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From VSME to ESRS: Navigating the sliding scale of sustainability reporting

Compliance has evolved and businesses are now asking themselves how they can maintain their sustainable ambition, while staying on top of changes to the CSRD. This article breaks down a smart approach to leverage VSME as a stepping stone towards ESRS, balancing compliance with business growth and stakeholder trust, and explains why strategic ESG reporting is crucial in the age of the Omnibus.

Finding the balance between VSME and ESRS

The Omnibus proposal has introduced a fresh wave of uncertainty. Many companies that have already begun the long journey toward CSRD-compliance may now find themselves out of scope. With the VSME standard’s debut alongside the ESRS, a new reporting continuum has emerged, a sliding scale of sustainability reporting. 

At one end lies the basic VSME module: the minimum baseline for sustainability reporting. At the other sits the ESRS: the gold-standard; legally binding for companies in-scope for CSRD and by far the most comprehensive. 

Most businesses will fall somewhere in between. The key is knowing where to position yourself—and how to scale your disclosures in a way to serve both compliance, stakeholder expectations and strategic goals. 

A shared structure, scaled by depth

Despite the differences in scope, both VSME and ESRS share a common architecture.

  • Policies (governance structures and oversight)
  • Actions, or ‘practices’ in VSME (what you are doing, have done and plan to do in relation to material impacts, risks, and opportunities)
  • Targets (goals and commitments)
  • Metrics (quantitative indicators for tracking effectiveness—fewer in VSME, but still a focus)

The difference lies in depth. A VSME report might simply confirm the existence of a policy, while the ESRS expects granular detail and compliance with stringent disclosure requirements. Understanding this distinction is crucial: a VSME report is not fundamentally different in structure from an ESRS report—it is just shorter and less detailed.

Your level of ambition matters

The VSME offers a clear starting point—particularly those not (yet) in scope of the CSRD. It ensures basic compliance and helps businesses meet growing expectations around transparency, finance access, and reputational risk management.

But VSME is the lowest rung of the reporting ladder. Large customers, banks, and investors are already demanding data aligned with ESRS. Staying at the minimum level may be cost-effective in the short term, but could constrain growth opportunities, or result in a strategic disadvantage, as peers publish more advanced sustainability disclosures. 

Choosing where to land on the VSME–ESRS spectrum starts with defining your sustainability ambition. Are you aiming to become a reporting leader, setting the tone for your industry? Or is your focus more on meeting basic regulatory expectations?

Many companies will take a phased approach—starting small but gradually incorporating more detailed, ESRS-aligned disclosures. The important part is making an intentional choice based on business priorities, not just reporting obligations.

Effort vs. reward: Allocate resources wisely

Sustainability reporting, particularly under the ESRS, demands time, data, and coordination. For companies with limited resources, the effort required can seem daunting.

However, starting early—even if only by enhancing your VSME disclosures—can help distribute the workload and reduce the stress closer to a CSRD deadline. It also avoids having to reinvent internal systems later.

That said, companies should balance ambition with practicality. The CSRD is expected to be revised in 2026, meaning that over-investing too early could result in duplicated efforts. The trick is to act early enough to build capacity and future-proof yourself amid regulatory uncertainties.

Why go beyond the minimum?

Materiality remains the cornerstone of sustainability reporting. Even under the VSME, a company must disclose material topics. However, many companies will find value in going beyond the bare minimum, particularly in areas where sustainability is strategically significant. Sticking strictly to VSME could lead to generic and rigid reporting with limited strategic value.  

In contrast, companies that take their reporting departure from aligning with the gold standard of the ESRS can turn sustainability reporting into a tool for internal insight, operational improvement, and stakeholder engagement.

Competitors providing richer ESG data may build stronger relationships with key stakeholders, attract capital more easily, and influence industry standards.The goal is not more reporting for the sake of it—it’s better reporting, aligned with business priorities.

The Omnibus opportunity: Make the framework work for you

The Omnibus proposal underscores the EU’s commitment to flexible, proportional reporting. But it’s also an opportunity. VSME gives companies a start—but it doesn’t set the limits. Leveraging the depth of the ESRS—where it makes sense—can create a more valuable, actionable sustainability report that serves both regulatory and strategic purposes. 

The smart move is to approach sustainability reporting as a scalable, strategic tool; businesses can navigate the VSME-to-ESRS spectrum effectively, positioning themselves for long-term success.

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