Revised ESRS or VS: Selecting the right voluntary reporting standard for FY2026

Investors, banks, and global supply chains continue to demand structured, comparable ESG data. As a result, many “out-of-scope” companies are now turning to voluntary sustainability reporting.

The FY2026 reporting dilemma: Which standard to choose?

With the Revised ESRS and the Voluntary Standard (VS) now published in the EU’s Official Journal, businesses must decide which standard best suits their needs for the FY2026 reporting cycle.

For mid-caps and companies with more than 500 employees, this choice is not merely technical. It is a strategic decision that determines how an organization:

• Meets Stakeholder Expectations: Aligning with the rigorous data demands of banks and investors.
• Maintains Competitive Advantage: Avoiding the “requirements gap” that occurs when lightweight standards fail to meet complex value chain requests.
• Ensures Future-Readiness: Building scalable reporting capabilities that can adapt as regulations evolve.

Understanding the differences between the VS and the Revised ESRS is critical for long-term business resilience.

VS vs. Revised ESRS: Different tools for different purposes

The VS and Revised ESRS were designed for different purposes, for different types of companies, and to deliver different outcomes.

1. The new Voluntary Standard (VS): Built on the VSME

The new VS builds on the VSME, which originally was developed by EFRAG for non-listed SMEs. Its purpose was to provide a simple, standardized way for small businesses to deliver a minimum set of sustainability information to banks, investors, and larger customers.

Rather than reinventing the wheel, only minimal tweaks were made to align the new VS with the Revised ESRS, offering continuity for companies already using the VSME. Keeping the standard lightweight allows it to serve as a practical option for businesses with up to 1,000 employees. Crucially, this restraint protects the value chain cap, preventing larger companies from forcing extra data requests onto their supply chain.

While efficient, the original VSME was not designed for the depth or structural complexity required by larger mid-caps. Whether the new VS, which is built on a standard for SMEs, can meet the reporting needs of larger mid-caps remains a key question.

2. Revised ESRS: Comparable and achievable

The Revised ESRS retains the core logic of the original ESRS, including double materiality and a structured assessment of impacts, risks, and opportunities (IROs), but in a far more achievable format.

• Reduced Burden: Mandatory data points have been cut by 61%, with an overall reduction of more than 70% compared to the original 2023 standards

• Comparability: Built on comparability and decision-useful information, and aligned with global standards like ISSB.

It is not a minimum data-request framework like VS. This distinction is critical for companies with more than 500 employees that are now considering voluntary reporting.

Why the Revised ESRS is the standard for Mid-Caps

For companies with more than 500 employees, “out of scope” does not mean “out of sight”.

These companies are typically operating in more complex stakeholder environments. They are responding not only to basic data requests but to tender requirements, investor expectations, lender scrutiny, and structured value chain requirements. 

Future-Proofing vs. Reworking

Choosing the VS when your stakeholders expect ESRS-level data creates a “requirements gap”. Choosing a lighter standard may require a costly “rebuild” of your ESG data maturity when market demands inevitably increase. The Revised ESRS is designed to grow with your organization. It’s also the same standard that becomes mandatory for in-scope companies from FY2027, so there’s no second changeover if your scope or stakeholder demands change.

Double Materiality as a business tool

One of the key advantages of the Revised ESRS is that it retains double materiality.

In the Revised ESRS, the materiality assessment has been made more practical. It now explicitly allows a top-down approach alongside the existing bottom-up method, making it easier to focus on what truly matters for the business.

This is not just a reporting requirement. It is a management tool.

A well-executed double materiality assessment helps companies:

• Identify the sustainability issues that have a real impact on financial performance
• Prioritise the risks and opportunities that require management attention
• Focus reporting on what is decision-relevant for stakeholders

In practice, this creates clarity across the organisation. It aligns sustainability, finance, and strategy around a common understanding of what matters, and why.

The VS does not include a materiality assessment. This makes it harder to connect sustainability reporting to business priorities, and limits its usefulness as a tool for managing performance and risk over time.

When the VS may be the right choice

The VS is well-suited for companies that:

• Fall within the SME category (fewer than 250 employees and €50m in net turnover) 
• Are early in their sustainability journey
• Face limited external pressure for structured ESG data

For these organizations, proportionality and accessibility are key.

But for companies with more complex stakeholder environments, expectations are typically higher and reporting needs to serve more use cases.

In that context, the VS can become limiting over time.

The bottom line for voluntary reporting in FY2026

The Omnibus has changed who is required to report but not how sustainability information is used. 

That is why voluntary reporting is becoming a practical necessity, not just a strategic choice.

The scrutiny period is now over. The Revised ESRS and the VS were published in the EU’s Official Journal on 21 September 2026 and enter into force on 10 November 2026.

For out-of-scope companies with more than 500 employees, choosing the right framework is key to remaining bankable, investable, and competitive in the global supply chain. The Revised ESRS provides that foundation, delivering high-value insights with a significantly lower administrative burden.

This is not a decision between “simple” and “complex.”

It is a decision between:

• a framework designed for proportionate, voluntary disclosure (VS)
• a framework built on alignment, comparability, and decision-useful information (ESRS)

For companies with more than 500 employees, the Revised ESRS offers a balanced approach:

• structured, investor-relevant reporting
• reduced complexity and effort
• alignment with market expectations
• readiness for future regulatory developments

It is not just a reporting choice. It is a strategic one that we can help you define as it relates to your business objectives for 2026 and beyond. So, if you are looking to get ahead of your peers and align to the highest quality standard of European reporting, then let us help you chart your course to impact.