The Voluntary Standard (VS) for ESG: Requirements, Benefits, and Implementation

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What Is the Voluntary Standard?

The Voluntary Standard (VS) is the EU’s new voluntary framework for sustainability reporting for companies with up to 1,000 employees. It is based on the VSME standard (Voluntary Sustainability Reporting Standard for SMEs), which EFRAG developed in 2024 and which the Commission initially introduced as a recommendation in July 2025. The VSME was originally designed for non-listed companies with up to 250 employees.

With the Omnibus I Directive, the thresholds for mandatory CSRD reporting were significantly raised. This created a gap: companies that now fall outside the reporting obligation but still have to provide sustainability data to business partners needed a suitable voluntary framework. As part of this recalibration, the VSME was further developed into the VS—now designed for companies with up to 1,000 employees and anchored as a delegated act. On July 3, 2026, the Commission adopted it in final form. After review from Parliament and Council, the delegated act was published in the Official Journal on 21 September 2026 and enter into force.

The VS Pursues Four Overarching Targets:

• Meet the data needs of companies subject to reporting obligations along the value chain.
• Facilitate access to sustainable finance by meeting the information needs of banks and investors.
• Improve how environmental and social challenges are addressed, thereby strengthening competitiveness and resilience.
• Contribute to a more sustainable, more inclusive economy.

What Changes Compared With the VSME

The public consultations showed that the VSME standard largely aligned with the simplification targets and proportionality considerations of the Omnibus I Directive and provided a suitable basis for the VS. However, there were concerns as to whether the standard is practicable for micro-enterprises and sufficiently protects them from disproportionate information requests. The Commission subsequently adjusted the standard in three respects:

• Fewer data points: substantive alignment with the revised ESRS, slightly reducing the number of data points compared with the VSME.
• More precise value-chain rules: clarification of how the upper limit for the value chain is to be applied, including an exhaustive list of the affected data points in Annex II.
• Relief for micro-enterprises: certain disclosures—especially more demanding environmental data points—are voluntary for companies with up to 10 employees.

Who Is the Voluntary Standard Intended For?

The VS is voluntary. It is intended for companies that, on the balance sheet date, do not exceed the threshold of an average of 1,000 employees during the preceding financial year. This also includes self-employed persons and listed micro-enterprises.

Value Chain Cap: Protection Against Excessive Data Requests

The VS also serves as an upper limit for the value chain—the so-called Value Chain Cap: companies subject to CSRD reporting may not request sustainability information from companies in their value chain that goes beyond the VS. If they nevertheless request more, they must disclose which additional disclosures they are requesting and that the counterparty may refuse them.

Annex II of the Regulation exhaustively specifies which data points may be requested at most. For companies with more than 10 employees, the cap covers almost the entire scope of the Basic Module as well as parts of the Supplementary Module.

How the Value Chain Cap will be implemented in practice and the possible legal interpretation issues associated with it will become apparent in application.

The cap applies only to requests made in the context of sustainability reporting under the Accounting Directive—other information obligations as well as the voluntary exchange of customary industry information remain unaffected.

How Is the Voluntary Standard Structured?

The VS comprises two modules:

• Basic Module (B1–B11): the intended approach for micro-enterprises; the minimum requirement for all others.
• Supplementary Module (C1–C9): additional data points that banks, investors, and corporate customers may request in addition. Requires application of the Basic Module.

Companies choose between Option A (Basic Module only) and Option B (Basic Module plus Supplementary Module). Once a module has been selected, it applies. If only the Basic Module was selected initially, disclosures from the Supplementary Module can be added as needed.

The standard distinguishes between four data-point categories: required data points, “if applicable” data points (only under certain circumstances), voluntary data points, and sector-specific data points. For companies with up to 10 employees, some data points that are actually required are voluntary (marked in square brackets in the standard).

How Can the Voluntary Standard Be Implemented Efficiently?

• Clarify stakeholder requirements: direct dialogue with the most important addressees—house bank, key customers, investors—shows which information is specifically needed. For mid-sized companies, the Supplementary Module will regularly be relevant, as the Basic Module alone often does not cover these addressees’ information needs.
• Stocktake: an initial overview usually shows that much relevant data is already available, for example from energy management, HR, or procurement. Often, it simply needs to be consolidated rather than collected anew.
• Define responsibilities and processes: sustainability reporting typically affects several service lines at the same time—from HR and procurement through to controlling. Clearly defined responsibilities and processes are therefore crucial to project success.
• Consider a double materiality assessment (DMA): even though the VS does not require a DMA, it sharpens the focus on the topics that are truly strategically relevant and facilitates the transition should the company become subject to CSRD reporting in the future.
• Use EFRAG guidance: EFRAG provides practical support on its website and in the ESRS Knowledge Hub. Updating these materials to the final VS is still pending, but is likely to take place after the VS is published in the EU Official Journal.

How Does the Voluntary Standard Differ From the ESRS?

In principle, the standard covers the same sustainability aspects as the ESRS, but is proportionately tailored to the capacities of smaller companies.

• Voluntary nature: the VS does not establish legally binding reporting obligations. Nor is there any audit requirement for the information provided. Nevertheless, a voluntary audit should be considered in order to increase the credibility of the disclosures vis-à-vis banks, investors, and business partners.
• Business conduct: the VS is aimed at companies that are not subject to CSRD reporting obligations. The ESRS apply mandatorily to companies subject to CSRD reporting (> 1,000 employees and > €450 million in revenue).
• Scope and depth: the VS uses fewer and simpler data points. Example Scope 3: while the ESRS provide for a comprehensive assessment of the upstream and downstream value chain, disclosure of Scope 3 emissions is voluntary under the VS and is only envisaged where it is assessed as relevant for the company. In addition, the VS leaves room in many places for the concrete implementation of the requirements, whereas the ESRS often establish binding rules via application requirements.
• Thematic focus of the report: since the VS does not provide for a double materiality assessment, VS disclosures cannot be excluded on the grounds of immateriality. For example, disclosures on water withdrawal (disclosure requirement B6) must be made under the Basic Module even if water is not, per se, a material sustainability topic for the company. The VS report therefore covers the full thematic breadth of the ESG topics addressed in the VS. In the ESRS, by contrast, the double materiality assessment is a core principle of reporting—generally, only material topics and disclosures are to be included in the sustainability report. In that case, for example, the ESRS E3 standard on water would be omitted in full if water proves immaterial in the double materiality assessment.

What Benefits Does Voluntary Reporting Under the Voluntary Standard Offer?

The VS provides standardised sustainability information instead of individual responses to different, sometimes extensive questionnaires from banks, investors, and business partners, thereby saving time and effort. At the same time, standardised, reliable sustainability data makes it easier for banks and investors to assess the company—an advantage for lending and investment decisions.

In addition, the VS offers the opportunity to embed sustainability topics in a structured way within the company and to manage material topics in a targeted manner. Mid-sized companies in particular often already show strong commitment in the area of sustainability, but communicate this externally hardly at all due to a lack of standardised internal processes. The VS provides a credible and understandable communication tool for this, making this performance visible—especially if the disclosures are voluntarily externally assured. Companies that already report under the VS today also create structures and data sources they can build on should they later fall under CSRD reporting obligations after all.

Last but not least, the uniform structure of the VS ensures comparability: banks, investors, and business partners can assess the sustainability performance of different companies on a common basis, and companies themselves can carry out direct benchmarking against their competitors.

Conclusion: The Voluntary Standard as a Pragmatic Entry Point Into Sustainability Reporting

With the VS, the EU has created a voluntary yet practical framework for sustainability reporting. In line with the Omnibus I initiative, the streamlined standard aims to reduce the reporting burden for smaller companies while still meeting the most important stakeholder requirements. At the same time, the VS reflects a shift in the understanding of sustainability reporting: it no longer serves solely to meet regulatory requirements, but is increasingly developing into an instrument for transparency, risk management, and dialogue with stakeholders. Companies without a statutory reporting obligation also benefit from capturing their sustainability performance in a structured way and communicating it transparently.

With its modular structure, the VS provides a proportionate framework that can be expanded flexibly. The Basic Module covers the material sustainability topics, while the Supplementary Module provides additional information as needed. This enables companies to align their reporting with their stakeholders’ actual information needs.

This makes the VS far more than a voluntary reporting structure. It creates a common language for sustainability information and supports companies in systematically addressing the market’s growing information requirements. In practice, this means: the effort required to get started with sustainability reporting is now clearly defined and designed pragmatically. Companies that now begin reporting and approach a stocktake in a structured manner gain clarity on their own maturity level—and thus time to prepare for future information needs and to embed sustainability in good time, strategically and in their communications.