VSME as an alternative to ESRS

Sustainability reporting requirements in Germany are changing — with the EU Omnibus I finally adopted in February 2026, fewer companies will be subject to reporting obligations under the CSRD. However, the need for standardized ESG reporting remains, driven by supply chain requirements and stakeholder expectations. This is where the VS(ME) comes in: it provides a pragmatic framework that allows smaller companies to report relevant ESG data without having to meet the full scope of the European Sustainability Reporting Standards (ESRS). Starting with the 2027 financial year, the VSME will be replaced by its successor, the VS — the underlying logic as a voluntary alternative to the ESRS remains unchanged.

What are the differences and similarities between ESRS and VSME? And which standard is best suited for which situation? This article highlights the key features of both approaches and explains why an "ESRS Focus" can be a strategically valuable path for many companies, beyond regulatory obligations.

Commonalities between ESRS and VS(ME)

The VSME standard and the European Sustainability Reporting Standards (ESRS) share several commonalities.

Both standards are structured around the classic ESG pillars - Environment, Social, and Governance - and organize their reporting requirements along these key sustainability dimensions. Their shared objective is to support companies in their sustainable transformation by providing a framework that makes sustainability-related progress measurable, comparable, and transparent. This enables companies to better understand and manage their impact on the environment and society.

Moreover, both the ESRS and VSME allow companies to withhold confidential information under certain conditions, particularly when disclosure could jeopardize sensitive business interests. At the same time, companies are free to disclose additional sustainability information that goes beyond the minimum requirements of the respective standard - if they deem it appropriate.

Another shared feature is the connection to financial reporting: Reports under both ESRS and VSME are ideally intended to link to the company’s financial statements, in order to highlight the interdependencies between sustainability performance and financial performance. Additionally, both standards require the sustainability report to refer to the same fiscal year as the financial report, which facilitates comparability across reporting periods.

Comparison of ESRS and VS(ME)

Why ESRS might be the better choice for companies

With the finally adopted Omnibus I package (February 2026), many companies fall out of the CSRD reporting obligation and therefore no longer need to report under ESRS. On top of that: with the revised ESRS published by the EU Commission on July 3, 2026, the number of mandatory datapoints drops by around 60%, meaning the standards are also becoming leaner in content. In some scenarios, it can still be strategically sensible to keep reporting under ESRS, for example on a reduced scale with an "ESRS focus."

VSME to be replaced by the new Voluntary Standard (VS) from 2027

Also worth noting: from fiscal year 2027, VS(ME) will be replaced by a new voluntary standard (VS) aimed at companies with up to 1,000 employees that don't fall under the CSRD, including companies that recently dropped out of the reporting obligation due to the raised CSRD threshold. VS builds on VS(ME) and was finally published by the EU Commission on July 3, 2026; going forward, it is intended to serve as a reference for permissible data requests along the supply chain.

What the “ESRS Focus” means

A focus on ESRS (i.e., the official standards under the CSRD) is valued by many stakeholders as a solid foundation, mainly because of the structured, comparable data it provides.

Even so, stakeholders may request individual pieces of information that weren't initially captured under the "ESRS focus." In these cases, the approach offers flexibility: the company can selectively add relevant datapoints and respond directly to stakeholder interests.

Another advantage lies in content control. The "ESRS focus" allows companies to set their own priorities, which can and should be guided by stakeholder expectations. The result is a report that combines systematic comparability with company-specific priorities. Even if not every topic is covered, an ESRS-based approach provides far more orientation, traceability, substance, and comparability than unsystematic or missing reporting, particularly when stakeholders place explicit value on ESRS compatibility.

From VS(ME) to ESRS: How to transition

Using the "ESRS focus" gives companies the option to start with the data they already have and concentrate on the topics they consider most relevant. Instead of implementing the full ESRS right away, companies can work through it step by step, one disclosure requirement at a time. With each reporting cycle, the scope can be expanded by gradually adding further material topics identified through the double materiality assessment (DMA).

The transition from VS(ME) to ESRS is generally possible, but it requires thorough preparation and can involve considerable effort. While VS(ME) is aligned with ESRS in content, the key difference is that a single datapoint in VS(ME) often corresponds to several, more detailed datapoints under ESRS. For a successful transition, the VS(ME) datapoints therefore need to be broken down and further differentiated to fully meet ESRS's specific requirements. This requires not only an in-depth analysis of existing reporting, but also an adjustment of internal processes and systems for capturing and documenting the additional information.