Introducing the Voluntary Standard (VS): Transitioning from the VSME
The EU has released a draft of their new Voluntary Standard (VS) for sustainability reporting. This standard is built for businesses that are not required to report under the Corporate Sustainability Reporting Directive (CSRD), helping them to prepare for information requests and to gather their own sustainability information. Sound familiar? It should! The Voluntary Standard is the updated version of the VSME and in this blog we will break down everything you need to know.
What is the Voluntary Standard?
The Voluntary Standard is an updated version of the VSME that is more formalised and follows the style of EU voluntary standards. With these updates, the VS will be “value chain cap ready,” meaning that it aligns with updates to the CSRD and will allow value chain actors to prepare fully for related information requests. It is important to note that the VS is not a complete redesign of the VSME. On the contrary, it builds on the VSME framework, adding clarity and simplifying certain data points.
Who Does It Apply To?
Just like the VSME, the VS is for businesses who are not required to report under the CSRD. As of the adoption of the Omnibus Proposal, the following organisations are required to report on the CSRD:
- EU companies with more than 1,000 employees AND more than €450 million net turnover.
- Non-EU companies with securities admitted to trading on an EU-Redulated market AND more than 1,000 employees AND more than €450 million net turnover.
- Non-EU entities with a consolidated turnover in the EU of more than €450 million AND either
- An EU subsidiary with net turnover of more than €200 million OR an EU branch with net turnover of more than €200 million
To learn more about the updated CSRD, check out our blog. For businesses that do not fall into this scope, the VS framework will help you to prepare your sustainability data for CSRD and supply chain information requests, your own voluntary disclosures, and tender applications.
What Has Changed from the VSME to the VS?
Overall, the VS is largely the same as the VSME: two modules, basic and comprehensive, environmental, social, and governance disclosures, specific data points and metrics to disclose. The key changes to note are:
- Addition of disclosure status labels: each disclosure in the VS is labeled as Necessary, Necessary if Applicable, Voluntary, or Consideration When Reporting Sector Information. These labels help you to navigate the standard with more confidence, providing guidance on where to focus disclosure efforts, particularly when preparing your first report.
- Proportionality: with the addition of the labels, we also see the addition of notes that simplify data points for businesses with less than ten employees. These notes identify opportunities for micro businesses to omit or reduce disclosures to ensure that the VS is applicable for them in a proportionate and accessible manner.
- Simplification and removal of data points: while the content of the VS remained largely unchanged from the VSME there are a few examples of the removal or simplification of data points. For example, businesses are no longer asked to report greenhouse gas emission intensity and the disclosures around biodiversity and land no longer asked about sealed and nature oriented areas.
What to Expect Next and What to Do Now
The VS is currently open for feedback until 03 June which means that we have a bit of time before the changes are adopted by the EU. At ENSO, we will be using this time to learn all about the new standard and make updates to our platform and guidance accordingly. These changes will be published after the draft VS is adopted by the EU, which is expected to happen shortly after the comment period ends. Our team will keep you updated on any changes or new pieces of information relevant to your business.
In the meantime, we recommend that you keep working with the VSME standards currently published by EFRAG and integrated into our platform. Because of the lack of significant changes between the VS and the VSME, your work on the VSME will still be relevant when the VS is officially adopted. We are happy to help navigate the small changes and updates, allowing you to smoothly transition between standards.