The CSRD Update: What the New Proposal Means for Your Business and How to Prepare

On February 26, 2025, the European Commission released an Omnibus package that includes key changes to the Corporate Sustainability Reporting Directive (CSRD). These changes are expected to reduce administrative burdens for businesses while still ensuring transparency in sustainability reporting.

But what does this mean in practice? If these updates are adopted (as we expect), the number of companies required to report in 2026 (for FY2025 data) will drop significantly—by nearly 80%. This shift will delay compliance for many businesses but also increase the importance of voluntary sustainability reporting frameworks.

At ENSO, we’ve been tracking these developments closely and helping businesses align with the Voluntary SME Sustainability Reporting Standards (VSME) to stay ahead. Here’s what you need to know.

CSRD Scope Reduction: Who Still Needs to Report?

Originally, around 50,000 companies were expected to report on FY2025 sustainability data in 2026. However, under the new Omnibus proposal, this number is expected to drop to about 10,000.

New CSRD Reporting Criteria (2026)

Only businesses that meet all three of the following criteria will now be required to report in 2026:

• 1,000+ employees
• €50M+ turnover OR €25M+ in total assets
• Located in the WU or operating in the EU with a significant market presence

Who Gets a Reporting Delay?

• Companies with fewer than 1,000 employees will not have to report under CSRD until at least 2028 (for FY2027 data). This includes most SMEs, small non-complex credit institutions, and captive insurance firms.
• Non-EU companies with €150M+ in EU turnover will also see their due date pushed to FY2030 (for reports in 2031).

Why the Voluntary SME Sustainability Reporting Standards (VSME) Matter More Than Ever

Even if your company is no longer required to report under CSRD in 2026, it’s still crucial to prepare for sustainability reporting. Why? Because large companies that do have to report will still need sustainability data from their supply chains.

That’s where the Voluntary SME Sustainability Reporting Standards (VSME) come in.

The Role of the VSME in Sustainability Reporting

• The VSME framework was developed by EFRAG (European Financial Reporting Advisory Group) to provide a simplified sustainability reporting structure for SMEs.
• Under the new CSRD proposal, large companies can only request sustainability data that aligns with the VSME from their suppliers.
• This means SMEs that adopt the VSME framework will be well-positioned to meet client demands without additional compliance burdens.

Who Should Use the VSME Framework?

• Any business outside of the 1,000+ employee threshold that supplies products or services to larger reporting companies.
• Companies looking to prepare for future CSRD compliance (2028–2030).
• B2B businesses that need to respond to sustainability requests from customers, investors, or regulators.

What’s Included in the VSME Reporting Framework?

The VSME framework consists of two main modules:

Basic Module (Essential Data)

• Carbon footprint & energy use
• Water & waste management
• Basic social responsibility metrics

Comprehensive Module (Advanced ESG Data)

• More detailed environmental impact data
• Social & labour practices
• Governance & risk management policies

Companies outside the 1,000+ employee category are expected to complete both modules unless they qualify as micro-enterprises.

How ENSO Can Help You Prepare

For businesses navigating these changes, adopting the VSME framework will be essential for maintaining compliance and meeting client expectations. At ENSO, we have already integrated the VSME standards into our platform, helping businesses streamline sustainability data collection and reporting. We’re here to help you understand your new reporting requirements and turn sustainability into a business advantage.

If you’re part of a supply chain that works with large corporations, adopting the VSME framework now will make compliance easier and more efficient in the coming years.

Final Thought: Sustainability Is Here to Stay

Even though the CSRD compliance timeline has been adjusted, sustainability expectations have not disappeared.

• Consumers demand sustainable products.
• Investors prioritise ESG compliance.
• Governments continue to expand green procurement policies.

This shift presents an opportunity for businesses to proactively integrate sustainability into their operations and gain a competitive advantage.

Want to discuss what this means for your business? Let’s connect!