Sustainability Reporting: New EU Voluntary Standard and Simplified ESRS

On 21 September 2026, two new delegated regulations were published in the Official Journal of the European Union, significantly reshaping the European sustainability reporting framework.

 

Commission Delegated Regulation (EU) 2026/1560 introduces sustainability reporting standards for voluntary use by undertakings outside the mandatory reporting scope and protected by the value chain cap, while Commission Delegated Regulation (EU) 2026/1563 introduces a simplified version of the European Sustainability Reporting Standards (ESRS) applicable to undertakings subject to mandatory sustainability reporting.

The new framework also affects the way companies organise financial statements and corporate reporting, particularly when responding to information requests from customers, banks, investors and larger groups.

 

 

One of the most relevant developments for SMEs is the new voluntary sustainability reporting standard, based on the VSME framework developed by EFRAG.

The standard is intended for undertakings covered by the value chain cap and is designed to provide a more proportionate reporting framework than the ESRS applicable to companies subject to mandatory sustainability reporting. It is relevant to undertakings that do not exceed an average of 1,000 employees during the preceding financial year.

Although reporting remains voluntary, the standard addresses a very practical issue. SMEs may increasingly be asked to provide sustainability information by customers, banks, investors and other business partners, even when they are not themselves subject to mandatory sustainability reporting.

For many SMEs, sustainability information may therefore become relevant even in the absence of a direct statutory reporting obligation.

 

 

Delegated Regulation 2026/1560 also introduces the value chain cap, designed to limit the sustainability information that companies subject to mandatory reporting may request from undertakings in their value chain that fall within the scope of the new voluntary standard.

This provision is particularly relevant to relationships between large companies and smaller suppliers and is intended to apply to financial years beginning on or after 1 January 2027.

 

 

At the same time, Delegated Regulation (EU) 2026/1563 revises the ESRS introduced in 2023 with the aim of reducing and simplifying reporting requirements.

The new standards reduce the number of required data points and provide clearer guidance, while retaining the principle of double materiality.

For financial years beginning during 2026, transitional provisions allow eligible companies, subject to the conditions set out in the Regulation, to apply either the previous ESRS or the new simplified standards.

The quality of sustainability reporting also depends on its consistency with internal control systems and with the processes used to collect, review and validate corporate information.

 

 

The new European framework therefore draws a clearer distinction between mandatory sustainability reporting and voluntary sustainability information, while seeking to reduce excessive information requests throughout value chains.

For companies outside the mandatory scope, voluntary reporting may become useful in relationships with customers, banks, investors and other stakeholders, provided that the information remains proportionate to the size of the company and is consistent with the data used for business planning and management control.