CSRD Post-2026: Reporting Changes and ESRS Relief for SMEs
7 Min. reading time
Since March 18, 2026, the Omnibus Amendment Directive (2026/470) has been in force – and it has fundamentally reshaped the CSRD landscape for the Mittelstand. Around 80 percent of the originally obligated companies are now out. Who remains, which deadlines apply, and why the topic is not settled for the others: a sober overview.
Key Takeaways
- New Threshold: Only companies with more than 1,000 employees AND more than 450 million EUR in turnover are now required to report. Both criteria must be met simultaneously.
- 50,000 becomes 5,000: The European Commission estimates that around 5,000 companies in the EU will remain directly obligated – instead of the original 50,000.
- Start date postponed: Obligated companies must only report from fiscal year 2027. Member states have until March 2027 for implementation.
- VSME as a bridge: For those relieved, the voluntary VSME standard comes into play – modular structure, EU-compliant, designed for supply chain pressure from the B2B environment.
RelatedEU Omnibus and Mittelstand: What the trilogue means for regulatory burden / CSRD data model 2026: What Mittelstand companies now need to know about ESG reporting obligations
What happened on March 18, 2026 – and what didn’t
Directive 2026/470 was published in the EU Official Journal on February 26, 2026, and entered into force twenty days later. This sounds technical. What it means: The original CSRD architecture, which was supposed to capture large companies in waves from 2024 and the broader Mittelstand from 2026, was subsequently reduced to a significantly smaller target field.
It’s not a complete rollback. The CSRD still exists, the ESRS standards (European Sustainability Reporting Standards) remain the framework. What has changed is the threshold. And it has risen significantly.
What the amendment directive does not mean: a general rejection of sustainability reporting. Those who believe this risk having to start from scratch again in two years – this time under time pressure because customers and banks are asking, not because the authorities require it.
The New Threshold: 1,000 Employees and 450 Million Euros in Revenue
The crucial change is the cumulative principle. Both criteria must be met simultaneously – more than 1,000 employees and more than 450 million EUR in annual revenue. Companies that meet only one of these two criteria do not fall under the direct obligation.
Source: European Commission, Directive 2026/470
In Germany, this means: A manufacturing company with 800 employees and 600 million EUR in revenue is out. Similarly, a service provider with 1,500 employees but only 200 million EUR in revenue. Only those who exceed both thresholds remain obligated to report.
For listed SMEs (Small and Midcaps), a separate regime applies. They do not fall under the general CSRD obligation, but may face indirect pressure from buyer or investor inquiries – this is where the VSME standard comes into play.
What the ESRS Relief Practically Means
Parallel to the threshold increase, the EU Commission has revised the ESRS standards (European Sustainability Reporting Standards). The number of mandatory data points is set to decrease significantly. This is relevant for the remaining ~5,000 companies – but also for all those who report voluntarily or must supply supply chain data.
Specifically: The original version of the ESRS contained over 1,000 data points. The revised draft, expected in summer 2026 as a delegated act, is set to significantly reduce this number. This reduces the IT and process effort for first-time reporters – and makes ESRS-compliant reporting more realistic without a dedicated sustainability department.
What doesn’t change: the quality requirements. Those reporting in accordance with ESRS must provide verifiable data. “We have a sustainability strategy” is not enough – what’s required are Scope-1 and Scope-2 emissions with data basis, supply chain screenings, social policies with key performance indicators.
The VSME Standard: Voluntary, but not without consequences
For companies below the new CSRD threshold, EFRAG (European Financial Reporting Advisory Group) has developed the VSME: Voluntary Sustainability Reporting Standard for SMEs. It is modularly structured – a basic module (key ESG metrics) and an extended module for companies with greater reporting ambitions or stronger supply chain pressure.
The final version of the VSME as a delegated act is expected after the completion of the revised ESRS – likely autumn 2026. Until then, the existing EFRAG recommendation can be used as a framework. The EU Commission has already adopted a formal recommendation for the use of VSME in July 2025.
VSME vs. ESRS: Who is it suitable for?
ESRS (mandatory from FY 2027)
- More than 1,000 employees
- More than 450 million EUR revenue (cumulative)
- Full Double Materiality
- External verification requirement
- Mandatory XBRL tagging
- First reports from spring 2028
VSME (voluntary, final from autumn 2026)
- For SMEs and midcaps below the CSRD threshold
- Modular structure (basic + extension)
- No requirement for Double Materiality
- No external verification requirement
- Still: EU-recognized methodology
- Ideal for supply chain reporting requests
Why is the VSME still relevant even though it’s voluntary? Because the pressure doesn’t only come from legislators. A Tier-1 supplier of a German automotive group that is itself CSRD-mandatory will ask its suppliers for Scope 3 data – CSRD requires this. The VSME offers these suppliers a structured, EU-compliant response option without ESRS complexity.
What to do now – depending on company size
The relief about the omnibus is understandable. But drawing operational consequences from it is not trivial – because depending on the situation, there are very different answers.
The Questions the CEO Must Answer to the Shareholder
The relief through the omnibus is real. But it has a characteristic that I know from experience: it creates the temptation to postpone the topic. “We are no longer obligated” sounds like an all-clear. It is not.
The pressure now comes from the market, not from the legislature. Lenders want ESG data for interest rate decisions (ECB stress test requirements affect the banks that pass them on to their corporate customers). Large buyers need supply chain data for their own CSRD report. Insurance companies are calculating climate risks into commercial tariffs.
So what has changed: the obligation is gone, the reason remains. Companies that start structured now – VSME basic module, Scope 1 collection, internal governance – will be in a better position in two years than those that in 2028 realize that their main customer suddenly needs data they don’t have.
This is not an empowerment phrase. This is a sober assessment from someone who has seen what happens when compliance requirements hit in the last quarter before the deadline.
Frequently Asked Questions
Do companies with 800 employees and 500 million EUR in revenue have to report?
No. Both thresholds must be met cumulatively. 800 employees are below the 1,000 threshold – therefore, the direct CSRD obligation does not apply, regardless of revenue. Indirect obligations through supply chains or creditors may still arise.
When must directly obligated companies report for the first time?
The reporting obligation begins for remaining companies from the 2027 financial year. The first report will thus appear in spring 2028. Member states have until March 2027 to implement the directive into national law.
What is the difference between ESRS and VSME?
ESRS is the mandatory framework for CSRD-obligated companies with over 1,000 employees and 450 million EUR in revenue. VSME is a voluntary, modular standard for SMEs and midcaps below that – fewer data points, no external verification requirement, yet EU-compliant and recognized for supply chain reporting.
Is the VSME standard already finalized?
No, the final version as a delegated act is expected after the revised ESRS is completed – presumably autumn 2026. The existing EFRAG recommendation (adopted 2024) can already be used as a reference framework now. The EU Commission has formally recommended the use of VSME.
Can companies still voluntarily report according to ESRS?
Yes. The obligation has been removed, not the possibility. Those acting as a Tier-1 supplier of a CSRD-obligated corporation or planning capital market access can voluntarily report according to ESRS. This is more complex than VSME, but for capital market-oriented companies sometimes the more sensible choice.
Source cover image: Pexels / Pixabay (px:273252)