Sustainability reporting is becoming increasingly complex, with businesses required to navigate multiple frameworks, respond to various stakeholder requests, and keep up with constant regulatory updates. Just when companies started getting to grips with the first wave of Corporate Sustainability Reporting Directive (CSRD) reports, along comes another shift—the European Commission’s Omnibus proposal, adding yet another layer of change to the sustainability reporting landscape.

With the regulatory goalposts continuously moving,businesses must adapt quickly. Two key standards shaping sustainability disclosure in the EU are the Voluntary SME Standard (VSME) and the EuropeanSustainability Reporting Standard (ESRS). While both address sustainability topics, they differ significantly in their scope, applicability, and reporting complexity.

Understanding these differences is essential for businesses looking to stay ahead and navigate the evolving sustainability landscape effectively.

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VSME vs ESRS: Breaking down the differences

The VSME isa voluntary framework designed for non-listed SMEs, offering a simplified and proportional approach to sustainability reporting that aligns with their capacity and resources. On the other hand, the ESRS isa mandatory reporting framework for large companies and listed SMEs, enforced under the CSRD to ensure comprehensive and structured sustainability disclosures.

A side-by-side comparison: VSME vs ESRS

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How VSME aligns with ESRS

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While both frameworks cover similar sustainability themes, ESRS requires far more granular data and an extensive stakeholder coverage. Meanwhile, VSME simplifies ESG reporting, making it more realistic for SMEs to implement without excessive administrative burden.

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The Omnibus Proposal: A Game Changer for VSME

To simplify sustainability reporting and ease the compliance burden, the European Commission’s Omnibus proposal (introduced in 2025) has reinforced VSME as the go-to reporting standard for companies with fewer than 1,000 employees. This move is a strategic shift to prevent SMEs from being overwhelmed by the stringent ESRS requirements while still ensuring they remain active players in sustainability reporting.

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What changes under the Omnibus?

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1. Limits on information requests: Large companies under CSRD can no longer demand excessive ESG data from SMEs. They must align their requests with VSME standards, ensuring SMEs don’t face disproportionate reporting burdens.
2. Voluntary reporting endorsement: VSME is now officially recognized as the preferred sustainability framework for SMEs, encouraging voluntary adoption instead of imposing mandatory ESRS compliance.
3. Simplified ESRS requirements: The Omnibus proposal scales down certain ESRS obligations, bringing some elements more in line with VSME’s practical, SME-friendly approach.
4. Exemptions for small businesses: Many SMEs will no longer be subject to mandatory reporting unless they voluntarily opt in to VSME for credibility, supply chain integration, or investor relations.
5. Current CSRD compliance: Until the Omnibus proposal is formally approved, companies currently subject to CSRD must still use ESRS as the required reporting framework to remain compliant.

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Why SMEs should care about VSME

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Even though VSME is voluntary, forward-thinking SMEs should consider integrating it into their operations. Here’s why:

• Enhances credibility and strengthens relationships with larger business partners who need ESG data.
• It is a 'no-regret' data collection framework during regulatory uncertainty
• Simplifies sustainability reporting while covering key ESG topics such as emissions, biodiversity, workforce conditions, circular economy, and governance.
• Futureproofs compliance by aligning with ESRS, making it easier to transition to stricter regulations if required in the future.
• Boosts competitiveness, particularly for SMEs looking to attract sustainable investments or align with responsible sourcing requirements.

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VSME and the tourism & travel industry

The tourism and travel industry, heavily composed of SMEs, stands to benefit significantly from the adoption of VSME. As sustainability becomes a major factor in consumer choices and regulatory expectations, travel businesses—including hotels, tour operators, and transport providers—must demonstrate their environmental and social commitments.

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VSME offers a streamlined yet credible way for SMEs in tourism to report on key issues such as carbon footprint, biodiversity impact, water and energy consumption, and fair labor practices without the overwhelming complexity of ESRS.

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Additionally, aligning with VSME ensures these businesses remain competitive in an increasingly eco-conscious market, while also easing compliance with sustainability data requests from larger partners in the travel ecosystem.

VSME offers a streamlined yet credible way for SMEs in tourism to report on key issues such as carbon footprint, biodiversity impact, water and energy consumption, and fair labor practices without the overwhelming complexity of ESRS.

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The future of sustainability reporting

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As sustainability regulations continue to evolve, businesses—both SMEs and multinational enterprises—must take a forward-thinking approach rather than simply reacting to new requirements.

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For SMEs, the VSME standard offers a practical and flexible reporting approach that balances sustainability commitments with operational realities. Adopting VSME allows smaller companies to enhance credibility, improve risk management, and integrate into sustainable supply chains without the overwhelming burden of ESRS compliance. It’s a tool for growth, competitiveness, and long-term business resilience.

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For multi-national enterprises and listed SMEs, while ESRS remains the primary reporting standard under CSRD, the shift toward a more SME-friendly framework means that supply chain sustainability reporting will also need to adapt. Large companies must ensure their sustainability strategies remain robust while respecting the reduced reporting burdens placed on smaller suppliers. This creates opportunities for collaboration, innovation, and streamlined ESG data collection.

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Ultimately, sustainability reporting is no longer just about compliance—it’s about strategy. Companies that embrace transparent, proportionate, and forward-looking reporting will be best positioned for success in an increasingly ESG-driven market.

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The "no-regret" approach to sustainability strategy

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As seen in the tourism and hospitality sector, adopting a "no-regret" approach to sustainability ensures businesses make decisions that provide long-term value, regardless of future regulatory shifts. Instead of treating sustainability as a regulatory burden, companies can use the VSME framework as a strategic tool to build resilience, efficiency, and stakeholder trust. Whether through resource efficiency, ethical sourcing, or social responsibility initiatives, investing in sustainability today will pay dividends in the future.

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By taking proactive steps now, businesses can future proof their operations, ensuring they are not only compliant but also leaders in sustainability innovation and impact.

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Want to learn how you can start using the VSME framework today? Let's chat.