The EU Commission has published the draft final version of the voluntary reporting standard for smaller companies, along with the details of the so-called value chain cap. The voluntary standard now covers all companies with fewer than 1,000 employees (previously the VSME applied to companies with fewer than 250 employees), and the Commission also published how the value chain cap — through which larger CSRD companies request information from their value chains — should function.
Our position
We support the Commission's objective to reduce administrative burden and fragmented value-chain requests while preserving the quality of sustainability disclosures. The voluntary standard will function as the value chain cap: CSRD in-scope companies may not require value-chain undertakings with 1,000 employees or fewer to provide information beyond the cap for CSRD reporting purposes. The current proposal, however, risks making the capped dataset too limited for climate-related reporting, financing decisions and risk management. We recommend two targeted amendments.
1. Include "necessary if applicable" disclosures in the value chain cap
The draft explains that the value chain cap covers disclosures marked "necessary", while other categories — including "necessary if applicable" — fall outside the cap. This is too narrow. The cap should also include "necessary if applicable" disclosures where the stated condition applies. This would not create a blanket obligation; it would only require information when the undertaking's circumstances make the disclosure relevant. Several important climate-related items are conditional by nature, such as climate strategy, transition initiatives, GHG reduction targets and the undertaking's assessment of climate risks.
2. Limit the 10-employee relief in climate-critical sectors
The draft gives extra protection to undertakings with 10 employees or fewer by making several disclosures voluntary for them. This may be proportionate for many micro-undertakings, but it should not apply automatically where the undertaking operates in a climate-critical sector — such as property and real estate, transport, or the manufacture of wood products. For undertakings in climate-critical sectors, core environmental datapoints such as energy consumption, Scope 1 and Scope 2 GHG emissions, climate targets, transition planning and climate risks should remain necessary or necessary if applicable.
Example: as currently drafted, a real estate company with fewer than 10 employees could report only very limited information despite owning or managing climate-relevant assets.
Our recommendations
We recommend that the Commission:
- include "necessary if applicable" disclosures within the value chain cap when the condition is met; and
- limit the 10-employee relief so that it does not apply to undertakings in climate-critical sectors.
These amendments would preserve proportionality while ensuring that value-chain data remains meaningful for sustainability reporting, financing decisions and climate risk management.
Jukka Honkaniemi — CEO, Selko Insights