European Commission opens consultation on revised ESRS and voluntary SME standard
The European Commission this week launched a one-month “Have Your Say” public consultation on draft final versions of the revised European Sustainability Reporting Standards (ESRS) and the rules underpinning the VSME – the new voluntary reporting standard
for smaller companies. The drafts build on the Omnibus I simplification package and on technical advice submitted by EFRAG in December 2025.
There are some changes to the ESRS text, meaning that the ESRS XBRL taxonomy will need to be further modified. Despite significant speculation (and lobbying from internationally operating companies) there are no proposals to permit the substitution of ESRS-based disclosures with ISSB ones.
The voluntary standard, based on EFRAG’s 2024 VSME, introduces a “value chain cap” for companies with 1000 employees or fewer (up from 250), with statutory effect: CSRD in-scope companies are prohibited from requiring these entities to provide information beyond the standard, and protected undertakings have a statutory right to refuse such requests. The 1,000-employee threshold is much wider than typical SME definitions, so this is an interesting expansion. Note that these (expanded-definition) SMEs are encouraged to use the VSME taxonomy and template (or a commercial version that provides greater integration with a company’s internal systems) that outputs an Inline XBRL report.
Stakeholders are invited to respond by 3 June. The delegated acts will then be transmitted to the European Parliament and Council under the no-objection procedure.
Read all about it here.
