Voluntary sustainability standard and value chain cap enter EU law
The EU’s Voluntary Sustainability Reporting Standard (VS) has been published in the Official Journal of the European Union and adopted by the European Commission. The delegated act entered into force on 24 September 2026.
Built on the European Financial Reporting Advisory Group’s (EFRAG) standard for smaller companies, formerly known as the VSME, it offers a “proportionate and practical” voluntary reporting framework for entities with up to 1,000 employees, which they can use to structure and communicate relevant sustainability information.
Notably, the standard is also designed as a “value chain cap.” Larger companies making mandatory sustainability disclosures under the Corporate Sustainability Reporting Directive (CSRD) cannot require value chain partners meeting that small-business definition of 1,000 employees or fewer to provide information beyond the disclosures set out in the voluntary standard.
As we noted when the Commission consulted on the drafts in May, that threshold reaches well beyond typical definitions of a small business, so a very large pool of companies may end up reporting against the VS. EFRAG, now tasked with maintaining its guidance, plans to release an updated Digital Template in November, with further enhancements to its Excel to XBRL converter for producing Inline XBRL reports. More sophisticated, integrated software that connects to source data inside a company and produces Inline XBRL reports can also be used. Structured, comparable sustainability data from across the value chain is on the horizon – within the limits defined by the new standard.
