Sustainability reporting is becoming increasingly important in the business world. Many companies have spent time and effort preparing for the requirements of the CSRD (Corporate Sustainability Reporting Directive). However, new proposals are now on the table that could significantly limit the scope of this legislation for mid-sized businesses. This raises important questions: what exactly is changing? And how can businesses adapt while maintaining transparency in the growing ESG landscape?
CSRD is no longer mandatory for mid-sized businesses. What now?
Proposed changes in European sustainability legislation under the Omnibus regulation may exempt 80% of businesses from the CSRD (Corporate Sustainability Reporting Directive). This means that thousands of mid-sized businesses (250-1,000 employees) would no longer be required to publish extensive ESG reports.
But does this mean these companies no longer need to share sustainability data? No. Large corporations will still need to report and will continue to request ESG data from their suppliers. The solution? VSME reporting.
What’s changing in sustainability reporting?
Previously, companies with 250+ employees or €50 million in revenue were expected to comply with CSRD reporting. Under the latest Omnibus regulation proposals, this threshold would increase to businesses with 1,000+ employees.
If these relaxations are implemented, around 3,000 companies in the Netherlands would no longer be subject to mandatory reporting.
However, this does not mean that these companies can ignore ESG transparency. Large corporations must still comply with CSRD and will continue requesting ESG data from their supply chains.
To address this, the EU is issuing VSME (Voluntary Sustainability Reporting Standards for SMEs): a lighter, standardised approach for mid-sized businesses to report their sustainability efforts without the complexity of CSRD.
CSRD vs. VSME: What’s the difference?
The CSRD and VSME both aim to help businesses report on sustainability, but they differ significantly in requirements and complexity. Here are the key differences:
With VSME, mid-sized businesses can still share sustainability data, but without the heavy obligations and costs associated with CSRD. This makes it a more accessible alternative for companies that want to be transparent about their ESG performance without dealing with complex regulations.
Why VSME is the smart choice for mid-sized businesses
- Large companies will still request ESG data - Even without a CSRD obligation, mid-sized businesses in the supply chain must still report sustainability data. Since large companies remain CSRD-compliant, they will continue requesting ESG data from their suppliers. A VSME report provides a lightweight alternative to meet these demands efficiently.
- No mandatory audit requirements - A CSRD report requires an external audit, which can be costly. VSME reporting is much cheaper because it is voluntary and requires no official audit.
- Show commitment without bureaucracy - Sustainability is a growing business priority. A VSME report allows companies to demonstrate their commitment to sustainability without being burdened by CSRD’s administrative complexity and costs. This can help build a stronger reputation and better relationships with clients and partners.
- Easy transition for companies already prepared for CSRD - If your company has taken steps towards CSRD compliance, preparing a VSME report is straightforward. The required data is often already available, making it easy to compile.
- Competitive advantage - Companies that are transparent about sustainability efforts are more likely to win tenders and business partnerships. A VSME report can set you apart from competitors who do not disclose their ESG performance.
- VSME is sufficient for non-material suppliers - For many smaller and non-material suppliers, a full CSRD report is unnecessary. VSME provides a practical and accessible way to share relevant sustainability data within the supply chain without unnecessary administrative burdens.
How do these changes impact your business?
Scenario 1: You are a material supplier
If your company plays a critical role in a large corporation's supply chain, you may still be required to provide additional data. In this case, VSME may not be sufficient, and a CSRD-like report may still be necessary.
Scenario 2: You are not a material supplier
If your business does not directly impact a large company's sustainability strategy, a VSME report is sufficient for supply chain reporting.
Scenario 3: You are intrinsically motivated to become more sustainable
Want to showcase your company’s commitment to sustainability? A VSME report provides an officially recognised framework to communicate your impact to clients, investors, and employees.
The future of VSME for mid-sized businesses
If the proposal is adopted, and mid-sized companies are no longer required to comply with CSRD, VSME will become the logical standard for ESG transparency.
In summary:
- Mid-sized companies may no longer be required to report under CSRD, but supply chain transparency remains essential.
- VSME offers a voluntary, cost-effective alternative.
- Companies already invested in CSRD preparation can easily transition to VSME.
This ensures ESG transparency remains accessible without the complexity of CSRD.
How can your business use VSME? Want to discover how VSME can help your business streamline ESG transparency and stay ahead in sustainability reporting? Find out how our VSME Reporting Tool makes it easy to answer sustainability questions efficiently and strengthen your market position. Get in touch today and take the next step!
In the next blog, we will examine how SMEs can use VSME to meet supply chain obligations, differentiate themselves, and gain a competitive advantage. Stay tuned!
