Code Gaia’s “ESRS light” approach

In light of the February 2025omnibusproposals and the delays in reducing the sustainability reporting requirement for companies with less than 1000 employees, some companies (that fall under the new reporting threshold) are choosing to report sustainability information in a way that is consistent with European standards. The European Commission has recommended that all companies that are not required to report according to ESRS Set 1 should voluntarily report according to the Voluntary ESRS for SMEs (VSME).

The VSME was developed by EFRAG and is aimed at unlisted micro, small and medium-sized enterprises with 1 to 250 employees. EFRAG recently confirmed that the VSME is not a suitable reporting standard for companies with more than 250 employees (online conference “VSME in Action: Empowering SMEs for a Sustainable Future”, April 7, 2025).

Code Gaia has spoken to many companies that are no longer required to report in accordance with the ESRS. It emerged that there is still an interest in reporting. However, many respondents felt that the VSME standard was too simple and therefore asked for a voluntary, adapted and reduced version of the full ESRS (Set 1). To support these companies in their reporting, we propose a reduced reporting scope ESRS light, which is based on the full ESRS and not on the VSME.

We now officially offer this under the “ESRS-light” concept. The proposal is integrated as a modular option in our software for sustainability reports and materiality analyses.

Our proposal

The ESRS light is a reduced scope of the ESRS Set 1, covering all necessary data points suitable for medium to large companies (250 to 1000 employees), but excluding very complicated or irrelevant data points. This allows companies to report with a realistic but manageable scope without risking an oversimplified VSME report.

The sustainability experts at Code Gaia have, at their own professional discretion, presented an ESRS with a reduced scope that is (in our opinion) better tailored to the needs of these SMEs.

In the absence of current guidance, this reduction in scope was not based on a specific official publication by EFRAG or the EU Commission or a Member State body.

The reduced scope corresponds to approximately 65% of the total reporting inputs (data points/ DRs/ ARs) of ESRS set 1. However, it should be noted that this does not correspond to 65% of the reporting burden. Not all requirements are associated with the same effort.

Furthermore, the reduced scope is not a substitute for a materiality analysis. The concept of materiality should still apply and a materiality analysis is likely to result in many of the reduced scope requirements being classified as not relevant to the reporting entity (which is in effect a further reduction in scope).

Our approach

Code Gaia has used the following approach to determine which reporting requirements should remain in the reduced scope.

Requirements were preferred for inclusion in the reduced scope if the following criteria apply:

• The requirement asks for the most frequently requested ESG information (i.e. that which is common in other frameworks and is also included in the VSME).
• It is assumed that the requirement asks for key figures that most companies are likely to have access to (energy consumption, water consumption, number of employees, etc.).
• The key figures are considered to be relatively easy to calculate.
• The requirement has a high information value for typical interest groups.
• If there are both qualitative and quantitative data points that require similar information, the quantitative requirement should be included.

Requirements have been prioritized for exclusion from the reduced scope if the following criteria apply:

• Requirements that asked for financial KPIs in relation to IRO management.
• Requirements that were assumed to duplicate information between ESRS 2 and the current standards.
• The requirements stipulate the disclosure of data that is difficult to access or collect or that is a difficult to calculate indicator.
• The requirements have only a limited or minor use case (the information does not appear to be relevant to a wide range of typical stakeholders).
• The requirements are considered to be very ESRS-specific and are not often required by other reporting frameworks.
• The minimum disclosure requirements (MDR) are seen more as a helpful guide than as necessary data points.

Here you can see how to use ESRS light in our software.

Table of included requirements for the ESRS light approach (subject to materiality)

Our new ESRS light filter in the reporting module simplifies the requirements specifically for small and medium-sized companies that wish to use ESRS voluntarily.

Simply make an appointment with us to find out how you can implement ESRS light in your company