The EU’s Omnibus Simplification Package proposes to significantly simplify the requirements and scope of sustainability reporting standards such as the Corporate Sustainability Reporting Directive (CSRD). The Voluntary Sustainability Reporting Standard for non-listed micro, small and medium enterprises (VSME) is the suggested alternative for large companies that would no longer be within scope of the CSRD.

This report examines and compares key elements of the VSME to the European Sustainability Reporting Standards (ESRS) and evaluates the VSME’s suitability for investors' sustainability reporting needs. The analysis found that the VSME requirements only partially align with the principle adverse impact (PAI) indicators investors must disclose under the Sustainable Finance Disclosure Regulation, while the ESRS requirements fully align. This suggests that having large entities report under VSME could reduce transparency, as well as data reliability, consistency and comparability, while also not aligning with investors’ disclosure requirements.

Readers of this report will learn about:

• The reporting simplification strategies proposed in the Omnibus Package.
• Key features of the VSME and its applicability to large companies.
• The alignment of current and proposed reporting standards with EU investors’ disclosure requirements.