On 3 July 2026, the European Commission adopted a delegated regulation establishing a voluntary sustainability reporting standard for undertakings with up to 1,000 employees, which also introduces a 'value chain cap' limiting the information that larger reporting undertakings can demand from them. The standard, supplementing Directive 2013/34/EU, applies from financial year 2027 for value chain reporting by mandatory reporters and from entry into force for voluntary users with ≤1,000 employees. Reporting undertakings—those exceeding €450 million turnover and 1,000 employees—are prohibited from requesting information beyond the voluntary standard from protected undertakings (≤1,000 employees). Protected undertakings have a statutory right to refuse information requests exceeding the cap, and reporting undertakings must inform them of this right. The cap covers only essential datapoints listed in Annex II, with separate caps for undertakings with >10 employees and ≤10 employees. Certain environmental disclosures are voluntary for undertakings with ≤10 employees, thus above the cap for them. The cap does not affect voluntary sector-common information sharing, contractual or legal obligations, or non-sustainability reporting requests. The standard replaces the VSME Recommendation (EU) 2025/1710 from entry into force. Undertakings applying the standard are not obliged to seek assurance on reported information.
The regulation, adopted by the Commission's Directorate-General for Financial Stability, Financial Services and Capital Markets Union (FISMA), is a delegated act under the Accounting Directive. It aims to reduce administrative burden for small and medium-sized enterprises (SMEs) in the value chain of larger companies, while ensuring that mandatory reporters still receive essential sustainability data. The policy trade-off balances the need for large firms to obtain sustainability information for their own reporting obligations against the compliance costs for smaller entities. For reporting undertakings, the cap may limit the granularity of data they can collect, potentially affecting their ability to assess and disclose value chain emissions and other sustainability impacts. For protected undertakings, the standard provides a safe harbour, reducing the risk of disproportionate information requests. The regulation does not affect existing contractual or legal obligations, meaning that if a large firm and a small supplier have a contract requiring specific sustainability data, the cap does not override that agreement. The standard is voluntary for small undertakings, but if they choose to apply it, they are not required to obtain assurance (third-party verification) on the reported information, lowering costs further.
The regulation is expected to be transmitted to the European Parliament and the Council for scrutiny under the delegated act procedure. Both institutions have the right to object within a period of two months, extendable by two months. No prior coverage of this file exists in the last 180 days, so this is the first formal step in the legislative process. The standard will enter into force on the twentieth day following its publication in the Official Journal of the European Union.