COMMISSION STAFF WORKING DOCUMENT Accompanying the documents COMMISSION DELEGATED REGULATION (EU).../... amending Delegated Regulation (EU) 2023/2772 as regards the simplification of certain sustainability reporting standards COMMISSION DELEGATED REGULATION (EU) …/... supplementing Directive 2013/34/EU of the European Parliament and of the Council by establishing sustainability reporting standards for voluntary use by undertakings protected by the value chain cap
Date: 2026-07-03
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: European standard, activity report, administrative formalities, corporate social responsibility, disclosure of information, environmental impact, simplification of formalities, standard, sustainable development, trade information

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.7.2026  SWD(2026) 500 final  COMMISSION STAFF WORKING DOCUMENT Accompanying the documents COMMISSION DELEGATED REGULATION (EU).../...  amending Delegated Regulation (EU) 2023/2772 as regards the simplification of certain sustainability reporting standards   COMMISSION DELEGATED REGULATION (EU) …/... supplementing Directive 2013/34/EU of the European Parliament and of the Council by establishing sustainability reporting standards for voluntary use by undertakings protected by the value chain cap {C(2026) 5010 final} - {C(2026) 5011 final}  
 
 
Table of contents 

1 
Introduction  on  the  legal  and  institutional  context  and  purpose  of  the  staff  working 
document:  adoption  of  the  revised  ESRS  and  the  VS  as  key  deliverables  of  the  EU 
sustainability reporting simplification agenda ................................................................. 3 

Context of the ESRS revision .................................................................................................................. 3 
Context of the VS adoption and role in the value chain cap ....................................................................... 4 
Purpose of the document ...................................................................................................................... 5 

2 

Revised ESRS, methodology and impacts, including costs savings ............................ 6 

2.1 

Role of EFRAG as the Commission’s technical advisory body................................................. 6 

Mandate for the revision of the ESRS ...................................................................................................... 6 
Timeline and deliverables ...................................................................................................................... 6 

2.2 

Evidence gathering and due process underpinning revised ESRS ............................................ 7 

Capturing the diversity of perspectives across the sustainability reporting ecosystem ................................ 7 
Engagement of the reporting community and experience from the first year of application .......................... 7 

2.2.1  Call for evidence ............................................................................................................. 7 

2.2.2  Outreach events and public consultation ......................................................................... 8 

Outreach events ................................................................................................................................... 8 
Public consultation ............................................................................................................................... 8 
One-to-one interviews with companies .................................................................................................. 8 
Field tests ............................................................................................................................................ 9 

2.3 

Reporting cost savings resulting from revised ESRS ............................................................... 9 

2.3.1  Baseline and population of companies ............................................................................. 9 

Baseline used in this analysis ................................................................................................................ 9 
Population of companies in scope of the analysis: Wave 1 and Wave 2 companies .................................... 9 

2.3.2  Costs concepts used .................................................................................................... 10 

2.3.3 

Key cost savings from revised ESRS................................................................................ 11 
Table summarising key cost savings ..................................................................................................... 11 
Annual and cumulative savings over 2027-2031 of EUR 3.7 billion ........................................................... 12 
Net savings: transition costs do not offset the benefits of simplification .................................................. 12 
Trickle-down effects raise cost savings to EUR 4.7 billion ....................................................................... 12 

2.3.4  Distribution of savings ................................................................................................... 13 

Internal reporting cost reduction .......................................................................................................... 13 
External consultancy cost reduction .................................................................................................... 13 
IT costs’ reduction .............................................................................................................................. 13 
Assurance costs’ reduction ................................................................................................................. 13 

2.3.5  Non-quantified impacts of revised ESRS ......................................................................... 14 

A positive effect on competitiveness .................................................................................................... 14 

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Benefits relating to access to finance ................................................................................................... 14 
Modified experience for users of sustainability information .................................................................... 14 
Lessening the trickle-down effects ....................................................................................................... 14 

3 

Commission’s changes to EFRAG’s technical advice .............................................. 14 

4 
Sustainability  reporting  standards  for  voluntary  use:  policy  drivers  leading  the 
development of the standard and quantified impacts .................................................... 16 

4.1 

Policy drivers and development of the VS............................................................................ 16 

Market demand and goal of market acceptance for the VSME standard ................................................... 16 
Public consultation and field tests conducted by EFRAG ........................................................................ 17 
Key messages from the public consultation and how they have been integrated ...................................... 17 
The VS as a proportionate and simplified standard “based on” VSME ...................................................... 18 

4.2 

4.3 

Methodology, multi-stakeholders’ interests and due process .............................................. 19 

Quantified impacts............................................................................................................ 19 

4.3.1  Baseline and population of companies ........................................................................... 19 

4.3.2  Quantified impacts of the VS ......................................................................................... 20 

Companies with up to 250 employees .................................................................................................. 20 
Companies with 250 to 1000 employees .............................................................................................. 22 

4.3.3  Qualitative benefits ....................................................................................................... 22 

Consistency with the European Climate Law .......................................................... 23 

Conclusions......................................................................................................... 24 

6.1 

6.2 

6.3 

Revised ESRS .................................................................................................................... 24 

VS .................................................................................................................................... 24 

Joint conclusion ................................................................................................................ 24 

5 

6 

2 

 
 
 
 
 
 
1  Introduction on the legal and institutional context and purpose of 
the  staff  working  document:  adoption  of  the  revised  ESRS  and 
the  VS  as  key  deliverables  of  the  EU  sustainability  reporting 
simplification agenda 

This Staff Working Document accompanies the adoption of two key deliverables of the sustainability 
reporting simplification agenda under the Omnibus I package: a delegated act adopting the revised 
European Sustainability Reporting Standards (ESRS) and a delegated act adopting the Sustainability 
Reporting Standard for Voluntary Use (VS). The corporate sustainability reporting rules introduced in 
the  Accounting  Directive 1  by  the  Corporate  Sustainability  Reporting  Directive  (CSRD) 2  provide 
investors  and  other  stakeholders  with  transparent,  comparable  and  reliable  information  on 
companies’ sustainability impacts, risks and opportunities. In light of the evolving policy priorities to 
strengthen  competitiveness  and  reduce  administrative  burdens,  the  sustainability  reporting 
framework was revised be the Omnibus I Directive 3 to simplify requirements and lower compliance 
costs  while  preserving  its  core  objectives.  Together  with  the  amendments  to  the  corporate 
sustainability  reporting  framework,  these  delegated  acts  give  effect  to  the  proportionality,  burden 
reduction and competitiveness objectives pursued by the Omnibus I package. 

Context of the ESRS revision 
Under  the  Accounting  Directive  as  amended  by  the  Corporate  Sustainability  Reporting  Directive 
(CSRD),  the  European  Commission  is  empowered  to  adopt  delegated  acts  establishing  European 
Sustainability Reporting Standards (ESRS) which companies in scope of sustainability reporting must 
use to fulfil their sustainability disclosure requirements4. The ESRS delegated acts shall take account 
of the technical advice prepared by EFRAG.  

The first set of ESRS was adopted by Commission Delegated Regulation (EU) 2023/2772 on 31 July 
2023 5 giving binding effect to the ESRS in EU law as a supplement to the  Accounting Directive and 
specifying  the  information  that  an  entity  must  disclose  about  its  material  impacts,  risks  and 
opportunities in relation to environmental, social and governance matters. 

To  deliver  swiftly  on  the  simplification  and  streamlining  of  sustainability  reporting  without 
undermining the objectives of the CSRD, the Omnibus I Directive - which narrows down the scope of 
sustainability reporting to companies above 1000 employees and EUR 450 million turnover, reducing 
the number of companies in scope by about 85% - recognises that the Commission, within six months 

1  Directive  2013/34/EU  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on  the  annual  financial 
statements,  consolidated  financial  statements  and  related  reports  of  certain  types  of  undertakings,  amending 
Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 
83/349/EEC (OJ L 182, 29.6.2013, p. 19, ELI: http://data.europa.eu/eli/dir/2013/34/oj).  
2 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation 
(EU)  No 537/2014,  Directive  2004/109/EC,  Directive  2006/43/EC  and  Directive  2013/34/EU,  as  regards  corporate 
sustainability reporting, (ELI: http://data.europa.eu/eli/dir/2022/2464/2026-03-18). 
3 Directive  (EU)  2026/470  of  the  European  Parliament  and  of  the  Council  of  24  February  2026  amending  Directives 
2006/43/EC,  2013/34/EU,  (EU)  2022/2464  and  (EU)  2024/1760  as  regards  certain  corporate  sustainability  reporting 
requirements  and  certain  corporate  sustainability  due  diligence  requirements  (OJ  L,  2026/470,  26.2.2026, 
ELI: http://data.europa.eu/eli/dir/2026/470/oj). 
4 Article 29b of the Accounting Directive. 
5  Commission  Delegated  Regulation  (EU)  2023/2772  of  31  July  2023  supplementing  Directive  2013/34/EU  of  the 
European Parliament and of the Council as regards sustainability reporting standards ((OJ L, 2023/2772, 22.12.2023, 
ELI: http://data.europa.eu/eli/reg_del/2023/2772/oj). 

3 

 
 
 
of the entry into force of the Omnibus I Directive6, will adopt a delegated act to substantially revise the 
first set of ESRS on the basis of the technical advice prepared by EFRAG.  

The revision of the ESRS constitutes a central element of the Omnibus I package. The narrowing of the 
CSRD  scope  alone  would  not  have  delivered  the  intended  cost  reductions’  level  if  the  reporting 
standards  had  remained  unchanged.  The  ESRS  revision  is  therefore  necessary  to  ensure  that 
companies remaining in the amended scope are subject to less costly reporting requirements. Those 
companies remaining in scope of CSRD are the largest undertakings in the EU. 

Additionally,  the  amendments  to  the  CSRD  and  the  revision  of  the  ESRS  operate  as  mutually 
reinforcing  levers  of  the  Omnibus  I  objectives  of  simplification  and  burden  reduction.  The  CSRD 
amendments reduce and recalibrate the population subject to mandatory reporting, while the revised 
ESRS simplify the substantive requirements applicable to those undertakings. Together, they combine 
a reduction in scope with a simplification of content, thereby lowering the burden while preserving the 
purpose of the sustainability reporting framework. 

Visualizing the burden reduction: 

Context of the VS adoption and role in the value chain cap 
In parallel to the mandate for the ESRS revision, the Omnibus I Directive provides for the introduction 
of a sustainability reporting standard for voluntary use (VS) for undertakings not subject to mandatory 
reporting under the CSRD.  

Under the Accounting Directive as amended by the Omnibus I Directive, the VS should be based on 
Commission  Recommendation  (EU)  2025/1710 7 ,  which  endorsed  the  Voluntary  Sustainability 
Reporting  Standard  for  SMEs  (VSME)  developed  by  EFRAG8.    Furthermore,  the  VS  should  act  as  a 
value-chain  cap  protecting  SMEs  and  other  companies  not  subject  to  mandatory  reporting 
requirements from excessive information requests of larger business partners, subject to mandatory 
reporting. Specifically, undertakings with no more than 1000 employees that are in the value chain of 
reporting undertakings will have the right to decline to provide information beyond what is required 
under the VS. In practice, this will mean that companies subject to mandatory sustainability reporting 
cannot  impose  additional  or  more  detailed  data  requests  on  smaller  suppliers,  customers,  or 
business partners beyond those contained in the VS for the purposes of sustainability reporting. The 
value chain cap is intended to protect smaller entities from disproportionate reporting burdens and to 
ensure that value-chain information requests remain proportionate to their size and resources. 

6 Recital 18 of the Omnibus I Directive. The Omnibus I Directive entered into force on 18 March 2026.  
7 Commission Recommendation (EU) 2025/1710 of  30 July 2025 on a voluntary  sustainability reporting  standard for 
small and medium-sized undertakings (OJ L, 2025/1710, 5.8.2025, ELI: http://data.europa.eu/eli/reco/2025/1710/oj). 
8 Available here: VSME Standard.pdf. 

4 

 
 
 
 
The value chain cap mechanism has been designed around a single, employee-based criterion and 
applies  to  undertakings  with  up  to  1000  employees  in  the  value  chain  of  reporting  entities.  This 
approach deliberately differs from the one adopted to define the new scope of the CSRD, which entails 
two criteria: an employee threshold of 1000 employees and a EUR 450 million net turnover threshold.  
As  a  result,  a  limited  category  of  undertakings  with  more  than  1000  employees  but  a  net  turnover 
below  EUR  450  million  falls  outside  the  CSRD  scope  while  also  not  formally  falling  within  the 
protection of the value chain cap. 

The co-legislators opted to define the value chain cap based on one criterion only to ensure it remains 
operationally simple and easily applicable in practice. In particular, such approach allows reporting 
undertakings to apply the value chain cap consistently across their value chains without the need to 
verify  both  workforce  size  and  turnover  for  each  business  partner.  This  reduces  the  burden  on 
reporting  entities  and,  at  the  same  time,  provides  a predictable safeguard for the  large  majority  of 
undertakings below the 1000 employee threshold, as CSRD-reporting undertakings may not request 
information exceeding the content of the VS. 

Together  with  the  ESRS  revision,  the  adoption  of  the  VS  constitutes  a  central  element  of  the 
proportionality  measures  under  Omnibus  I.  While  the  narrowing  of  the  CSRD  scope  substantially 
reduces the number of reporting undertakings, this measure alone would not sufficiently address the 
trickle-down effects borne by smaller companies through value-chain information requests. The VS is 
therefore a translation of the legal requirement in the Omnibus I to protect smaller undertakings with 
a  concrete  mechanism  framing  how  sustainability  information  may  be  requested  from  non-CSRD 
companies in the value chains. 

Purpose of the document 
The  purpose  of  this  staff  working  document  is  twofold.  Firstly,  it  substantiates  the  basis  for  the 
Commission’s  adoption  of  the  delegated  act  amending  the  first  set  of  ESRS  by  presenting  the 
structured, transparent and evidence-based due process guiding EFRAG’s technical advice on revised 
ESRS  and  by  setting  out  the  expected  impacts  of  such  revision,  with  particular  emphasis  on  cost 
reductions and overall savings. That assessment is based on the Cost-Benefit Analysis prepared by 
an external contractor for EFRAG9 and is developed in Section 2. Section 3 presents the changes that 
the Commission has made to the technical advice presented by EFRAG. 

Secondly, the document presents the development of the VSME standard forming the basis for the VS, 
describes the due process followed by EFRAG in its preparation and assesses the expected impacts 
and benefits of the VS. That assessment relies primarily on the Cost-Benefit Analysis conducted for 
the VSME10 and is developed in Section 4.  

Section 5 assesses the compatibility of both delegated acts with the European climate law.  

Section 6 finally draws the main conclusions of the two delegated acts in terms of impacts.  

9 Cost-benefit Analysis on Draft Amended ESRS.pdf. 
10 EFRAG's Cover Letter and Cost Benefit Analysis on VSME.pdf. 

5 

 
 
 
 
2  Revised  ESRS,  methodology  and  impacts,  including  costs 

savings 

2.1  Role of EFRAG as the Commission’s technical advisory body 

EFRAG  acted  as  the  European  Commission’s  technical  advisory  body  for  the  revision  and 
simplification of ESRS. In this role, EFRAG was entrusted with preparing technical advice to support 
the revision of the ESRS Delegated Act, on the basis of a formal mandate from the Commission. The 
work  was  carried  out  under  the  governance  of  EFRAG’s  Sustainability  Reporting  Board  (SRB)  and 
Sustainability Reporting Technical Expert Group (SR TEG), following an adapted but structured due-
process,  due  to  time  constraints  and  the  critical  nature  of  the  simplification  exercise,  and  an 
evidence-based standard-setting approach that culminated in the delivery of draft revised ESRS to the 
Commission. 

Mandate for the revision of the ESRS 
Through letters of 27 March 202511 and 5 May 202512, the Commission mandated EFRAG to deliver 
technical advice for a substantial simplification of the first set of ESRS. 

From  the  outset  of  the  revision  process,  stakeholder  views  were  taken  into  account  and  directly 
informed  the  design  of  the  proposed  changes.  In  the  Explanatory  Memorandum  of  the  Omnibus  I 
Directive, the Commission stated its intention to revise the first set of ESRS13. This is also recognised 
in Recital 18 of the Omnibus I Directive, which specifies that  this revision would “substantially reform 
ESRS by: (i) removing datapoints deemed least important for general purpose sustainability reporting; 
(ii)  prioritising,  to  the  extent  possible,  quantitative  datapoints  over  narrative  text;  (iii)  further 
distinguishing between mandatory and voluntary datapoints; (iv) providing clear instructions on how 
to  apply  the  materiality  principle  in  order  to  ensure  that  undertakings  are  only  required  to  report 
material information and to reduce the risk that assurance service providers inadvertently encourage 
undertakings  to  report  information  that  is  not  necessary  or  dedicate  excessive  resources  to  the 
materiality  assessment  process;  (v)  improving  consistency  with  other  pieces  of  Union  legislation, 
including  financial  services  legislation;  and  (vi)  taking  account,  to  the  greatest  extent  possible,  of 
interoperability  with  global  sustainability  reporting  standards.”  The  revision  would  also  clarify 
provisions that are deemed unclear and simplify the structure and presentation of the standards. It 
would  also  make  any  other  modifications  that  might  be  considered  necessary  considering  the 
experience gained in the application of the first set of ESRS, . also taking account of the difficulties 
that undertakings might encounter in gathering information from actors throughout their value chain, 
especially  from  those  which  are  not  subject  to  the  sustainability  reporting  requirements  and  from 
suppliers in emerging markets and economies.  

Timeline and deliverables 
EFRAG’s  work  followed  a  compressed  and  adapted  timeline  reflecting  the  urgency  of  the 
simplification exercise. Evidence gathering and stakeholder outreach took place between April and 
mid-May 2025, followed by the drafting of the Exposure Drafts (referred to as ‘interim revised ESRS’ 
hereafter) between the second half of May and July 2025. A public consultation on the interim revised 
ESRS was conducted from the end of July to the end of September 2025. The final technical advice, in 

11Commissioner Albuquerque, 27 March 2025, Letter to EFRAG, available here: Commissioner Albuquerque Letter to 
EFRAG March 2025.pdf. 
12Commissioner Albuquerque, 5 May March 2025, Reply letter to EFRAG, available here: Reply to EFRAG submission of 
workplan_5 May.pdf. 
13 Explanatory  memorandum  of  proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  amending 
Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability 
reporting and due diligence requirements, available at: 892fa84e-d027-439b-8527-72669cc42844_en, p.5. 

6 

 
 
 
the  form  of  draft  revised  ESRS  and  the  accompanying  Basis  for  Conclusions 14,  was  finalised  and 
approved by EFRAG’s governance body in November 2025 and delivered to the Commission by the 
end  of  that  month,  following  a  short  extension  of  the  original  deadline.  The  main  deliverables 
consisted of the draft revised ESRS, Basis for Conclusions explaining the rationale and due process 
and accompanying supporting documents, including a cost-benefit analysis. 

2.2 

Evidence gathering and due process underpinning revised ESRS 

EFRAG adapted its usual standard-setting process due to the time constraints and the criticality of the 
exercise at hand, while preserving its core governance and oversight arrangements. Its governance 
structure  ensured  that  technical  judgements  were  subject  to  multi-layer  scrutiny  and  collective 
decision-making, while maintaining alignment with the mandate received from the Commission. 

Capturing the diversity of perspectives across the sustainability reporting ecosystem 
The  evidence-gathering  process  of  EFRAG  was  deliberately  broad  and  multi-channel  in  order  to 
capture the diversity of perspectives across the sustainability reporting ecosystem. EFRAG received 
coordinated  contributions  from  European  industry  associations,  users  and  investors  as  well  as 
national standard-setting bodies and civil society organisations. The combination of consultations, 
targeted  outreach  activities  and  structured  dialogue  allowed  to  capture  companies’  and  public-
interest perspectives and to identify areas of convergence or deviation between stakeholder groups. 

Engagement of the reporting community and experience from the first year of application 
A key feature of the revision process was the systematic involvement of the reporting community, in 
particular companies that had already applied the ESRS in the first year of mandatory reporting (2025 
for financial year 2024, so-called ‘Wave 1’ companies). Their practical experience played a decisive 
role  in  identifying  the  most  burdensome  and  complex  aspects  of  the  standards.  This  engagement 
provided granular evidence on how the ESRS were implemented in practice, how methodologies were 
applied and where interpretation and audit-related challenges occurred.  

As a result, the amendments were informed not only by policy considerations, but also by operational 
feedback from companies on the ground. The revision incorporated an explicit ex-post evaluation of 
the ESRS as enacted in 2023. EFRAG conducted analysis of sustainability statements prepared for the 
2024  reporting  year  and  analysed  several  hundred  ESRS-based  reports  through  its  “State  of  Play” 
assessment15. This review identified recurring implementation patterns, divergences in practices and 
specific  areas  where  requirements  generated  excessive  complexity.  The  analysis  of  questions 
submitted through the ESRS Q&A platform further highlighted the provisions that created the greatest 
difficulties16. 

2.2.1  Call for evidence 

As an initial evidence-gathering step, EFRAG launched a public call for input on 8 April 2025 open for 
4 weeks and addressed to all interested stakeholders through an online questionnaire. The call was 
designed to capture early evidence on the practical functioning of the ESRS as enacted in 2023 and on 
priorities for simplification. 

14

 EFRAG,  Draft 

amended 

ESRS, 

Basis 

for 

conclusion,  December 

2025, 

available 

here: 

Draft_Amended_ESRS_Basis_for_Conclusions_2025_December.pdf. 
15 EFRAG, State of Play 2025, Implementation of the European  Sustainability Reporting Standards (ESRS): Observed 
Practices  based  on  statements  issued  as  of  April  2025,  July  2025,  available  here:  EFRAG_State  of  Play  2025 
Report_0.pdf. 
16

 EFRAG,  Draft 

ESRS, 
Draft_Amended_ESRS_Basis_for_Conclusions_2025_December.pdf, Appendix 6. 

conclusion,  December 

amended 

Basis 

for 

available 

2025, 

here: 

7 

 
 
 
The  call  for  input  was  explicitly  open  to  companies,  users,  financial  institutions,  civil  society 
organisations, national standard setters and other stakeholders.  

The public call for input attracted 823 stakeholders, who submitted approximately 16 000 individual 
comments, including direct written submissions. All contributions were analysed in detail by EFRAG 
and used as an input to identify priorities for the amendments.  

2.2.2  Outreach events and public consultation 

Outreach events 
EFRAG organised a very large and structured programme of outreach events specifically designed to 
deepen and validate the feedback received from the  reporting community and stakeholder groups. 
EFRAG  organised  a  total  of  89  outreach  events,  involving  3  842  participants  and  more  than  1  506 
organisations. 

Companies  were  explicitly  one  of  the  main  target  groups  of  these  outreach  activities.  The  events 
systematically 
involved  companies,  business  associations,  together  with  other  stakeholder 
categories (financial users, auditors, civil society organisations and national standard setters). 

In the first phase of the process (from late March to 31 July 2025), EFRAG organised 68 outreach events, 
gathering 729 participants from 635 organisations.  

In the second phase (from the end of July to the end of November 2025), EFRAG organised a further 21 
targeted outreach events, attended by 3 113 participants representing more than 871 organisations. 
These  events  were  specifically  aimed  at  collecting  feedback  on  the  proposed  amendments  and 
testing  whether  the  simplification  levers  proposed  in  the  interim  revised  ESRS  would  effectively 
address the concerns previously raised by stakeholders.  

This  second  round  of  outreach  played  a  key  role  in  taking  into  account  stakeholders’  feedback.  It 
allowed  EFRAG  to  verify  whether  the  main  cost-  and  burden-related  messages  expressed  by 
companies  in  the  initial  call  for  evidence  were  effectively  reflected  in  the  draft  amendments,  and 
whether the revised drafting and relief mechanisms were perceived by companies as workable. 

Public consultation 
EFRAG  conducted  a  formal  public  consultation  on  the  interim  revised  ESRS  from  31  July  to  29 
September 2025.17 

The  consultation generated  responses  from  717  stakeholders,  corresponding to  more  than  26  000 
individual  comments,  including  formal  written  comment  letters.18 The  complementary  overview  of 
evidence gathering confirms that this public consultation phase resulted in 720 structured responses, 
including 87 written comment letters. Preparers of sustainability reports constituted one of the main 
respondent groups to this consultation. 19 

One-to-one interviews with companies 
EFRAG conducted as well one-to-one interviews and workshops with companies of different sizes, 
sectors and Member States, including companies with direct experience of ESRS implementation. 

17 Press release - EFRAG Shares Revised ESRS Exposure Drafts and Launches 60-Day Public Consultation | EFRAG. 
18  For  details  on  the  public  consultation,  please  refer  to  the  EFRAG  Basis  for  Conclusions  available  here: 
Draft_Amended_ESRS_Basis_for_Conclusions_2025_December.pdf (pages 12 and following). 
19  In  parallel  with  the  public  consultation  survey,  the  EFRAG  Secretariat  conducted  20  targeted  outreach  events 
between August and October 2025 which were attended by more than 3,000 participants (EFRAG Outreach Events on 
the Revised ESRS Exposure Drafts.pdf). 

8 

 
 
 
Field tests 
EFRAG complemented its outreach and consultation activities with two targeted field tests carried out 
exclusively with reporting companies to assess the operational feasibility and burden implications of 
particularly  complex  requirements.  The  first  field  test,  involving  28  companies  from  different 
geographies and sectors, examined the revised guidance on the double materiality assessment. The 
second field test involved 20 companies that had already published audited ESRS reports for the 2024 
financial year and focused on the revised methodology for adequate wages under ESRS S1. Together, 
the two field tests provided direct company-level evidence and informed further simplifications in the 
final amendments. 

2.3  Reporting cost savings resulting from revised ESRS 

This  section  presents  the  expected  reporting  cost  savings  associated  with  the  revised  ESRS,  as 
reflected in the technical advice delivered by EFRAG to the Commission. This section relies on the 
CBA  that  was  commissioned  by  EFRAG  and  carried  out  by  an  external  consortium  composed  of 
Prometeia and Syntesia available at this link.20 The quantitative cost assessment is based on the EU 
Standard Cost Model (SCM), in line with the European Commission’s Better Regulation guidelines. 

For the purpose of this document, the analysis focuses on the net reporting cost reductions generated 
by the revised ESRS compared with the ESRS as enacted in 2023. 

It should be noted that in parallel to the cost savings  resulting from revised ESRS, substantial cost 
savings  are  expected  from  the  reduction  in  the  CSRD  scope  under  the  Omnibus  I  simplification 
package, a change that will exempt 85 % of companies originally in scope from mandatory reporting 
and is estimated to contribute to annual cost savings of around EUR 4.4 billion21. 

scope 
with 

Source of savings 
CSRD 
reduction 
Omnibus I 
for 
Revised 
companies  remaining 
in scope of CSRD 

ESRS 

Type of measure 
Removal  of  ~85%  of 
companies  from  original 
scope 
of 
Simplification 
disclosure requirements 

Impact 
~4.4 billion 

Population affected 
Companies  originally 
scope but now exempt 

in 

EUR  2.24  billion 
per 
from 
year 
2029 onwards 

Circa  6  753  companies 
remaining in scope 

2.3.1  Baseline and population of companies 

Baseline used in this analysis 
The analysis uses the ESRS as adopted in 2023 ("ESRS 2023") as the baseline and compares them with 
the revised ESRS. It therefore does not measure savings linked to a no-reporting scenario, nor savings 
resulting from changes to the scope of the CSRD. Instead, it isolates the change in reporting costs for 
companies  that  remain  subject  to  ESRS  reporting  and  captures  the  savings  resulting  from  the 
simplification of the standards. 

Population of companies in scope of the analysis: Wave 1 and Wave 2 companies 
The population in scope consists exclusively of companies that will remain subject to CSRD reporting 
following the Omnibus I changes to the scope. 

20 EFRAG Cost-Benefit Analysis on Draft Amended European Sustainability Reporting Standards (draft Amended ESRS) 
(December 2025). 
21 Omnibus package - European Commission. 

9 

 
 
 
 
The total population is estimated at 6 753 companies, of which 1 535 are Wave 1 companies and 5 218 
are Wave 2 companies. 

The  analysis  distinguishes  between  two  groups  of  companies  reflecting  their  position  in  the  ESRS 
implementation timeline. 

Wave 1 companies have already produced sustainability statements under ESRS 2023. They have 
therefore already incurred the main initial implementation costs associated with ESRS adoption. As 
these costs have already been incurred, they are  treated as sunk costs and are not affected by the 
revision  of  the  ESRS.  For  these  companies,  the  revised  ESRS  may  generate  savings  through  lower 
future recurring reporting and assurance costs, although some limited one-off adjustment costs may 
be required to adapt existing systems and processes to the revised standards. 

Wave  2  companies  have  not  yet  produced  ESRS-compliant  sustainability  statements.  They  are 
expected  to  report  for  the  first  time  under  the  revised  ESRS.  As  a  result,  they  will  not  incur 
implementation costs associated with ESRS 2023 but will instead implement the revised ESRS directly. 
Their  savings  therefore  arise  both  from  lower  initial  implementation  costs  and  from  lower  future 
recurring reporting costs. 

This distinction is important because Wave 1 and Wave 2 companies face different cost profiles and 
therefore generate savings in different ways. 

Different types of costs are distinguished. 

2.3.2  Costs concepts used 

First,  recurring  reporting  costs  are  the  annual  costs  of  preparing  and  publishing  ESRS  information 
once reporting processes are in place.  

Second, one-off implementation costs correspond to the initial set-up of ESRS reporting. For Wave 1 
companies,  that  have  applied  ESRS  2023,  the  one-off  implementation  costs  have  already  been 
incurred and are treated as sunk costs, as explained above. For Wave 2, that implement the revised 
ESRS directly, there will be lower one-off implementation costs. 

Third, adjustment costs are the additional one-off costs needed to adapt existing reporting systems 
from  ESRS  2023  to  the  new  simpler  standards  that  are  revised  ESRS.  This  is  the  case  for  Wave  1 
companies. 

These  adjustment  costs  are  estimated  at  EUR  55  000  for  smaller  companies  and  EUR  230  000  for 
larger companies and are annualised over five years. 22 

It should be noted that the term “adjustment costs” is used in the cost benefit analysis in a narrower 
sense  than  in  the  European  Commission’s  Better  Regulation  Toolbox.  Here,  the  term  refers 
specifically  to  the  additional  one-off  costs  incurred  by  undertakings  to  adapt  existing  reporting 
systems, processes and internal controls to the revised ESRS requirements. By contrast, under the 
Better Regulation Toolbox, adjustment costs (often referred to as compliance costs) are understood 
more broadly as the direct expenses incurred by businesses, citizens or public authorities in order to 
comply with new legislation. Reporting cost savings are calculated by comparing the recurring costs 
that would have been incurred under the 2023 ESRS with the recurring costs under the revised ESRS 
and by adding the adjustment costs required to move to the revised standards. 

22 Cost-benefit Analysis on Draft Amended ESRS.pdf (p.51). 

10 

 
 
 
The CBA also compares how much companies would have spent if the 2023 ESRS had continued to 
apply with how much they are expected to spend under the revised ESRS. The difference between the 
two is referred to as gross savings.  

Net savings take into account that moving from the 2023 ESRS to the revised ESRS also generates 
additional  costs,  in  particular  one-off  adjustment  costs  and  some  limited  cost  increases  linked  to 
specific changes in  the  standards.  Net  savings  therefore  correspond  to gross savings minus  these 
transition and adjustment costs.  

At  aggregate  level, adjustment  costs  associated  with  the  transition  to  the  revised  ESRS amount  to 
around EUR 161 million in 2027, before falling to a negligible level in subsequent years.21 

Different costs concepts: 

Cost concept  
Baseline 
costs  

reporting 

Reporting 
savings  

cost 

One-off 
implementation 
costs  

costs  of 

Meaning in the CBA  
Annual  ongoing 
full 
compliance  with  ESRS  2023  after  all 
phase-ins  
Annual reduction in ongoing reporting 
and  assurance  costs  under  revised 
ESRS  
Initial 
first-time 
implementation  of  ESRS  reporting 
systems  

costs 

for 

One-off  adjustment 
costs  

Additional temporary  costs  incurred 
to  adapt  existing  systems  to  revised 
ESRS  

Relevance  
Reference  point  for  measuring 
savings  

Main burden reduction  

lower 

relevant for  Wave  2 
Mainly 
companies, 
one-off 
implementation costs than Wave 
1 
For  Wave  1,  sunk  costs  of 
implementing  ESRS  2023  for  the 
first time 
Mainly 
companies that  will 
from ESRS 2023 to revised ESRS 

relevant for  Wave  1 
transition 

2.3.3  Key cost savings from revised ESRS 

Table summarising key cost savings 
The  table  below  summarizes  the  main  reporting  cost  estimates  used  throughout  the  analysis, 
distinguishing between baseline reporting costs, annual gross savings generated by the revised ESRS 
and savings rate compared to the 2023 baseline.23 

Year 

2027 

2028 

2029 
2030 
2031 
2027-2031 
cumulative 

Baseline  reporting 
costs  (ESRS  2023) 
(in million EUR) 

1 700 

2 370 

2 240 
2 240 
2 240 

annual 
Gross 
savings 
from 
revised ESRS (in 
million EUR) 
476 

900 

747-805 
747-805 
747-805 
3 700 

Explanation 

Savings  rate 
compared  to 
2023 baseline 

28% 

38% 

33-36% 
33-36% 
33-36% 
34% average 

Wave  1  adjustment 
costs still incurred 
Major 
from 
savings 
avoided  Wave  2  higher 
implementation costs 

Excluding  value-chain 
impact 

23 Cost-benefit Analysis on Draft Amended ESRS.pdf (Table 1 p.6). 

11 

 
 
  
 
 
 
 
 
2027-2031 
cumulative 

4 700 

44% average 

Includes 
impact 

value-chain 

Annual and cumulative savings over 2027-2031 of EUR 3.7 billion 
Under the ESRS 2023 baseline, total reporting costs for companies remaining in scope are estimated 
at around EUR 1.7 billion in 2027, rising to EUR 2.37 billion in 2028, and stabilising at around EUR 2.24 
billion per year from 2029 onwards. 

The reporting cost savings for companies in scope of the revised ESRS are quantified over a five-year 
horizon  from  2027  to  2031  and  show  a  substantial  and  persistent  reduction  in  compliance  costs 
compared to the ESRS as enacted in 2023. 

The  CBA  estimates  that,  for  companies  remaining  within  the  CSRD  scope,  annual  reporting  cost 
savings amount to approximately EUR 476 million in 2027 and rise sharply to around EUR 900 million 
in 2028. From 2029 onwards, once the revised standards are fully effective and transitional effects are 
over, annual savings are estimated to range between EUR 747 million and EUR 805 million per year. 
Over  the  full  period  2027-2031,  cumulative  gross  reporting  cost  savings  for  companies  reach 
approximately EUR 3.7 billion. This evolution over time of savings reflects both the progressive entry 
of Wave 2 companies into reporting and the structural effects of simplification from the revised ESRS.  

In 2027, net savings are broadly evenly split between companies that have already implemented ESRS 
and those entering the framework later, while from 2028 onwards the increase in savings is mainly 
driven by Wave 2 companies, who avoid the higher first-year implementation costs of the ESRS 2023. 

Savings are comparatively lower in 2027 because a significant share of Wave 1 companies still sustain 
adjustment costs related to the transition to the revised standards. They increase markedly in 2028, 
when  Wave  2  companies  would  otherwise  have  faced  high  first-year  implementation  costs  under 
ESRS 2023, and then stabilise from 2029 onwards, when the cost structure reaches its long-term state.  

Importantly, the analysis shows that savings are not temporary or just at the start but are sustained 
over time as a result of permanently reduced requirements. 

Net savings: transition costs do not offset the benefits of simplification 
Net savings are a very relevant measure of economic benefits for companies because they account 
for additional costs incurred for the transition to the revised ESRS.  

Even  after  deducting  these  adjustment  costs,  net  savings  remain  substantial  in  every  year  of  the 
analysis. This confirms that transition costs do not offset the benefits of simplification and that the 
revised ESRS generate positive net effects from the first year of application. 

Trickle-down effects raise cost savings to EUR 4.7 billion 
When  trickle-down  effects  on  companies’  value  chains  are  taken  into  account,  the  magnitude  of 
savings  increases  further.  Reduced  data  requests  and  greater  flexibility  in  the  use  of  proxies  and 
sectoral estimates generate additional savings estimated at approximately EUR 97 million per year for 
the value chains of Wave 1 companies and EUR 146 million per year for those of Wave 2 companies. 
Including these trickle-down effects raises cumulative savings over 2027-2031 from EUR 3.7 billion to 
around EUR 4.7 billion, corresponding to approximately 44% of baseline costs. 24 

24 Cost-benefit Analysis on Draft Amended ESRS.pdf (Table 9 p.44). 

12 

 
 
 
 
 
2.3.4  Distribution of savings 

Internal reporting cost reduction 
A substantial share of the savings comes from reductions in internal reporting work.  

Under  the  revised  framework,  recurring  internal  costs  are  significantly  reduced.  For  Wave  1 
companies,  the  interim  revised  ESRS  already  lowered  recurring  internal  costs  by  around  24%  for 
smaller companies and 15% for larger ones, with further marginal reductions confirmed in the revised 
ESRS. It is expected to be of similar magnitude for revised ESRS. 25 

External consultancy cost reduction 
External consultancy costs follow a similar pattern.  

The revised ESRS would reduce the need for such support. Quantitative evidence from the targeted 
consultation shows that, under the Exposure Draft, recurring consultancy costs fell by approximately 
23%  for  smaller  Wave  1  companies  and  17%  for  larger  ones,  with  similar  reductions  projected  for 
Wave 2 companies.24 

IT costs’ reduction 
IT costs account for a smaller but still measurable share of total savings.  

For instance, for Wave 2 companies, IT costs under interim revised ESRS were estimated to be around 
20% lower than under ESRS 2023 and it is expected to be of similar magnitude for revised ESRS. 26 

Assurance costs’ reduction 
Assurance costs remain a key cost category. Under ESRS 2023, it represented roughly 40% to over 
50% of total reporting costs, with annual assurance expenditure estimated at around EUR 115 000 for 
smaller Wave 1 companies and close to EUR 1 million for larger preparers.27 These amounts combined 
external  assurance  fees  and  substantial  internal  support  costs,  reflecting  the  time  dedicated  by 
company staff to documentation, interpretation and interaction with auditors. 

The  revised  ESRS  significantly  reduce  the  burden  relating  to  assurance.  First-year  implementation 
costs  were  structurally  higher  due  to  adjustments,  interpretative  complexity  and  audit  frictions. 
However, even in steady state, assurance remained a structurally strong recurring burden under ESRS 
2023.  The  revised  ESRS  will  simplify  that  process.  Assurance  costs  are  estimated  to  fall  to 
approximately EUR 86 000 for smaller preparers (-20%) and EUR 725 000 for larger companies (-19%) 
compared to ESRS 2023. 28 

External assurance fees decline by about 20%, while internal assurance support costs decrease by 
24% for smaller companies and 15% for larger ones, reflecting fewer interpretative disputes, clearer 
architecture and more proportionate audit scope. 

These reductions are not driven by a lowering of the limited assurance requirement under the CSRD. 
Rather,  they  result  from  structural  simplifications:  the  reduction  of  mandatory  datapoints,  clearer 
articulation between materiality and disclosure requirements, reliefs on anticipated financial effects, 
separation of binding provisions from guidance, and strengthened auditability. The CBA confirms that 
the amendments improve clarity and auditability without weakening assurance levels. 

25 Cost-benefit Analysis on Draft Amended ESRS.pdf (Table 14 p.52). 
26 Cost-benefit Analysis on Draft Amended ESRS.pdf (Table 16 p.54). 
27 Cost-benefit Analysis on Draft Amended ESRS.pdf (p.44 and Table 10 p.45). 
28 Cost-benefit Analysis on Draft Amended ESRS.pdf (Table 14 p.52). 

13 

 
 
 
Clarifications around fair presentation principle further contributes to this trajectory. It is estimated 
to generate an additional reduction of around 2 percentage points in assurance-related burden. 

As assurance constitutes one of the largest cost categories, these reductions materially contribute to 
the aggregate savings estimated under the revised framework over the 2027-2031 period. 

2.3.5  Non-quantified impacts of revised ESRS 

Beyond  the  quantified  reporting  cost  savings,  the  CBA  identifies  a  set  of  non-quantified  impacts 
associated with the revised ESRS that affect companies’ competitiveness, access to finance and the 
usability  of  sustainability  information  for  users.  These  impacts  are  not  quantified,  they  are 
systematically  assessed  through  qualitative  evidence  gathered  from  interviews,  surveys  and  field 
testing, and they play an important role in the overall balance of effects of the revision. 

A positive effect on competitiveness 
By lowering reporting complexity, companies can reallocate internal resources from compliance to 
core business and strategic activities. 

Benefits relating to access to finance 
More focused and material disclosures are expected to improve usability and comparability, thereby 
strengthening the link between sustainability reporting and financial analysis and supporting access 
to capital. 

Modified experience for users of sustainability information 
The  revised  ESRS  are  expected  to  reduce  processing  costs  and  improve  usability  through  better 
prioritisation and structure. 

However, it should be noted that feedback from users of sustainability information is also divided. 
Some consider that the revised ESRS strike a better balance, others express concern that the removal 
or simplification of certain requirements may limit their ability to assess corporate impacts. Overall, 
the  revisions  are  seen  as a  compromise:  improving readability  and  proportionality  for  many  users, 
while potentially narrowing the scope of information available for more in-depth analysis. 

Lessening the trickle-down effects 
By limiting excessive data requests and encouraging the use of estimates, they help prevent trickle-
down effects and related issues in the value chain. 

3  Commission’s changes to EFRAG’s technical advice  

In light of consultations the Commission has made a number of targeted modifications to EFRAG’s 
technical  advice,  with  the  primary  aim  of  facilitating  the  application  of  the  standards  by  clarifying 
certain provisions and granting certain additional flexibilities to undertakings.  

These  changes  are  expected  to  increase  the  likelihood  of  more  favorable  cost-saving  scenarios 
materializing.  Notably,  savings  are  estimated  to  stabilize  at  a  range  of  around  33-36%  from  2029 
onwards, and we reasonably expect that those changes could allow for the upper range scenario of a 
36% reduction of baseline costs to emerge. 

The principal modifications made in this regard address the following issues:  

-  Materiality  and  materiality  assessment.  The  text  clearly  states  that  the  undertaking  is  not 
expected to meet the specific information needs of each individual user and stresses that the 
objective of the standards is to ensure the reporting of information that is decision-useful for 

14 

 
 
 
users. It specifies that undertakings “shall not” report information that is not material, except 
in  certain  clearly  defined  circumstances,  rather  than  stating  that  the  undertaking  “is  not 
required to” report information that is not material. Lastly, a new provision emphasises that the 
“top-down” approach to materiality assessment allows the undertaking to avoid unnecessary 
work  and  in  general  to  avoid  assessing  the  materiality  of  each  individual  impact,  risk  or 
opportunity. 
Fair presentation:  The  text  clarifies  that  fair  presentation applies  to  the  overall sustainability 
statement and does not apply to each datapoint. It also states more clearly that the application 
of  ESRS  results  in  fair  presentation.  The  modifications  made  regarding  materiality  and 
materiality assessment will also facilitate the application of the principle of fair presentation.  
Level  of  aggregation  and  disaggregation:  The  text  introduces  greater  discretion  to  the 
undertaking regarding the need to consider specific geographical contexts when carrying out 
the  materiality  assessment.  It  also  clarifies  that  the  level  of  disaggregation  for  materiality 
assessment  does  not  imply  that  information  must  be  reported  at  that  same  level  of 
disaggregation. 

- 

- 

-  Omission  of  information:  The  text  integrates  new  provisions  derived  from  the  Omnibus  I 
Directive  that  allow  undertakings  to  omit  certain  information  in  certain  circumstances, 
including  information  that  could  be  seriously  prejudicial  to  the  commercial  position  of  the 
undertaking.29  

-  Anticipated financial effects: The text states that reporting anticipated financial effects is likely 
to  involve  estimates  and  that  these  can  be  updated  in  the  future  in  light  of  new  information 
without  this  constituting  a  reporting  “error”.  It  also  clarifies  that  the  provisions  that  allow 
undertakings to omit certain information in certain circumstances, including information that 
could  be  seriously  prejudicial  to  the  commercial  position  of  the  undertaking,  also  apply  to 
reporting on anticipated financial effects. An additional year of phasing-in is introduced for both 
qualitative and quantitative information.  

-  Green  house  gas  emissions:  the  text  aligns  more  closely  with  global  sustainability  reporting 
standards by giving undertakings the flexibility to use either the financial control approach or 
the operational control approach when defining the reporting boundary to be applied.  

-  Climate transition plans: The text requires undertakings that report transition plans with targets 

that are not compatible with 1.5C target to be transparent about this. 

-  Microplastics: The text limits the disclosure requirement to primary microplastics. For reasons 
of feasibility and proportionality it does not require undertakings to report metrics on secondary 
microplastics. 

-  Emission of pollutants: the text specifies that the decision on which pollutants are material for 
reporting  purposes  should  be  taken  following  a  managerial  assessment  that  considers  the 
undertaking’s activities and sector of operation.  

-  Substances of very high concern: the text introduces a new phase-in provision of one-year for 
reporting  on  substances  of  very  high  concern  for  undertakings  that  are  users  of  articles 
containing such substances.  

-  Coherence  with  Corporate  Sustainability  Due  Diligence  Directive  (“CSDDD”  –  Directive  (EU) 
2024/1760)30: the text includes a number of technical modifications regarding due diligence to 
ensure better alignment with the CSDDD.  

29  Text derived from Articles 19a(3) and 29a(3) of the Accounting Directive as amended by the Omnibus I Directive.  
30  Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability 
due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 (OJ L, 2024/1760, 5.7.2024, ELI: 
http://data.europa.eu/eli/dir/2024/1760/oj).  

15 

 
 
 
-  Human  rights 

incidents  and 

incidents  of  discrimination:  the  text  clarifies  that  only 
“substantiated verified” instances are to be reported, and that not all instances are necessarily 
substantiated  instances.  It  also  deletes  the  reference  to  “initiated”  for  the  judicial  and  non-
judicial proceedings.  

-  Asset management activities: The text includes new provisions to allow financial institutions 
that manage investments subject to a fiduciary duty on behalf of clients pursuant to a mandate 
agreed with those clients to not disclose information in relation to those investments in their 
sustainability statement. Those investments are primarily relevant to the activities of the clients 
and not to the activities of the undertaking acting on their behalf. Additionally, the sustainability 
matters relevant for those investments are governed at EU level by Regulation (EU) 2019/2088 
and by Delegated Regulations 2017/565 and (EU) 2017/593. These new provisions aim to avoid 
disproportionate  administrative  burden  and  the  duplication  of  sustainability  reporting 
requirements.  

These changes made by the European Commission can broadly be grouped into four categories. First, 
feasibility  and  proportionality  improvements  like  limiting  microplastics  disclosures  to  primary 
microplastics  only,  introducing  managerial  judgement  for  pollutant  reporting,  new  phase-in  for 
substances of very high concern and the asset management carve-out. Second, increased flexibility, 
including  more  discretion  on  aggregation  and  disaggregation,  clearer  top-down  materiality 
assessment, omission provisions and flexibility in GHG reporting boundaries (financial vs operational 
control).  Third,  greater  international  alignment,  notably  closer  alignment  with  ISSB  on  GHG 
boundaries.  Finally,  clarifications  to  improve  legal  certainty  and  avoid  over-reporting,  such  as 
clarifying fair presentation, specifying that only substantiated verified human rights incidents must be 
reported and clarifying the treatment of estimates in anticipated financial effects. 

4  Sustainability  reporting  standards  for  voluntary  use:  policy 
drivers leading the development of the standard and quantified 
impacts 

4.1  Policy drivers and development of the VS 

This section explains how the VS builds on the Voluntary Sustainability Reporting Standard for non-
listed SMEs (VSME) developed by EFRAG and how its design reflects the policy objectives set out in 
the Omnibus I Directive. It first recalls the policy context and market need that led to the development 
of  the  VSME  and  outlines  the  structured  due  process  followed  by  EFRAG  in  developing  the  VSME, 
including  systematic  consideration  of  stakeholder  feedback.  It  also  outlines  the  mandate  and 
parameters provided under Omnibus I for the development of the VS. 

Market demand and goal of market acceptance for the VSME standard 
In December 2024, EFRAG published the final draft of the VSME, developed under the mandate from 
the  European  Commission  as  part  of  the  2023  SME  Relief  Package.  EFRAG’s  work  responded  to  a 
request  to  provide  a  simplified  reporting  framework  for  non-listed  micro,  small  and  medium-sized 
undertakings,  reflecting  a  strong  demand  from  markets.  In  July  2025,  the  European  Commission 
formally endorsed the VSME through a Recommendation for voluntary use, encouraging undertakings 
with  fewer  than  250  employees  and  their  counterparts  in  value  chains  to  deal  with  sustainability 
information requests with the help of this standard. 

16 

 
 
 
The development of the VSME responded to the absence of a credible, proportionate and harmonised 
framework capable of replacing the multitude of uncoordinated ESG questionnaires used by banks, 
investors and large undertakings to collect sustainability information from SMEs in their value chain. 
The  standard  was  therefore  developed  in  response  to  market  demand  to  address  a  concrete 
operational  gap  by  providing  a  standardised  reference  to  streamline  sustainability  information 
requests across value chains without imposing new mandatory obligations on reporting undertakings.  

Beyond the market demand underpinning its development, the preparation of the VSME was guided 
by the goal of achieving wide market acceptance on the ground in the future, as the effectiveness of 
voluntary  standards  ultimately  depends  on  the  extent  to  which  undertakings  decide  to  use  it  in 
practice. Ensuring such acceptance required a robust and inclusive standard-setting process, which 
EFRAG  conducted  through  an  extensive  public  consultation  in  which  the  views  of  SMEs,  financial 
institutions and users were systematically taken into account. The draft standard was subsequently 
subject to significant modifications reflecting that feedback, including simplifications to its structure 
and disclosure requirements, thereby reinforcing its usability and credibility and supporting its uptake 
by market participants.  

The  following  section  sets  out  in  greater  detail  the  main  elements  of  the  feedback  received  in  the 
public consultation and explains how they were reflected in the final design of the standard. 

Public consultation and field tests conducted by EFRAG 
EFRAG conducted a public consultation on the VSME Exposure Draft (ED), an interim version of the 
VSME,  over  a  4-month  period,  running  from  22  January  2024  to  21  May  2024 31.  The  consultation 
process comprised two main strands: an online questionnaire and a field-testing exercise. The online 
survey  generated  input  from  311  respondents,  including  126  preparers 32 ,  39  users 33  and  146 
participants  falling  into other  stakeholder  categories.  In  parallel,  164 stakeholders  took  part  in  the 
field test, of which 135 were preparers and 29 were users. In addition to these structured consultation 
activities, EFRAG received 22 written comment letters providing further feedback. 

Alongside  the  consultation,  EFRAG  organised  11  field  test  workshops.  The  field  test  required 
participating preparers to draft a sustainability report based on the VSME ED. Further workshops were 
organised in September 2024 to gather feedback on a revised version of the VSME, updated in light of 
the consultation results34. 

The public consultation conducted by EFRAG mainly enquired about the proposed architecture of the 
VSME,  the  relevance  of  the  proposed  disclosures,  the  simplifications  achieved  by  the  proposed 
standard and the market acceptance35. The field test focused on assessing the costs and challenges 
associated with the disclosures under VSME ED, the understandability and usefulness of the guidance 
provided and the expected benefits of the disclosures36.  

Key messages from the public consultation and how they have been integrated 
Public  consultation  and  field  testing  highlighted  several  key  themes  regarding  the  design  and 
implementation of the VSME. First, stakeholders emphasised the need for a supportive operational 

31 VSME Feedback Statement from the Public Consultation.pdf. 
32 Preparers are the undertakings that are responsible for producing and publishing corporate reports in accordance 
with applicable reporting requirements. 
33 Users are the external parties who rely on corporate reports to inform their economic, investment, supervisory or 
other decision-making. 
34 VSME Basis for Conclusions.pdf – para BC25 page 7. 
35 VSME Basis for Conclusions.pdf – Annex 11. 
36 VSME Basis for Conclusions.pdf – Annex 12. 

17 

 
 
 
ecosystem around the standard, including digital tools and practical guidance to facilitate its use and 
enable  efficient  data  exchange  along  value  chains.  The  standard-setter  indicated  its  intention  to 
contribute to such resources and to encourage complementary initiatives by other actors. 

Second, feedback pointed to the need to simplify the structure and reporting approach. A previously 
proposed narrative-based module was therefore removed, as it was considered overly complex and 
of limited comparability. Core elements were retained and integrated in a more streamlined manner 
into the remaining modules. In the same vein, the materiality assessment requirement was eliminated 
and replaced by a simpler applicability principle, significantly reducing reporting burden. 

Finally, consultation with financial stakeholders identified a limited number of additional information 
needs  not  initially  covered.  Rather  than  creating  a  separate  module,  selected  elements  were 
incorporated into the existing structure to ensure usability while addressing key user expectations. 

The VS as a proportionate and simplified standard “based on” VSME 
The Omnibus Directive establishes the parameters for the development of the VS. It provides that the 
standard  is  to  (i)  be  “based  on”  the  VSME  standard  as  endorsed  by  the  Commission;  (ii)  be 
proportionate  to  the  capacities  and  characteristics  of  the  undertakings  concerned;  (iii)  specify  the 
structure for the presentation of sustainability information. 

The requirement that the VS  is to be “based on” the VSME constitutes the primary methodological 
anchor. It implies continuity with the architecture, structure and disclosure logic of the VSME, rather 
than the development of a new or expanded framework. This continuity serves a policy objective of 
stability and predictability, providing legal certainty for undertakings that already applied the VSME 
under  the  VSME  Recommendation,  which  functioned  as  an  interim  response  to  market  demand 
pending the adoption of the VS. 

In addition, maintaining the substantive boundaries of the VSME ensures that the VS does not expand 
the volume or granularity of information that undertakings protected by the value chain cap may be 
required  to  provide  to  reporting  companies.  The  VS  therefore  preserves  the  protective  function 
embedded in the original design of the VSME. 

The practical consequence of these parameters is that the VS maintains the modular structure of the 
VSME  divided  into  a  basic  module  and  a  comprehensive  module  and  introduces  only  limited  and 
targeted modifications compared to the VSME.  Therefore, no additional datapoints or modules are 
added to the VS and changes are confined to what is necessary to ensure coherence with the revised 
set of ESRS and to clarify structure and presentation where appropriate. 

Moreover, in order to meet the proportionality parameters as set out in Omnibus I, the VS clarifies the 
operation of the value-chain cap. Only essential disclosures are covered by the value chain cap, and 
every  datapoint  under  the  cap  is  listed  in  Annex  II  of  the  VS,  allowing  for  clear  identification  by 
undertakings. For the purposes of the value-chain cap, companies reporting under the CSRD can only 
require companies in their value chain to provide the information corresponding to disclosures listed 
in Annex II.  

Furthermore,  for  reasons  of  proportionality,  some  of  the  essential  disclosures  across  the  VS  have 
been marked as “voluntary” for companies with 10 employees or fewer. This not only implies that the 
reporting of those disclosures is voluntary for companies with 10 employees or less, but also that the 
value chain cap applying to those undertakings includes less information than the value chain cap for 
companies with between 11 and 1000 employees. In this way, companies with 10 employees or fewer 
are therefore given extra protection from the trickle‑down effect.  

18 

 
 
Logically,  the  list  of  disclosures  covered  by  the  value  chain  cap  in  Annex  II  of  the  VS  clearly 
distinguishes  between  the  datapoints  constituting  the  cap  for  undertakings  with  more  than  10 
employees from those constituting the cap for undertakings with 10 employees or fewer. 

This set of targeted adjustments reflects the renewed proportionality equation of Omnibus I, which 
seeks  to  balance  competitiveness  with  the  needs  for  information  of  the  market.  Under  this 
recalibrated  understanding,  the  preservation  of  the  VSME’s  modular  structure  and  content,  the 
absence of additional datapoints, the alignment with the revised ESRS, and the introduction of a more 
granular categorization of disclosures at datapoint level make the VS a proportionate reference point 
for undertakings with up to 1000 employees, even though the VSME was originally designed for SMEs.  

4.2  Methodology, multi-stakeholders’ interests and due process 

The  methodology  underpinning  the  VSME  Cost-Benefit  Analysis  (CBA)  is  robust,  transparent  and 
aligned with recognised EU analytical standards. As explained in EFRAG’s Cover Letter, the CBA was 
commissioned through a public tender to independent experts (Syntesia and Prometeia), selected on 
the basis of their experience in similar EU-level impact assessments. The contractors applied the EU 
Standard Cost Model to estimate administrative costs and combined multiple sources of evidence, 
including  targeted  consultations,  75  structured  interviews,  SME  surveys  covering  more  than  4  400 
companies  across  13  Member  States,  field  tests,  public  consultation  responses,  and  a  structured 
literature review, as developed in the previous section. 

The analysis distinguishes baseline, administrative and incremental costs, incorporates scenario and 
sensitivity  analyses,  and  explicitly  acknowledges  uncertainties  inherent  in  ex-ante  assessments. 
Importantly,  benefits  were  assessed  using  both  quantitative  estimates  (where  feasible)  and 
qualitative analysis where impacts are not readily quantifiable. 

Beyond methodology, the VSME itself is the result of extensive stakeholder engagement and a rigorous 
due  process.  The  draft  standard  was  subject  to  public  consultation,  field  testing,  workshops,  and 
iterative  discussions  within  the  EFRAG  Sustainability  Reporting  Board  (SRB)  and  Technical  Expert 
Group (SR TEG). Feedback led to substantive structural changes to the standard.  

This  process  ensured  that  the  final  VSME  standard  reflects  broad  stakeholder  input  and  balanced 
assessments. 

4.3  Quantified impacts 

4.3.1  Baseline and population of companies 
The VSME CBA is anchored in a comparison between two scenarios:  

(i) 

(ii) 

a  fragmented  reporting  environment  characterised  by  multiple,  heterogeneous  ESG 
questionnaires addressed to SMEs in value chains; and  
reporting  conducted  by  SMEs 
proportionate framework (VSME).  

in  accordance  with  a  single,  standardised  and 

Accordingly,  the  costs  and  benefits  presented  in  the  VSME  CBA  are  the  result  of  a  comparison 
between the two scenarios outlined above. By assessing the implications of a fragmented reporting 
environment  against  those  of  a  harmonised  VSME  framework,  the  CBA  analysis  focuses  on  the 
benefits  and  impacts  attributable  to  the  introduction  of  the  standard.  The  resulting  estimates 
demonstrate that the adoption of the VSME leads to a more efficient reporting landscape, with overall 
benefits outweighing costs when compared to a situation characterised by multiple, scattered ESG 
questionnaires. 

19 

 
 
The VSME CBA was developed for a population of undertakings with up to 250 employees. For SMEs 
below that threshold, the underlying logic of the  VSME baseline remains fully applicable to the VS, 
given the limited differences in content and structure between the VSME and the VS. Accordingly, the 
quantified  benefits  identified  in  the  VSME  CBA  can  reasonably  be  expected  to  materialise  in  a 
comparable manner under the VS for companies with up to 250 employees. A similar reasoning can 
be applied to the qualitative benefits identified in the VSME CBA, which are not size-contingent and 
can be expected to extend across the full population covered by the VS. 

Conversely,  the  quantitative  cost  estimates  produced  in  the  VSME  CBA  cannot  be  extrapolated  to 
undertakings with 250 to 1000 employees, as this population was outside the scope of the original 
assessment. For these companies, cost impacts would require a separate estimation. Nevertheless, 
it is reasonable to expect that the VS standardisation effects will also generate both quantitative and 
qualitative benefits for this broader population. 

4.3.2  Quantified impacts of the VS 

Companies with up to 250 employees 
The VS impacts on undertakings with up to 250 employees can be quantified based on the VSME CBA. 
Overall,  the  evidence  shows  a  clear  and  favourable  cost  profile  for  SMEs:  the  introduction  of  a 
standardized sustainability reporting framework entails one-off implementation costs in the first year, 
followed by significantly lower recurring costs in the following years, as companies move from initial 
set-up to routine reporting. 

For  micro-enterprises  and  small  enterprises  with  fewer  than  20  employees,  first-year  costs  are 
estimated at around EUR 3 500-4 500 when applying the basic module and around EUR 8 500-9 500 
when  applying  the  basic  and  comprehensive  modules  combined,  with  recurring  annual  costs  of 
around  EUR  2  000-2  300  and  EUR  4  500-4  800  respectively.  For  small  enterprises  with  20  or  more 
employees and  medium-sized  enterprises  (up  to  250  employees),  first-year costs  are  estimated  at 
around  EUR  7  500-12  800  for  the  basic  module  and  around  EUR  17  500-22  800  for  the  basic  and 
comprehensive modules combined, with recurring annual costs of around EUR 3 500-6 000 and EUR 
8  500-11  000  respectively.  These  figures  illustrate  initial  set-up,  process  adaptation, and first-time 
data collection, followed by lower costs once routines are established.37 

Company size 

Employees  Module applied 

small 

small 

Micro 
& 
enterprises 
Micro 
& 
enterprises 
Small (≥20 employees) 
& medium enterprises 
Small (≥20 employees) 
& medium enterprises 

< 20 

< 20 

20 – 250 

20 – 250 

Basic module 

Basic 
Comprehensive 
Basic module 

Basic 
Comprehensive 

First-year 
costs (EUR) 
3,500 – 4,500 

Recurring  annual 
costs (EUR) 
2,000 – 2,300 

+ 

8,500 – 9,500 

4,500 – 4,800 

7,500 – 12,800 

3,500 – 6,000 

+ 

17,500 – 22,800  8,500 – 11,000 

At aggregate level, the VSME CBA shows that, compared with the baseline situation of uncoordinated 
sustainability information requests, the introduction of a common reporting framework is expected to 
generate rapidly declining incremental costs and potential net savings within a few years. Incremental 
costs are the additional costs generated by the VSME as compared to the baseline scenario in which 
SMEs  will  have  to  reply  to  uncoordinated  ESG  requests  from  their  larger  customers  or  financial 
institutions. By 2028, incremental costs are estimated at around EUR 5.0 billion, with a range of -EUR 

37 EFRAG's Cover Letter and Cost Benefit Analysis on VSME.pdf – Figure 9 p.49. 

20 

 
 
 
 
5.8 to 9.4 billion, indicating that under part of the scenarios SMEs would already incur lower costs 
when using the VSME than in the fragmented baseline. This favorable trajectory emerges quickly as 
incremental costs are estimated at around EUR 9.3 billion in 2026 (range -EUR 1.3 to 9.3 billion) and 
around  EUR  9.4  billion  in  2027  (range  -EUR  3.5  to  9.4  billion),  reflecting  learning  and  scale  effects 
across the SME population. The higher level observed in the initial transition year (around EUR 15.0 
billion in 2025, range EUR 7.6 to 18.6 billion) reflects one-off adjustment as companies move from 
fragmented requests to a streamlined framework. Importantly, the presence of negative values in the 
estimated ranges from 2026 onwards indicates that, under part of the scenarios considered,  those 
companies  would  experience  net  cost  savings  compared  to  the  absence  of  the  standard.  As  the 
common  and  proportionate  framework  becomes  established  and  learning  effects  accumulate, 
compliance costs stabilize and can fall below the level that SMEs would otherwise face in a context of 
multiple, uncoordinated information demands.38 

On  the  benefits  side,  SMEs  using  the  VS  are  expected  to  experience  both  financial  gains  and 
advantages linked to participation in value chains. Financial benefits arise primarily from improved 
access  to  external  finance  and  potential  reductions  in  the  cost  of  borrowing.  The  availability  of 
structured, comparable sustainability information reduces information asymmetries for lenders and 
investors,  facilitating  credit  allocation  and  potentially  lowering  financing  costs.  These  effects 
translate into economic gains, as SMEs can deploy the capital obtained to generate additional returns. 
On this basis, aggregate financial benefits are estimated at approximately EUR 100-390 million in 2025, 
increasing to around EUR 380-1 340 million in 2028 as uptake expands and market familiarity with the 
standard grows.39 

In parallel, the VS strengthens SMEs’ position within value chains. By providing decision-useful and 
comparable  ESG  information  aligned  with  market  expectations,  SMEs  reduce  the  risk  of  being 
excluded  from  commercial  relationships  with  larger  corporates  subject  to  sustainability  reporting 
obligations. The CBA estimates benefits by assessing the share of SME turnover linked to business 
with larger counterparties and the extent to which standardised reporting mitigates the risk of contract 
loss. On this basis, benefits related to value chain participation are estimated at EUR 1.8-5.3 billion in 
2025, rising to EUR 3.5-10.6 billion in 2028.40 

The economic effects of the VS follow a gradual trajectory. In the first year, companies face initial set-
up and adjustment costs, while the financial and commercial benefits build up progressively as the 
standard  becomes  embedded  in  market  practices.  From  the  second  year  onwards,  however,  net 
impacts  turn  positive,  driven  by  lower  recurring  reporting  costs  and  increasing  financial  and 
commercial  benefits.  Net  benefits  are  estimated  at  around  EUR  800  million  in  the  second  year  of 
application and reach approximately EUR 2.6 billion in the third year.41 

Year of 
application of 
the VS 

Estimated net 
benefits (EUR) 

Key drivers 

38 EFRAG's Cover Letter and Cost Benefit Analysis on VSME.pdf – Figure 11 p.51. 
39 EFRAG's Cover Letter and Cost Benefit Analysis on VSME.pdf – Figure 12 p.52. 
40 EFRAG's Cover Letter and Cost Benefit Analysis on VSME.pdf – Figure 13 p.53. 
41 EFRAG's Cover Letter and Cost Benefit Analysis on VSME.pdf – Figure 14 p.56. 

21 

 
 
 
Year 2 

~800 million  

Lower recurring reporting costs; increasing financial and 
commercial benefits 

Year 3 

~2.6 billion  

Further reduction in relative reporting burden; continued 
growth in financial and commercial benefits 

Companies with 250 to 1000 employees 
There  are  no  precise  available  figures  quantifying  the  costs and  benefits of  the  use  of  the  VS  for  a 
population of companies with 250 to 1000 employees, therefore these costs have been excluded from 
this analysis. The reasons for this choice are multiple. First, the data uncertainties and variables make 
it  impossible  to  reasonably  estimate  these  costs  at  this  stage.  Furthermore,  because  the  VS  is  a 
strictly voluntary reporting standard, it can be reasonably expected that companies will only opt into 
the VS if they see advantages to do so, therefore if the internal benefits outweigh the administrative 
burdens.  Moreover,  the  introduction  of  the  VS  establishes  a  limit  on  data  requests  form  bigger 
companies, shielding smaller enterprises and consequently saving costs. Finally, the VS streamlines 
the market for sustainability reporting, reducing the complexity and therefore the  costs that would 
have otherwise been emerging through uncoordinated sustainability reporting demands. 

However, available quantitative evidence and reasonable assumptions suggest that the VS can bring 
benefits to companies with 250 to 1000 employees. Generally speaking, as companies grow (+46% to 
a doubling of workforce, i.e. +100%)42, compliance costs tend to scale less than proportionally with 
size and turnover. In other words, for companies larger than SMEs, the relative burden of compliance 
is expected to decrease in proportion to their capacity, even if absolute costs may still increase. It is 
therefore  reasonable  to  assume  that  the  use of VS  by  companies  with  250  to  1000  employees  will 
reduce their costs and time spent to address sustainability information requests.  

4.3.3  Qualitative benefits 

Although  originally  attributed  to  a  population  of  SMEs,  multiple  qualitative  benefits  outlined  in  the 
VSME  CBA  remain  applicable  in  the  context  of  the  use  of  the  VS  by  undertakings  with  up  to  1000 
employees.  

The  use  of  the  VS  allows  for  the  preparation  of  one  structured  report  that  can  be  reused  by 
undertakings to answer multiple requests for information, reducing the complexities linked to such 
process. The use of a standardized report can also mitigate the needs for clarification and follow-ups 
with  business  partners  and  companies  rely on  common  definitions  and  a shared  understanding  of 
practices. 

The  VS  is  also  expected  to  support  learning  and  automation.  Once  data  collection  processes  and 
routines  are  established,  subsequent  reporting  cycles  are  expected  to  require  less  burdensome, 
routinary practices. 

Furthermore,  the  use  of  the  VS  as  value-chain  cap  can  also  be  expected  to  bring  benefits  to 
undertakings.  As  a  value-chain  cap,  the  VS  operates  as  a  shield  against  ESRS-based  information 
requests  from  CSRD  reporting  companies.  By  establishing  a  clearly  defined  reference  for  the 
information  that  may  be  asked  by  reporting  undertakings,  the  VS  limits  the  scope,  granularity  and 

42 EFRAG (2025), Cost–Benefit Analysis of the Draft Amended European Sustainability Reporting Standards, December 
2025, Box 3. The analysis finds a logarithmic correlation between firm size and reporting costs, with reporting costs 
increasing by approximately 46% when firm size doubles. 

22 

 
 
 
 
frequency  of  data  requests  addressed  to  companies  with  up  to  1000  employees.  This  mechanism 
makes the VS beneficial not only as a limitation, but also as an instrument enhancing predictability for 
undertakings with respect to the data they need to disclose.  

From  a  strategic  perspective,  undertakings  may  use  the  VS  as  an  instrument  to  strengthen  their 
market  positioning  and  competitiveness.  By  disclosing  sustainability  information  in  line  with  a 
recognized EU reporting architecture, companies have a possibility to enhance their reputation and to 
differentiate themselves in sustainability sensitive markets. The alignment of the VS with the revised 
ESRS further reinforces its credibility as a recognized reference point within EU sustainability reporting.  

Additionally, the use of VS can enhance transparency and stakeholder trust by allowing undertakings 
to  communicate  sustainability  information  in  a  consistent  and  comparable  manner,  strengthening 
credibility vis-à-vis investors, customers and value chain partners. 

Another potential benefit linked to the use of the VS relates to the behavior of banks. According to 
feedback  from  financial  institutions,  the  absence  of  sustainability  disclosures  can  be  a  factor 
considered  in  lending  decisions  and  may,  depending  on  the  circumstances,  influence  borrowing 
conditions. In such a scenario, the opportunity cost of restricted access to credit could exceed the 
reporting costs associated with the VS.  

5  Consistency with the European Climate Law 

The Commission has assessed the consistency of the delegated acts with the objectives laid down in 
Articles 2(1) and 5 of the European Climate Law (Regulation (EU) 2021/1119)43. Article 2(1) establishes 
the Union’s legally binding objective of achieving climate neutrality by 2050 and of pursuing negative 
emissions  thereafter,  while  Article  5  requires  Union  institutions  and  Member  States  to  ensure 
continuous  progress  in  enhancing  adaptive  capacity,  strengthening  resilience  and  reducing 
vulnerability to climate change. 

The revised ESRS, in particular the Climate standard, is designed to operate within this framework. It 
requires undertakings to disclose transition plans, targets and actions aligned with the EU’s climate-
neutrality  objective  and  climate-adaptation  goals.  In  doing  so,  it  supports  both  the  credibility  of 
corporate  transition  plans  and  the  objectives  of  the  European  Climate  Law.  The  disclosure  of 
adaptation-related and mitigation-related information further contributes to transparency on climate-
resilience efforts, reflecting the objective set out in Article 5. 

The VS is likewise consistent with the European Climate Law. In particular, the requirement to disclose 
a greenhouse gas (GHG) emissions reduction target benchmark under the Comprehensive Module is 
aligned with the EU climate-neutrality objective under Article 2(1) of the European Climate Law. By 
anchoring  corporate  target-setting  disclosures  to  this  regulatory  benchmark  and  by  including 
disclosures on transition plans and climate change adaptation actions, the VSME, and the VS building 
upon it, ensures coherence with the objective set out in Article 5 of the European Climate law. 

43 Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework 
for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate 
Law’) ELI: http://data.europa.eu/eli/reg/2021/1119/oj. 

23 

 
 
 
6  Conclusions  

6.1  Revised ESRS 

The revised ESRS are expected to generate approximately EUR 4.7 billion in reporting cost savings over 
the period 2027-2031, corresponding to around 44 % of the costs under the 2023 ESRS baseline. These 
savings  are  mainly  driven  by  lower  recurring  reporting  costs,  in  particular  for  Wave  1  companies, 
reduced implementation costs for both current and subsequent waves, lower assurance costs and 
reduced costs relating to trickle-down effects and value-chain data requests. Reporting cost savings 
clearly  constitute  the  most  significant  impact  of  the  revision.  Overall,  the  simplification  measures 
under  the  revised  ESRS  are  effective  in  delivering  substantial  and  tangible  reductions  in  reporting 
costs. 

6.2  VS 

The VS is designed to deliver tangible benefits in terms of proportionality and burden reduction. By 
building on the VSME framework without expanding its content, it provides a stable and  recognized 
reference point for sustainability information. This shields undertakings outside the CSRD scope from 
disproportionate  value-chain  requests  while  enabling  comparable  and  credible  disclosures  that 
enhance transparency, stakeholder trust and market positioning. 

The VS therefore combines protection against regulatory trickle-down effects with opportunities for 
companies outside of the CSRD scope. 

Crucially,  the  VS  is  also  expected  to  generate  rapid  and  potentially  net  cost  savings.  By  replacing 
multiple uncoordinated sustainability information requests with a single structured report, it reduces 
duplication and  recurring compliance  costs.  Evidence  shows  sharply  declining  costs  after  the first 
year and, from the second year of application onwards, scenarios in which companies already incur 
lower costs than in the absence of a common framework, with system-wide savings materializing by 
the third year of application. 

Overall, while net impacts are expected to be negative in the first year of application, they turn positive 
from the second year onwards as recurring costs fall and benefits increase. Net benefits are expected 
to amount to EUR 800 million in the second year of application and reach EUR 2 600 million in the third 
year44, underscoring the strong cost-saving potential of the VS in the medium term.  

6.3 

Joint conclusion 

Taken  together,  the  revised  ESRS  and  the  voluntary  sustainability  reporting  standard  constitute 
complementary elements of the EU sustainability reporting simplification agenda. While the revised 
ESRS  significantly  reduce  reporting  costs  for  undertakings  within  the  CSRD  scope,  the  voluntary 
standard  provides  a  proportionate  and  structured  framework  for  undertakings  outside  that  scope, 
limiting regulatory trickle-down effects and fostering greater predictability in value-chain information 
flows. 

By combining substantial cost reductions with enhanced clarity and proportionality, the two initiatives 
contribute to a more coherent and streamlined sustainability reporting system across the Union. They 
support  the  broader  objective  of  maintaining  robust  sustainability  disclosure  while  reducing 
unnecessary administrative burden. 

44 The calculation of net impacts is based on a population of companies with up to 250 employees. A similar order of 
magnitude can be expected to apply to companies with 250 to 1000 employees. 

24