The One ESG Standard That Could Save Your Company

The latest developments in ESG reporting, particularly concerning the Omnibus directive, have sparked a wave of uncertainty. While the European Commission has acknowledged the complexity of the ESRS standards and the challenges companies face in implementing them, this situation presents an uncertainty. This article will delve into finding the most effective approach to navigate these changes.

Situation on the market

Many companies are already taking steps to comply with the Corporate Sustainability Reporting Directive (CSRD). However, the proposed changes with the Omnibus directive have created uncertainty. It’s unclear whether these changes will be approved by the European Parliament, leaving businesses in a difficult position. Meanwhile, large companies that are still required to report on ESG will likely request this information from their partners and suppliers, regardless of the Omnibus outcome.

Understanding the Omnibus Updates to CSRD

Among the important changes introduced by the Omnibus Directive is a redefinition of the CSRD’s scope, directly affecting which businesses must comply with sustainability reporting standards.

Original Reporting Requirements:

250 or more employees
50+ mil EUR of revenue
25+ mil EUR of assets

To fall under the initial CSRD reporting requirements, a company had to meet at least two of the three criteria.

Revised CSRD Requirements:

1000 or more employees
50+ mil EUR of revenue
25+ mil EUR of assets

According to the proposed new rule, companies will need to meet the employee criteria and at least one of the other two criteria (revenue or assets) to be subject to CSRD.

A Clear Path Forward

Fortunately, a solution exists: the Voluntary Standard for non-listed Micro-, Small-, and Medium-sized Undertakings (VSME). This standard, created by the European Commission, simplifies ESG reporting for SMEs, whether they choose to report voluntarily or are requested to by stakeholders. Notably, under the proposed Omnibus changes, stakeholders requesting ESG data from non-obligated companies must adhere to the VSME standard, preventing requests for information beyond its scope.

What are the main benefits of VSME standards

VSME avoids excessive complexity by focusing on essential sustainability disclosures without requiring exhaustive data collection. Here is the summary of main benefits:

Simplified Data Collection: Requires only about 10% of the data points compared to full CSRD reporting.
No Complex Analysis: Eliminates the need for double materiality analysis.
Easy Reporting Format: Does not require machine-readable documents (XBRL format).
Focus on Numbers: Emphasizes quantitative data over qualitative descriptions.

Why should company go with the VSME standards

Companies should consider adopting the VSME standard for the following key reasons:

Ongoing Data Demand:

Banks and clients will continue to require ESG data, regardless of changes to mandatory reporting regulations. Adopting VSME ensures companies are prepared to provide this information efficiently.

Comprehensive or Basic Module:

VSME offers two modules for the undertaking to choose from. Basic, with the minimum requirements and Comprehensive, for the companies willing to go step forward and be eventually ready for the CSRD directive.

Preparedness for Regulatory Uncertainty:

The final outcome of the Omnibus Directive and its impact on CSRD requirements remains uncertain. Using VSME allows companies to be proactive and prepared, regardless of how the regulations ultimately evolve. It acts as a safeguard against potential future reporting obligations.

At Sustainly, we believe that the issue of ESG can be approached pragmatically. There is no need to be afraid of it; most of the work is already done in your company, you just don’t know that ESG is behind it.

Simplify your ESG reporting with our software. We automate the entire process and create your report with minimal effort on your part, all at a significantly lower price than consulting firms. Contact us through our contact form and find out how easy it can be.

Do you want to find out more? Contact Sustainly today!