Getting started with the EU sustainability reporting standard for voluntary use

As market expectations from investors, lenders, customers and public sector stakeholders continue to grow, voluntary sustainability reporting is becoming an increasingly important tool for demonstrating transparency, strengthening competitiveness and facilitating access to business opportunities and finance.

This guide highlights the main features of the VS, explains how it compares with the revised ESRS and outlines the practical considerations for companies seeking to apply the VS.

What makes the VS simple and proportionate for companies of different sizes? 

The VS combines simplified language, a pragmatic approach to disclosures and flexibility for smaller entities, including less demanding requirements for companies with 10 employees or fewer. It is characterised by its modularity and accessibility.

To accommodate different levels of sustainability maturity, the VS is structured around two modules: A Basic Module containing entry-level ESG disclosures, and an optional Comprehensive Module designed to address additional information needs from investors, lenders and business partners. Companies may apply the Basic Module alone or combine it with the Comprehensive Module, but the framework does not allow a selective “pick and choose” approach.

Supported by EFRAG guidance and practical tools historically relating to the VSME standard, the VS provides an accessible foundation for voluntary sustainability reporting, while it may not fully meet the needs of the largest companies outside the scope of the revised CSRD.

In what ways does the VS align with or differ from the revised ESRS?

Both frameworks share the same qualitative characteristics of reported information and seek to ensure consistency with financial reporting. While the VS is structured around two reporting modules rather than a comprehensive set of sustainability standards, it also covers all ESG topics, with lower granularity than in the revised ESRS. Besides, unlike the revised ESRS, the VS does not require a double materiality assessment (DMA). A DMA can however be performed on a voluntary basis in the context of a “VS+” approach, to identify material sustainability topics (e.g., building on the DMA process in the revised ESRS).

Another significant distinction lies in the content and depth of reporting requirements. The VS comprises 20 disclosure items supported by a limited number of datapoints, including essential, “if applicable” and voluntary disclosures, whereas the revised ESRS contain approximately 300 datapoints that must be presented, where material, to present fairly the identified material sustainability-related impacts, risks and opportunities and how the reporting company manages them.

How does the VS also serve as the value chain cap?

The VS plays a dual role by serving not only as a voluntary sustainability reporting framework but also as the value chain cap established by the revised CSRD, protecting eligible companies within the value chain of CSRD reporting companies from “disproportionate” information requests.

Applying from financial years beginning on or after 1 January 2027, the value chain cap defines the maximum sustainability information that CSRD-reporting companies may request from value chain partners with fewer than 1,000 employees (qualified as “protected” companies). In practice, this cap is based on a defined set of disclosures drawn from the VS, with different requirements depending on whether the company has more than 10 employees or not.

Importantly, the value chain cap applies only in the context of sustainability reporting. While companies may still request additional ESG information for other business purposes, “protected” companies as per the revised CSRD have the legal right to decline requests that exceed the limits established by the VS for CSRD reporting purposes.

What are the main challenges for companies wishing to apply the VS?

Companies should first assess their sustainability maturity to determine the reporting option best suited to their needs and establish a coherent ESG roadmap. Adopting a long-term perspective is equally important, positioning sustainability as a strategic driver that supports business objectives, value creation and organisational transformation.

Successful implementation of the VS also depends on leveraging available guidance and establishing robust data collection processes. Companies are encouraged to make full use of EFRAG’s support materials while ensuring that sustainability information is collected, monitored and documented through reliable and consistent processes.

Beyond a reporting exercise, the VS provides an opportunity to strengthen transparency and stakeholder trust. Public communication of sustainability performance can enhance the credibility of reported information, even more if it is being audited.