Omnibus Directive Boosts the Role of the VSME Standard

🇪🇺 Major changes in EU sustainability reporting – what does it mean in practice? 🤔

On February 26th, the EU Commission published the Omnibus Directive, which eases corporate sustainability reporting and due diligence requirements. This change will significantly reduce the number of companies subject to CSRD reporting obligations. The Commission estimates cost savings of at least €6.3 billion – for Finnish companies, this could mean up to €128 million in reduced reporting costs! 💰

However, even significant number of companies will see a reduced reporting burden, climate action and sustainable business practices remain an important focus area.

What’s next?

✅ Higher threshold for mandatory reporting: CSRD reporting will now apply only to companies with over 1,000 employees and either €50 million in revenue or €25 million in assets.

✅ Fewer companies affected: In Finland, around 800 companies will be exempt from mandatory CSRD reporting, leaving only 132 companies under the obligation. At the EU level, the number of companies required to report under CSRD is estimated to decrease by 80%.

✅ New voluntary VSME standard: Companies exempt from CSRD reporting are encouraged to use the VSME Standard (Voluntary Standard for SMEs) for sustainability reporting. This framework helps meet the growing data demands of large corporations and financial institutions. At the same time, the VSME Standard will set the legal maximum for sustainability information that stakeholders can require from companies.

✅ Pending approval & transition period: The Omnibus Directive still requires approval from EU member states and the European Parliament. In the meantime, the Commission aims to postpone CSRD reporting deadlines for newly affected companies by two years, transitioning them to voluntary VSME reporting instead.

📌 Why does this matter?

Even with reduced reporting requirements, sustainability efforts remain a priority. Large companies and financiers still need ESG data from their partners and suppliers. The VSME standard provides SMEs with an efficient way to report sustainability without unnecessary complexity.
The VSME Standard, which esgResilience reporting service applies, will become the de facto legal sustainability reporting framework for companies across the EU. Under the Omnibus Directive, approximately 9,000 of the largest companies in the EU will remain subject to the comprehensive, mandatory CSRD reporting requirements, while the other 32 million businesses will be able to report under the VSME Standard.

Furthermore, banks, investors, and value chain partners cannot demand additional sustainability data beyond what is defined in the VSME Standard. esgResilience is the only Nordic VSME reporting service participating in the future development of the standard as part of the EFRAG VSME Community.

The European Financial Reporting Advisory Group (EFRAG), responsible for sustainability reporting regulation, launched a community in late 2022 to support the development of sustainability reporting standards. This community brings together stakeholders with direct experience and interest in sustainability reporting for SMEs (EFRAG VSME Community). Members contribute to the development and acceptance of the standard across the EU through surveys and other forms of feedback.

At the start of this year, additional members were invited to join the group. We are happy to announce that esgResilience is currently the only Finnish company in EFRAG’s VSME Community network, actively shaping the future of SME sustainability reporting in Europe.

If you’d like to discuss how this change affects your business, feel free to reach out!

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