CSRD and the EU Voluntary Standard: clarity for companies between the thresholds

Companies with between 250 and 1,000 employees have faced particular uncertainty as European sustainability reporting requirements have evolved.

Under the original Corporate Sustainability Reporting Directive (CSRD) framework, companies in the broader large-company reporting category were generally within scope where they exceeded at least two of the following three criteria:

• more than 250 employees;
• net annual turnover exceeding €50 million; and
• a balance-sheet total exceeding €25 million.

These criteria were assessed at consolidated group level where applicable. A company’s number of employees was therefore only one part of the original scope assessment.

The EU’s final Omnibus I reforms, adopted in February 2026, significantly narrow mandatory CSRD reporting. Under the revised scope, a company must exceed both 1,000 employees and €450 million in net annual turnover. The balance-sheet criterion has been removed, while the remaining thresholds must be assessed at consolidated group level where applicable.

Standalone companies with 1,000 or fewer employees will therefore generally fall outside mandatory CSRD reporting, regardless of their turnover. However, companies belonging to larger groups should still verify whether they are covered by group-level reporting or subsidiary arrangements.

The position in Ireland

The Irish position is not yet fully settled. Ireland implemented the EU “stop-the-clock” provisions through S.I. No. 309/2025, postponing reporting by two years for Wave 2 and Wave 3 companies. The substantive Omnibus changes—including the new scope thresholds—must still be transposed into Irish law by 19 March 2027.

Companies already reporting under Irish law should therefore not assume that their obligations have ended until the Irish legislation is amended. Companies previously expecting to enter Wave 2 should use the additional time to confirm their revised group position rather than simply discontinuing all sustainability-reporting preparations.

From VSME to the new EU Voluntary Standard

Falling outside mandatory CSRD reporting does not mean that demands for sustainability information will disappear. Customers, public-sector clients, banks and larger contractors may continue to seek information on greenhouse-gas emissions, workforce matters, health and safety, governance and other sustainability issues.

EFRAG’s original Voluntary Sustainability Reporting Standard for non-listed SMEs—commonly known as VSME—was designed primarily for micro, small and medium-sized businesses. It provided a practical way for SMEs to standardise their sustainability information instead of responding to every request from a blank page.

This framework has now developed further. On 3 July 2026, the European Commission adopted a new EU Voluntary Sustainability (VS) Reporting Standard based on VSME. It was published in the Official Journal of the European Union on 21 September 2026 as Delegated Regulation (EU) 2026/1560.

The new VS Reporting Standard is intended for undertakings that do not exceed an average of 1,000 employees, including larger businesses that would not traditionally be classified as SMEs. It is therefore more accurate to describe it as a new and broader EU Voluntary Standard, rather than saying that VSME itself has simply been extended.

The Standard offers businesses outside mandatory CSRD reporting a proportionate and consistent sustainability dataset that can be maintained and reused across customer, supply-chain, tender and finance requests.

The Value Chain Cap

The Voluntary Standard also provides the basis for the new Value Chain Cap. From the FY2027 reporting cycle, companies subject to CSRD should not request information beyond the Voluntary Standard from value-chain undertakings with 1,000 or fewer employees when gathering information for their own CSRD reporting.

However, the cap is purpose-specific. It does not automatically prevent clients, lenders or other parties from requesting additional information for procurement, lending, contractual due diligence or separate regulatory requirements.

For CIF members outside mandatory CSRD, the practical opportunity is therefore to adopt one proportionate and credible dataset based on the new Voluntary (VS) Standard. This can reduce repeated questionnaires while still providing clients and financial institutions with useful and comparable sustainability information.

Council update on the revised CSRD scope
European Commission update on sustainability reporting standards
EU Voluntary Standard—Delegated Regulation (EU) 2026/1560