VSME and the ‘Sustainability Omnibus’: Adapting to the new ESG landscape

On 26 February 2025, the European Commission introduced the Sustainability Omnibus (Omnibus I) proposal, aiming to simplify EU sustainability reporting. The Voluntary Sustainability Reporting Standard for SMEs (VSME) is expected to become the standard approach for SMEs and other businesses outside the proposed CSRD scope.

So what does this mean for businesses? Potentially less complexity, more clarity, and a better way for businesses to manage sustainability information without unnecessary burden.

Companies collect and store large volumes of ESG data from internal operations, suppliers, and third-party sources. Each dataset requires energy-intensive processing, storage, and transmission, contributing to Scope 3 IT-related emissions.

What is the VSME, and Why Does It Matter? 

The VSME (Voluntary Sustainability Reporting Standard for SMEs) offers a straightforward, structured framework for sustainability reporting. It provides a manageable way for companies outside the CSRD scope to track and report ESG (Environmental, Social, and Governance) data—without the heavy workload of full CSRD compliance.

Two levels of reporting:

Basic Module: Core ESG Disclosures

The Basic Module establishes a foundation for sustainability reporting across four key areas:

• General Information
• Environmental Metrics
• Social Metrics
• Governance Metrics

It includes 11 simplified ESG disclosures, focusing on essential metrics with reduced complexity, making it a prerequisite for the Comprehensive Module.

Comprehensive Module: Deeper ESG Insights

For businesses needing to report more detail—often to meet bank, investor, or other stakeholder requirements—the Comprehensive Module builds on the Basic Module with 9 additional disclosures covering: 

• Business Model and Strategy
• Practices and Policies
• Scope 3 Greenhouse Gas (GHG) Emissions
• Climate Risks and GHG Targets
• Human Rights

While VSME remains voluntary, the Sustainability Omnibus proposal suggests that the European Commission will officially recommend it as the EU’s recommended sustainability reporting standard. Getting ahead of this shift ensures SMEs stay prepared for evolving regulations while meeting increasing market expectations.

How the VSME Fits Into the ‘Sustainability Omnibus’ Proposals

The Sustainability Omnibus proposal, published on 26 February 2025, introduces potential changes to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy, and the Carbon Border Adjustment Mechanism (CBAM) to improve alignment and simplify sustainability reporting within the EU.

One of the most significant shifts is a focus on simplifying reporting for companies outside the CSRD scope while still maintaining the “trickle-down” effect—where large companies will continue to request ESG data from their supply chain and other business partners.

Three Key Takeaways for VSME Reporting:

1. Who needs to report under CSRD may change

• Under Omnibus I, mandatory sustainability reporting would apply only to companies with more than 1,000 employees and either EUR 50m turnover or EUR 25m in assets.
• Companies outside the proposed scope, including SMEs, will still be expected to provide ESG data to larger value chain actors.

2. VSME could become the go-to reporting standard

• The European Commission intends to formalise the VSME as an EU-backed reporting framework, making the VSME the go-to sustainability reporting standard for companies outside the CSRD scope.

3. CSRD reporting deadlines could be delayed

• SMEs working with these companies could expect a slower rollout—but not a complete stop—to ESG data requests.
• Companies that would have had to report in 2026 on 2025 data may now get a two-year delay, meaning their first reports would be due in 2028.

Even with these changes, sustainability reporting is not going away. SMEs that proactively align with the VSME will be better positioned to secure financing, strengthen business relationships, and remain competitive. Companies that see reporting as a strategic tool—not just compliance—will be better positioned for the future.

“VSME reporting offers multiple benefits—helping businesses improve internal decision-making, meet growing stakeholder expectations, and streamline ESG data management. For companies that may need to comply with ESRS in the future, adopting the VSME now ensures a smooth and structured transition.” – Frida Stolpe, Senior Associate, Position Green

“For companies that may need to comply with ESRS in the future, adopting the VSME now ensures a smooth and structured transition.”

Frida Stolpe, Senior Associate, Position Green

VSME vs. ESRS: What Are The Key Differences?

The ESRS is detailed and complex, designed for large corporations under CSRD. In contrast, VSME simplifies sustainability reporting for SMEs while still ensuring that businesses meet essential sustainability expectations.

• No Mandatory Double Materiality Assessment (DMA) – Unlike ESRS, VSME doesn’t require a full DMA. However, businesses can still conduct a lighter assessment if they want to understand risks and opportunities better.
• “If Applicable” Principle – Businesses decide which disclosures make sense for their operations, keeping reporting practical and relevant.
• Meets Stakeholder ESG Requests – Even though SMEs don’t have to follow CSRD, larger companies will still ask for ESG data from their stakeholders. The VSME makes it easy to provide the right data in a structured way.

VSME: Future-proofing for regulatory shifts

Despite the uncertainty around the Sustainability Omnibus, businesses that prepare now will be in the strongest position moving forward. While VSME aligns with ESRS, it offers a simplified version designed specifically for SMEs. This makes it a practical choice for businesses that may need to comply with CSRD in the future.

How VSME Helps Businesses Adapt to Regulatory Changes:

• Preparedness for Future CSRD Compliance – If CSRD thresholds change and a business falls under mandatory reporting, those already using VSME will have a structured system in place.
• Easier Sustainability Data Management – Businesses that establish an ESG reporting process now will be better equipped to respond to regulatory and stakeholder data requests.
• Competitive Advantage – Companies that begin tracking their environmental and social impact now will stay ahead of competitors that delay ESG reporting.

Even though the Sustainability Omnibus proposal may reduce mandatory sustainability reporting requirements, companies within the CSRD scope will still require ESG data from suppliers and business partners. The VSME ensures that companies outside the CSRD scope can meet these demands in a structured and efficient way without unnecessary complexity.

Key Steps to Prepare for VSME Reporting

As the EU moves toward simplified sustainability reporting for SMEs, companies can take proactive steps to prepare for VSME reporting:

1. Select the right reporting approach
   • Basic Module: Start here if you are new to sustainability reporting.
   • Basic and Comprehensive Module: Consider this if banks, investors, or large customers require deeper ESG insights.
2. Start Measuring GHG (Greenhouse Gas) Emissions
   • Carbon accounting: Begin tracking energy consumption, fuel use, and emissions to support accurate reporting.
3. Establish a Reporting System
   • Use existing financial and operational data to build your sustainability report.
   • Leverage digital platforms to streamline data collection and data sharing and ensure consistency.
4. Prepare For Supply Chain Requests
   • Large companies will continue to request ESG data from SMEs.
   • Using VSME reporting ensures you’re ready without unnecessary complexity.

Final Word: Get Ahead, Stay Competitive

While the Sustainability Omnibus signals a shift toward simplified reporting, it doesn’t eliminate sustainability reporting. Instead, it offers a simplified, structured approach for SMEs and companies outside the CSRD scope through the VSME.

Want to stay ahead? Start aligning with VSME now—before ESG reporting requests start stacking up and to ensure a smoother transition to potential ESRS reporting.

At Position Green, we stay two steps ahead of regulations and have already put together an effective VSME solution to help businesses streamline their disclosures. Our experienced advisors are actively guiding clients through VSME reporting, ensuring they meet requirements efficiently and strategically—so they are well-prepared should the Sustainability Omnibus proposal move forward.