On 6 May 2026, the Commission released the draft that operationalises Article 29ca of the Accounting Directive, as introduced by the Omnibus I Directive (EU) 2026/470. The instrument does two things simultaneously: it creates a standardised voluntary reporting framework for companies below 1,000 employees, and it defines the upper boundary – the value chain cap – of what in-scope reporting undertakings may require from those companies for CSRD reporting purposes.
For every undertaking classified as “protected” under the Omnibus I framework, there is now a statutory right to refuse data requests that exceed this ceiling. For in-scope reporting entities, value chain questionnaires must be redesigned to respect it.
The legal architecture
The path from soft law to binding regulation ran through three instruments in twelve months. The VSME standard – developed by EFRAG and submitted to the Commission in December 2024 – was first adopted as Recommendation (EU) 2025/1710 on 30 July 2025. When the Omnibus I Directive entered into force on 18 March 2026, it empowered the Commission to adopt a delegated act establishing the standard. This draft is that act.
When seeking to obtain information about their value chain, reporting undertakings are prohibited from requiring from protected undertakings information exceeding the information to be disclosed pursuant to the voluntary standard.
Are you protected? What can be required from you?
The value chain cap does not cover the entire voluntary standard. Only disclosures classified as “necessary” sit within it. Disclosures marked “voluntary”, “necessary if applicable”, or “sector consideration” fall above the cap – meaning an undertaking can share them if it chooses, but cannot be compelled to do so for CSRD purposes. The protection level also depends on company size: micro-undertakings with 10 employees or fewer receive additional shielding, as several environmental disclosures become voluntary for that group.
The standard retains the two-module architecture of the VSME. The Basic Module (disclosures B1 to B11) covers general information, environmental metrics (energy, GHG, pollution, biodiversity, water, waste), social metrics (workforce characteristics, health and safety, remuneration and training) and governance metrics (corruption and bribery). The Comprehensive Module (C1 to C9) extends into strategy, climate transition, human rights and revenue from sensitive sectors. Applying the Basic Module is a prerequisite for the Comprehensive Module – an undertaking cannot selectively apply the latter without completing the former. For each disclosure, the standard specifies one of four categories: necessary, necessary if applicable, voluntary, or consideration when reporting sector information. A few disclosures carry differentiated treatment depending on whether the undertaking has more or fewer than 10 employees.
What changed from the VSME Recommendation
The Commission’s explanatory memorandum emphasises that changes have been “kept to a minimum” to avoid raising the cap threshold. Any significant addition to the voluntary standard would lower the protection for value chain companies. The modifications fall into three categories.
The double materiality assessment, which remains central to full ESRS reporting, is not required under the voluntary standard. This reflects its proportionate design. Similarly, no assurance is required – the Regulation explicitly exempts voluntary reporters from the obligation to seek external verification.
Who uses this data – and why it matters
Appendix C of the voluntary standard maps each disclosure to three downstream regulatory frameworks. This mapping is designed for the users of the data – banks evaluating lending risk, asset managers meeting SFDR principal adverse impact reporting, and benchmark administrators – rather than the reporting undertakings themselves.
For banks with thousands of SME borrowers, the practical implication is standardisation. ESG data intake can now be structured around a single, legally defined framework – replacing ad hoc questionnaires with a consistent data model. For SMEs, the benefit is equally tangible: responding to one standard replaces the burden of processing overlapping, uncoordinated requests from multiple counterparties.
It is important to note the cap’s scope limitation. It applies exclusively to information gathering for CSRD sustainability reporting under the Accounting Directive. Data requests required under other EU or national legislation – the EU Deforestation Regulation, the Forced Labour Regulation, sector-specific prudential requirements – remain unaffected. Contractual information exchanges outside CSRD reporting purposes are also beyond the cap’s reach.
Implementation timeline
The Regulation enters into force on the third day following publication in the Official Journal and is directly applicable in all Member States without transposition. The voluntary reporting provisions (Article 2) apply immediately, while the enforceable cap mechanism (Article 3) activates from financial years beginning on or after 1 January 2027 – regardless of whether a reporting undertaking has opted for voluntary early application of the Simplified ESRS for FY 2026.
What undertakings should consider now
For companies with fewer than 1,000 employees, those already applying the VSME under the 2025 Recommendation can continue with minimal disruption – the Commission has deliberately maintained continuity. For those that have not yet adopted a structured reporting approach, the standard provides a framework to respond to value chain data requests efficiently and to improve positioning with financial counterparties. The ESG reporting readiness assessment can help determine which frameworks apply to a given organisation.
For in-scope reporting undertakings, the delegated act requires a redesign of value chain data collection. Questionnaires sent to suppliers must align with the cap: only “necessary” disclosures can be required, and protected undertakings must be informed of their statutory right to refuse anything beyond that level. The Omnibus I Directive introduced a self-declaration mechanism: reporting undertakings may rely on a statement from value chain partners confirming that they fall within the protected category, unless that declaration is manifestly incorrect. This reduces the administrative burden of verifying employee thresholds across complex supply chains.
A three-year transitional provision provides additional flexibility. For the first three years of reporting, undertakings unable to obtain all required information from their value chain may explain the reasons, document their efforts, and describe plans to obtain the missing data. After three years, direct collection or documented estimates are required. This graduated approach recognises that data flows between large reporting entities and their smaller suppliers will take time to mature.
At Generation Impact Global, our platform supports the full VSME disclosure set across both modules – from structured data collection through to XBRL-ready output – and maps each datapoint to the downstream SFDR, EBA Pillar 3 and Benchmark Regulation frameworks that data users depend on.
Frequently asked questions
What is the difference between the VSME Recommendation and the new Delegated Regulation?
The VSME Recommendation (EU) 2025/1710 was a non-binding instrument with no enforcement mechanism. The new Delegated Regulation is a binding EU regulation that establishes the value chain cap as a legally enforceable ceiling. Protected undertakings gain a statutory right to refuse information requests exceeding the cap.
Does the value chain cap apply to all ESG data requests?
No. The cap applies only to information gathering for CSRD sustainability reporting under the Accounting Directive. Requests under other EU or national legislation (such as the EU Deforestation Regulation or sector-specific prudential requirements) and contractual information exchanges are unaffected.
Is assurance required for voluntary reporters?
No. The Regulation explicitly states that undertakings applying the voluntary standard are not required to seek assurance. This is a cost-minimisation feature for smaller companies.
When does the value chain cap take effect?
The cap under Article 3 applies from financial years beginning on or after 1 January 2027. Voluntary reporting under Article 2 applies from the date of entry into force, meaning undertakings can begin structured reporting immediately upon publication in the Official Journal.
Are micro-undertakings treated differently?
Yes. For undertakings with 10 employees or fewer, several environmental disclosures that are “necessary” for larger companies become “voluntary” and therefore sit above the cap. The Basic Module remains the target approach for micro-undertakings.
Can protected undertakings share information voluntarily beyond the cap?
Yes. The cap does not prohibit voluntary sharing of information that is commonly shared in a given sector. It only limits what can be required. Protected undertakings may choose to disclose additional information if they believe it serves their commercial or financing interests.
