VSME Reporting: Simpler, but Not for Every Business to the Same Extent

VSME Reporting: Where Does the Simplification Lie?

On 3 July 2026, the European Commission adopted a delegated regulation introducing a new voluntary sustainability reporting standard: the Voluntary Sustainability Reporting Standard (VSRS). This standard builds on the VSME, published by EFRAG in December 2024 and subsequently endorsed by the Commission through a Recommendation in 2025.

Reporting under the VSME will therefore change in several respects. The key question, however, is not whether the standard changes, but whether reporting under the VSME will actually become simpler for every undertaking.

The answer depends largely on the size of the undertaking and on the choice between the Basic Module and the Comprehensive Module. For undertakings with up to ten employees, the simplification is the most significant. For undertakings applying the Comprehensive Module, the picture is more mixed: some datapoints are removed or simplified, while others have been relocated or become applicable at an earlier stage.

Please note: the delegated regulation has not yet entered into force. The European Parliament and the Council may still object to the delegated act. If no objection is raised, it will enter into force following its publication in the Official Journal of the European Union.

Not an Entirely New Standard

The future Voluntary Sustainability Reporting Standard (VSRS) is neither a completely rewritten nor a significantly simplified version of the 2024 VSME. Its familiar structure remains intact, consisting of a Basic Module (B1 to B11) and a Comprehensive Module (C1 to C9).

The core ESG topics also remain largely unchanged, including energy, greenhouse gas emissions, water, biodiversity, waste, workforce, human rights, climate-related risks and business conduct.

As a result, undertakings that already use the 2024 VSME will not have to start from scratch. Much of the existing data and many of the underlying analyses are likely to remain relevant. However, inventories, questionnaires and reporting templates should be reviewed against the new standard. A number of datapoints have been amended, relocated, reclassified or removed.

Key Differences

The table below illustrates why the impact of the new standard is not the same for every undertaking.

Topic	What Changes?	Impact
Energy and Scope 1 & 2	Remain essential for undertakings with more than 10 employees; voluntary for undertakings with up to 10 employees.	Simplified for the smallest undertakings
Emissions Intensity	The ratio of Scope 1 + Scope 2 emissions divided by revenue is removed.	Significant simplification
Biodiversity	Hectare-based disclosures are removed; the location and name of the sensitive area remain, where applicable.	Less quantitative reporting
Water	Water withdrawal remains; water consumption is required only for production activities with significant water use. Voluntary for undertakings with up to 10 employees.	Amended; simplification for micro-undertakings
Waste and Material Flows	Remain part of the standard but become voluntary for undertakings with up to 10 employees.	Simplified for the smallest undertakings
Employee Turnover	Moved from the Basic Module (previously applicable from 50 employees) to the Comprehensive Module; essential for undertakings with more than 10 employees and voluntary for those with up to 10 employees.	Simpler for Basic-only reporting; potentially more demanding for Comprehensive undertakings with 11–49 employees
Gender Pay Gap	Reported only where required under other European or national legislation.	Significant simplification
Training Hours	Breakdown by gender is removed.	Simplified
C2: Policies and Targets	More explicit information is required on suppliers, customers and the targets referred to under B2.	More detailed in certain respects
Scope 3	No general reporting requirement; greater emphasis on sectors where significant Scope 3 categories are likely to exist.	Assessment of relevance becomes more important
Sensitive Information	Broader exemption available; its use must be identified for each datapoint and reassessed annually.	More practical, subject to conditions
PAB Exclusion	The separate declaration is removed.	Significant simplification

1. The Most Significant Simplification: Undertakings with up to Ten Employees

The 2024 VSME did not include a comparable general distinction for undertakings with up to ten employees. Under the new standard, a number of datapoints in both the Basic Module and the Comprehensive Module become voluntary for this category of undertakings.

This applies, among other things, to disclosures relating to energy, Scope 1 and Scope 2 greenhouse gas emissions, water, waste and material flows, business model and strategy, climate targets and climate-related risks, employee turnover, and certain information on human rights policies.

This may result in a substantial reduction in the reporting burden. However, it does not constitute an exemption from the reporting standard as a whole. Other disclosures remain essential or applicable under their own conditions. The threshold of ten employees must therefore be assessed on a datapoint-by-datapoint basis.

2. Datapoints Are Also Removed for Larger Undertakings

A clear example is the greenhouse gas emissions intensity ratio. Under the 2024 VSME, undertakings are required to report the sum of Scope 1 and Scope 2 greenhouse gas emissions divided by revenue in euros. The new Voluntary Sustainability Reporting Standard no longer contains an equivalent datapoint. As a result, this ratio is removed entirely.

The hectare-based biodiversity disclosure and the separate declaration on the exclusion of EU Paris-aligned Benchmarks (PABs) have also been removed. The gender pay gap only has to be reported where this is required under other European or national legislation. In addition, training hours no longer need to be broken down by gender.

The treatment of sensitive information has also become more practical. The new standard provides a broader basis for omitting classified or commercially sensitive information, including trade secrets. However, undertakings must indicate, on a datapoint-by-datapoint basis, whenever they rely on this exemption and reassess each year whether its continued use remains justified.

3. Employee Turnover: Both Simplification and Additional Requirements

Employee turnover clearly illustrates why a general conclusion is not sufficient. Under the 2024 VSME, this datapoint forms part of the Basic Module and applies only to undertakings with 50 or more employees. Under the new standard, it is moved to C5 of the Comprehensive Module, where it becomes essential for undertakings with more than ten employees and voluntary for undertakings with up to ten employees.

The practical implications differ depending on the reporting approach:

• Basic Module only: the employee turnover datapoint is removed, resulting in a lighter reporting burden.

• Comprehensive Module (11–49 employees): the datapoint becomes essential at an earlier stage and may therefore increase the reporting burden.

• Comprehensive Module (50 or more employees): the information remains required but is reported under a different module.

• Undertakings with up to ten employees: the datapoint becomes voluntary.

4. The Comprehensive Module Becomes More Precise, Not Automatically Simpler

Under the 2024 VSME, the Comprehensive Module contains a general provision stating that disclosures C1 to C9 should be considered and reported where applicable. In the new standard, each datapoint more clearly indicates whether the information is essential, conditional or voluntary. It also specifies which disclosures are voluntary for undertakings with up to ten employees.

This approach provides greater clarity and a more targeted reporting framework. However, it does not mean that the Comprehensive Module becomes less demanding in every respect. Some disclosures remain essential, while in certain areas the reporting requirements have become more explicit.

For example, C2 requires additional information on the specific practices, policies and future initiatives already referred to under B2. Undertakings must indicate whether these policies apply to suppliers, customers or both, and provide a brief description of the targets identified under B2.

5. Scope 3 Remains Voluntary, but Receives Greater Emphasis

Scope 3 greenhouse gas emissions do not become a general reporting requirement under the new standard. However, the future text provides more specific guidance on when undertakings should assess the relevance of Scope 3 emissions. It explicitly refers to activities such as manufacturing, agri-food, construction and real estate, and packaging processes, where significant Scope 3 categories are more likely to arise.

This does not create an automatic reporting obligation. However, for undertakings operating in these sectors, it becomes more important to carry out a well-founded assessment of whether Scope 3 emissions are material to their business and value chain. The change therefore lies primarily in the greater emphasis and clearer guidance, rather than in the introduction of a new reporting requirement.

6. Potentially More Important: The Value Chain Cap

A significant part of the expected reduction in the reporting burden does not result from the removal of datapoints, but from the legal function of the new standard. The Voluntary Sustainability Reporting Standard will become the reference framework for the so-called value chain cap.

Undertakings that are required to report sustainability information under the Accounting Directive may, in principle, not request more sustainability information from protected undertakings in their value chain than is required under the standard for the purpose of their own sustainability reporting. A protected undertaking is therefore entitled to refuse requests that go beyond this framework.

However, this protection is not unlimited. It applies only to information requests made for the purposes of sustainability reporting under the Accounting Directive. Additional information may still be requested where required for credit assessments, contractual arrangements, or other obligations arising under European or national legislation.

What Does This Mean for Existing VSME Reporting Projects?

A significant part of the existing reporting framework is likely to remain relevant. However, a targeted reassessment is required to determine the impact of the new standard.

Key questions include:

• Which datapoints have been retained, amended, relocated or removed?

• Which disclosures are essential, conditional or voluntary?

• Which simplifications apply to undertakings with up to ten employees?

• Does the Basic Module still meet the organisation's reporting needs, or is the Comprehensive Module alsorequired?

• What are the implications of relocated datapoints, such as employee turnover?

• Are Scope 3 emissions or other sector-specific disclosures relevant?

• Do existing questionnaires, reporting templates and software solutions still align with the requirements of the new standard?

Conclusion

The proposed Voluntary Sustainability Reporting Standard makes sustainability reporting simpler and more flexible for many SMEs. However, this does not mean that organisations can simply take a step back. Even under the new standard, it remains essential to understand the relevant ESG topics, the availability of data, and the expectations of customers, financiers and other stakeholders.

The actual impact will vary from one undertaking to another. It depends, among other things, on the size of the organisation, the sector in which it operates, its position within the value chain, and whether it applies the Basic Module or the Comprehensive Module. Much of the existing VSME reporting framework is likely to remain relevant, but a targeted reassessment of datapoints, processes, reporting templates and software will be necessary.

The key question is therefore not only whether the reporting requirements are changing, but above all what these changes mean for your organisation and how you can prepare for them in practice.

Want to Know More?

DUFINCO has compared the 2024 VSME and the Voluntary Sustainability Reporting Standard, adopted by the European Commission on 3 July 2026, paragraph by paragraph and datapoint by datapoint.

Would you like to know:

• which changes are relevant for your organisation;

• which reporting requirements have actually changed;

• which data you need to collect; or

• how to implement the new standard in practice?

  
  

DUFINCO helps organisations translate legislation and regulations into practical solutions. We assess which requirements apply to your organisation and support the design and implementation of governance structures, reporting processes and compliance frameworks.

Would you like to discuss what the new standard means for your organisation?

Please contact us at info@dufinco.nl or call +31 (0)6 512 47 217 for a no-obligation introductory discussion.