Guide · 2026
CSRD vs VSME: Which Sustainability Report Does My Company Need?
After the 2026 Omnibus changes raised the thresholds, far fewer companies fall into mandatory CSRD scope. This guide walks you through a simple, six-step decision: check your size against the current thresholds, work out whether CSRD applies to you, and — if it does not — see why the voluntary VSME standard is the right way to answer the data requests now flowing down supply chains.
The short answer
You must report under the CSRD only if your company exceeds the EU's large-company thresholds. Following the 2026 Omnibus reform, the headline scope is large undertakings with more than 1,000 employees (alongside a turnover or balance-sheet test). If you are below that — which now includes most SMEs and many mid-market companies — CSRD is no longer mandatory for you, and the VSME (Voluntary SME) standard is the recommended way to report. VSME is a single, proportionate template designed to answer the sustainability-data requests you receive from larger customers, banks and investors. Crucially, the Omnibus also caps what those large companies can demand from smaller suppliers at the VSME data points — so reporting once in VSME satisfies the chain. Check your CSRD readiness to confirm where you stand.
How to decide: CSRD or VSME, step by step
Work through these six steps in order. By the end you will know which framework applies, why, and what data you need to collect to be ready.
- 1
Check your employee count and turnover against the 2026 thresholds
Start with your headcount, net turnover and balance-sheet total for the financial year. After the 2026 Omnibus reform, the headline test for mandatory CSRD reporting is more than 1,000 employees combined with a financial threshold (turnover or balance-sheet total). Gather these three figures first, as every later step depends on them.
- 2
Determine if you are in mandatory CSRD scope
If your company exceeds the large-undertaking thresholds — broadly, more than 1,000 employees plus the turnover or balance-sheet test — then CSRD reporting under the ESRS is mandatory for you, including a double-materiality assessment and limited assurance. Listed companies and large groups should also check consolidated (group-level) obligations.
- 3
If out of scope, see why VSME is the recommended standard
If you fall below the CSRD thresholds, you are not legally required to report under the ESRS. The EU developed the VSME (Voluntary SME) standard precisely for this gap: it is a single, proportionate template that lets you answer the sustainability-data requests coming from larger customers, banks and investors without taking on full CSRD complexity.
- 4
Understand the value-chain cap that protects SME suppliers
Read the value-chain cap before you respond to any customer questionnaire. A large CSRD reporter cannot require its smaller, out-of-scope suppliers to provide more information than the VSME data points. So a clean VSME report effectively answers the request — your customer cannot keep escalating bespoke demands beyond that ceiling.
- 5
Pick the Basic or Comprehensive VSME module if reporting voluntarily
VSME has two modules. Begin with the Basic module, which covers core disclosures such as energy and greenhouse-gas emissions, workforce and key environmental and social metrics. Add the Comprehensive module — with targets, transition information and additional governance and value-chain detail — only when a specific customer, lender or investor asks for it.
- 6
Plan your data collection for the chosen framework
Once you know which framework applies, map the data you need and where it lives: energy bills and fuel use for Scope 1 and 2, and spend or supplier data for Scope 3. Build one auditable inventory on the GHG Protocol so each figure carries its source, unit and emission factor, then generate the CSRD or VSME report from that single dataset rather than maintaining separate spreadsheets.
CSRD scope at a glance (2026)
A company is generally treated as a large undertaking when it exceeds two of the three size criteria below. The 2026 Omnibus reform focused mandatory reporting on the largest companies and postponed timelines for others — always confirm the current rules for your member state, as transposition details vary.
| Criterion | Large undertaking | What it means for you |
|---|---|---|
| Employees | More than 1,000 | The headline 2026 floor — companies under this are generally out of mandatory CSRD scope. |
| Net turnover | Above the large-undertaking threshold | Used together with the employee and balance-sheet tests; confirm the figure your member state applies. |
| Balance-sheet total | Above the large-undertaking threshold | A company typically qualifies as large when it exceeds two of the three criteria. |
The headline 2026 change is the move to a 1,000-employee floor for in-scope companies, combined with one of the financial tests above. Below that floor, CSRD is not mandatory and VSME is the recommended route.
CSRD vs VSME compared
The two frameworks share a foundation — both are built on the same sustainability concepts and the GHG Protocol for emissions — but they differ sharply in scope and effort. Here is how they line up.
| Dimension | CSRD (ESRS) | VSME |
|---|---|---|
| Who it is for | Large undertakings and large groups (and, on a later timeline, certain listed companies) | SMEs and other companies outside mandatory CSRD scope |
| Mandatory or voluntary | Mandatory once thresholds are met | Voluntary — a standard you choose to use |
| Materiality | Double materiality assessment required | No full double-materiality exercise required |
| Assurance | Limited assurance by an auditor | No mandatory external assurance |
| Effort & scope | Extensive ESRS disclosures across environment, social and governance | Proportionate: a Basic module plus an optional Comprehensive module |
| Main purpose | Comprehensive public sustainability statement in the management report | Answer value-chain data requests from customers, banks and investors |
The value-chain cap protects smaller suppliers
One of the most important Omnibus changes is the value-chain cap. A large company that must report under CSRD cannot force its smaller, out-of-scope suppliers to provide more sustainability information than the data points set out in the VSME standard. In practice this means a supplier that publishes a clean VSME report has effectively answered the questionnaire — your customer cannot keep escalating bespoke demands beyond that ceiling. That is exactly why VSME has become the common language of the value chain: report once, in the standard format, and reuse it with every customer, bank and investor that asks. CarbonTool's reporting module maps a single emissions dataset to both CSRD and VSME, so you never duplicate work as your obligations change.
If VSME applies: Basic or Comprehensive?
VSME is built as two modules. Start with the Basic module; add the Comprehensive module only if your customers, lenders or investors specifically ask for the extra disclosures.
Basic module — start here
Core disclosures most data requests ask for: energy use and greenhouse-gas emissions, basic workforce information, and key environmental and social metrics. For many SMEs this is enough to satisfy customers, banks and investors.
Comprehensive module — add if asked
Builds on Basic with reduction targets, transition information, and additional governance and value-chain disclosures. Add it only when a specific stakeholder requests the extra detail, so you do not over-report.
One data backbone for whichever framework you need
Because thresholds and timelines keep moving, the safe choice is a tool that does not lock you into a single framework. CarbonTool builds one auditable emissions inventory and maps it to whatever you owe:
200+ GHG-Protocol templates
Expert emission-source templates with built-in methodology guidance get you from invoices and bills to a defensible Scope 1, 2 and 3 inventory, whichever framework you ultimately report under.
One data backbone for CSRD, VSME, GRI, CDP and PCAF
Structure your data once and generate CSRD or VSME — and GRI, CDP or PCAF — from the same dataset. If your obligations change as thresholds move, you switch frameworks without re-entering data.
Audit trail by default
Every figure carries its source, unit, emission factor and data-quality level, so a VSME submission or a CSRD limited-assurance review holds up when someone checks your numbers.
Supplier portal for value-chain data
Collect Scope 3 and VSME-level data from suppliers in a structured way — and respond to your own customers’ requests at the VSME data points rather than ad-hoc spreadsheets.
Transparent pricing and a free trial
Published per-organisation pricing with unlimited users and a free 30-day Starter plan, so you can start measuring before committing — no quote-based sales cycle.
Built by BuildGreen
CarbonTool is built by the BuildGreen team, giving companies in Romania and across the EU a locally-rooted partner that understands both CSRD and the VSME standard.
Going deeper on CSRD specifically? See our guides to the best CSRD software and CSRD software in Europe, or — if you are based in Romania — carbon accounting software for Romania.
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The 2026 Omnibus reform narrowed mandatory CSRD reporting to large undertakings, with the headline test being more than 1,000 employees combined with a financial threshold (net turnover or balance-sheet total). A company generally counts as large when it exceeds two of the three size criteria. Many SMEs and mid-market companies that were previously expected to fall into scope are now out of mandatory scope. Transposition varies by member state, so confirm the exact figures that apply to you.
VSME is voluntary. It is the EU’s Voluntary standard for SMEs and other companies outside mandatory CSRD scope. You are not legally required to report under VSME, but it is the recommended way to answer the sustainability-data requests you receive from larger customers, banks and investors, because it provides a single, proportionate and recognised format rather than a different spreadsheet for every requester.
If you are below the CSRD thresholds, you are not legally required to publish a CSRD report. When a large customer asks for sustainability data, the practical answer is to report under the VSME standard — typically the Basic module first. A clean VSME report answers most value-chain questionnaires, and the value-chain cap means your customer cannot require more than the VSME data points from you as an out-of-scope supplier.
No. The Omnibus value-chain cap prevents a large CSRD reporter from requiring its smaller, out-of-scope suppliers to provide more sustainability information than the data points set out in the VSME standard. This protects SMEs from open-ended, bespoke requests: once you have published a VSME report, you have effectively met the requirement and can reuse the same report across every customer that asks.
Often, yes. Even when you are out of mandatory CSRD scope, customers, banks and investors increasingly ask for sustainability data, and lenders may factor it into financing decisions. A voluntary VSME report lets you answer those requests consistently, demonstrate progress, and avoid being caught unprepared if your company grows back into scope or your largest customers tighten their requirements. Starting with the Basic VSME module keeps the effort proportionate.
Listed small and medium-sized enterprises sit on a later, separate timeline from large undertakings, and the Omnibus process postponed several reporting dates. Listed SMEs should monitor the final transposed rules in their member state for the applicable start year and any opt-out provisions, and can use VSME in the meantime to respond to value-chain requests. Always confirm the current dates with an authoritative source, as timelines have been subject to change.
CSRD or VSME — be ready either way.
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