntary reporting standard were already introduced during the preparation of the European Commission’s consultation draft published in May 2026. This section summarises these amendments together with the final adjustments made upon publication of the delegated act.

First, the Value Chain Cap was extended to the threshold of 1,000 employees in order to ensure consistency with the Omnibus Directive. This also resulted in a change of name: as the standard now applies to companies that are not SMEs, the term “SME” in the original acronym was no longer appropriate.

Second, the data points were categorised into different groups to create varying levels of reporting obligation. The final categories are: Required, Required if applicable, Voluntary, Sector-specific.

However, the individual data points are not consistently labelled using these categories. The only exception concerns those data points in the Basic Module that are voluntary for micro-undertakings.

Third, data points were removed and reallocated, inter alia to reflect the parallel simplification of the ESRS.

As a further editorial amendment, the detailed implementation guidance was removed from the standard and transferred to the Knowledge Hub on EFRAG’s website.

Assurance requirements

The VS is a standard designed for voluntary reporting and is therefore not subject to mandatory assurance. However, voluntary assurance of a sustainability report prepared under the VS makes a significant contribution to the reliability of the reported information and therefore provides meaningful added value for users of the report.

In Austria, assurance engagements relating to sustainability reports prepared in accordance with the VS are based on the standards applicable to sustainability assurance. As with the assurance of sustainability statements prepared under the ESRS, such engagements constitute limited assurance engagements.

All elements of a voluntary assurance engagement (e.g. liability limitations) must therefore be agreed separately, in the same way as for voluntary financial statement audits.

Conclusion

The Voluntary Standard provides a sound and manageable foundation for companies wishing to report sustainability information in accordance with an established framework. At the same time, it is reasonable to expect that the Voluntary Standard will become a benchmark for voluntary sustainability reporting.

For companies that approach sustainability strategically and seek to manage sustainability-related risks and opportunities appropriately, it is advisable to complement the Voluntary Standard with a materiality assessment. This can provide a more comprehensive understanding of sustainability-related impacts, risks and opportunities while enhancing the usefulness of sustainability disclosures for key stakeholders.

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