It is the first question business leaders ask when they hear about the European sustainability reporting standard for SMEs: is VSME/VS mandatory? The answer fits in one word – no – but that word conceals a more nuanced reality. A standard can be entirely voluntary in the eyes of the law and yet become, in practice, difficult to avoid. That is exactly the case with VSME/VS. So let us separate what stems from the law from what stems from market pressure.
The short answer: no, VSME/VS is not mandatory
On 8 November 2026, no company is legally required to produce a VSME/VS report. The standard was developed by EFRAG – the technical body that advises the European Commission – and then endorsed by Commission Recommendation (EU) 2025/1710 of 30 July 2025. A recommendation, however, falls within what lawyers call soft law: a non-binding instrument. It invites, it encourages, it proposes a common framework, but it imposes nothing and provides for no penalties.
Indeed, that is precisely why VSME/VS was created. The mandate given to EFRAG was to provide unlisted small and medium-sized enterprises – those outside the scope of the CSRD – with a standardised, lighter framework, so that they can respond more easily to the ESG requests they receive without bearing the burden of large-company reporting. It is a tool made available, not one more constraint.
‘Legally voluntary’: what it means in practice
Saying that VSME/VS is voluntary is not an empty phrase. It has very concrete consequences:
- No penalties. Not publishing a VSME/VS report does not expose you to any fine, penalty or formal notice.
- No mandatory filing. Unlike the annual accounts, there is no register or office where a VSME/VS report must be filed. You decide whether to produce it, to whom you provide it and in what form.
- No mandatory audit or assurance. VSME/VS does not require third-party verification or a double materiality assessment, unlike the mandatory CSRD framework. A voluntary review or assurance remains possible to lend the report credibility, but it is a choice, not an obligation.
- Built-in modularity. You remain free to limit yourself to the Basic Module (disclosures B1 to B11) or to add the Comprehensive Module (C1 to C9). The ‘if applicable’ principle means you only report what genuinely concerns you.
To understand in detail what the standard covers, its structure and its status, see our reference page: the VSME/VS standard explained for SMEs.
Why VSME/VS often becomes ‘necessary in practice’
If VSME/VS is optional, why are so many companies taking it up? Because the pressure comes not from the law but from their business partners. This is where the legally voluntary turns into a practical necessity.
Pressure from the value chain
The main driver is contracting customers. Large groups subject to the CSRD must report on the sustainability matters of their value chain – including their suppliers. In practice, they pass the request on: ESG questionnaires, tender clauses, supplier approval requirements. An SME that wants to remain a supplier to a key account then has little choice: it must provide data. Here, VSME/VS becomes a common language that is far more convenient than a multitude of disparate questionnaires.
The EU legislator anticipated this. The Omnibus I Directive provides for a capping mechanism – the value chain cap – designed to limit what a contracting customer can request from a partner with 1,000 employees or fewer to the content of the voluntary standard. This cap will become fully operational once the directive has been transposed; it should then also give SMEs a means of protecting themselves against excessive requests. We explain this mechanism in detail in our feature on VSME/VS and the value chain.
Banks and investors
Financing is the second lever. Banks and investors are increasingly incorporating ESG criteria into their assessment of financing applications. In 2026, however, caution is called for: French banks still rely largely on their own questionnaires, derived from their regulatory obligations. VSME/VS is therefore not an established banking requirement. But it can provide a convenient standardised response, avoiding the need to fill in a different form for each counterparty.
Voluntary by choice or voluntary under pressure?
Two very different situations must therefore be distinguished. On the one hand, the company that decides, on its own initiative, to structure its sustainability approach: it chooses VSME/VS as its framework, at its own pace, to showcase its commitments. On the other, the company that receives a questionnaire from a strategic customer or a requirement in a tender: it produces a report because it is pushed to do so. The first case is voluntary reporting by genuine choice; the second is voluntary reporting under pressure.
In both cases, the legal nature remains the same – nothing obliges you to do it by law. But the economic stakes differ radically. Anticipating the process rather than rushing it to meet a tender deadline changes everything: you control the scope, the quality of the data and the timetable.
Does the ‘VS’ standard change anything?
One recent development deserves clarification, as it fuels confusion. On 3 July 2026, the European Commission adopted a delegated act (reference C(2026) 5011) on a voluntary standard, often referred to by the acronym ‘VS’. Published in the Official Journal of the EU on 21 September 2026 (Delegated Regulation (EU) 2026/1560), this text has been in force since 24 September 2026; its use remains voluntary (Article 2).
VSME/VS (the EFRAG standard endorsed by the 2025 Recommendation) and ‘VS’ (the standard adopted by delegated act in 2026, in force since 24 September 2026) are therefore two related but distinct instruments, which it would be premature to conflate. They do, however, have one thing in common: in both cases, the approach remains voluntary. Moving from a recommendation to a delegated act strengthens the official status of the framework, without making it a general obligation for SMEs.
Two dates that should not be confused. The standard becomes usable as soon as it enters into force, that is, on the third day following its publication in the Official Journal of the European Union (Article 4). The value chain cap, by contrast, only applies to financial years beginning on or after 1 January 2027 (Article 3). In other words, nothing prevents an SME from applying the standard before 2027.
What makes the issue unavoidable: the Omnibus effect
One final factor explains why the question ‘voluntary or mandatory’ is becoming central. The Omnibus I Directive – Directive (EU) 2026/470 of 24 February 2026 raised the threshold for entering the scope of the CSRD. Only companies exceeding two cumulative thresholds – more than 1,000 employees AND more than €450 million in net turnover – are now subject to the obligation (for financial years beginning on or after 1 January 2027).
The consequence: a great many companies that expected to fall within the scope of the CSRD are now outside it. But their customers, their banks and their markets continue to demand ESG data. These companies are therefore turning to voluntary reporting – and VSME/VS is emerging as the most natural response. Herein lies the paradox: fewer legal obligations, but a de facto demand that shows no sign of weakening. To see precisely where VSME/VS stands in relation to the CSRD and other frameworks, see our comparison of sustainability frameworks.
In summary
VSME/VS is not mandatory: no law requires it, and no penalty attaches to not using it. But it is increasingly necessary, because your customers, your financiers and your contracting customers make it a condition for doing business. Understanding this distinction – voluntary in law, often imposed in practice – is the key to approaching the subject with confidence, and to deciding to commit to it by choice rather than under the pressure of a deadline.
Sources and verification — checked on 8 November 2026
Every regulatory statement on this page has been checked against the official text. The references below allow you to verify them for yourself.
- Commission Delegated Regulation (EU) 2026/1560 of 3 July 2026 (adopted under reference C(2026) 5011), “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” — legal basis: Article 29ca(1) of Directive 2013/34/EU. Published in the Official Journal of the EU (L series) on 21 September 2026, in force since 24 September 2026 (Article 4); its Article 3 (value chain cap) applies to financial years beginning on or after 1 January 2027. Official text on EUR-Lex · version adopted on 3 July 2026 (PDF, European Commission). Relevant provisions: Articles 1 (definition of the cap), 2(1) (who may apply the standard), 3(2) (the cap covers only the data points in Annex II), 4 (entry into force), recital 5 (end of the legal effects of the Recommendation, message to lenders and investors). Transmitted to the European Parliament and the Council on 3 July 2026 (Council document 11697/26 of 9 July 2026).
- Commission Delegated Regulation (EU) 2026/1563 of 3 July 2026 (adopted under reference C(2026) 5010, revision of the ESRS): reduces the number of mandatory data points by 61%. Published in the Official Journal of the EU on 21 September 2026; enters into force on 10 November 2026 (Article 3) and applies to financial years beginning on or after 1 January 2027. Official text on EUR-Lex · adopted version (PDF, European Commission).
- Recommendation (EU) 2025/1710 of 30 July 2025 (endorsement of EFRAG’s VSME), OJEU of 5 August 2025 — text on EUR-Lex. Recital 5 of Delegated Regulation (EU) 2026/1560 provides that it “should be considered as no longer producing legal effects” from the entry into force of that regulation, i.e. from 24 September 2026.
- Directive (EU) 2026/470 of 24 February 2026 (Omnibus I), published in the OJEU on 26 February 2026, entered into force on 18 March 2026 — text on EUR-Lex. National transposition due by 19 March 2027 at the latest.
- EFRAG — VSME/VS digital template and XBRL taxonomy, version 2.0.0 of 4 November 2026 (prepared in accordance with the voluntary standard (VS), Delegated Regulation (EU) 2026/1560 published in the Official Journal of the EU on 21 September 2026; it replaces version 1.3.0 of 11 June 2026, which EFRAG says should no longer be used) — EFRAG page.
A question about the timeline? We track the status of each text, with dates, in our regulatory watch.
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