This is a joint report by Harvey Carlin, a Digital Communications Specialist at low-carbon commodity company StarCB (SCB), and Eduardo Mariz, Sustainability Lead and Senior Analyst at Ishka Airfinance.
After the coming and going of aircraft lessor EU sustainability disclosure obligations over the past two years, uncertainty further increased last year with the release of the Omnibus I proposal, which eventually resulted in the Corporate Sustainability Reporting Directive (CSRD) no longer being applicable to companies with fewer than 1,000 employees – including all dedicated aircraft lessors based in the EU.
Instead, a new reference reporting framework emerged: a ‘voluntary standard’ introducing a value chain cap on information that companies no longer covered by CSRD may be expected to provide. Based on the already available voluntary standard for SMEs (VSME), it offers a way to simplify and standardise ESG reporting for companies no longer under the scope of CSRD.
VS vs VSME
Although the VSME already existed and was adopted as a “recommendation” for SMEs (companies between 11 and 1,000 employees) by the Commission last year, it was not until last month that the European Commission adopted a delegated act establishing the Sustainability Reporting Standard for Voluntary Use (VS).
The ‘VS’ will apply from financial years starting 1st January 2027, and is designed to replace the multitude of uncoordinated ESG questionnaires used by banks, investors and other large companies to collect sustainability information from companies in their value chain.
As noted in a staff working document released last month, “no additional datapoints or modules are added to the VS” compared to the VSME. Changes are “confined to what is necessary to ensure coherence with the revised set of ESRS,” “clarify structure and presentation where appropriate,” and to “clarify the operation of the value chain cap.” ESRS refers to the recently revised European sustainability reporting standards (ESRS), the exact rulebook and metrics that companies still covered by CSRD must follow.
The adopted delegated act establishing the VS is accompanied by two annexes that include:
- Voluntary Standard: Composed of the same Basic Module (11 core disclosures) and Comprehensive Module (nine additional disclosures) of metrics as the existing VSME. It also notes (Annex I) that from the second year, companies shall report comparative information in respect of data already disclosed the previous year.
- Three appendices: Covering defined terms (e.g. what does accident prevention refer to, or which Greenhouse Gases are covered), list of possible sustainability issues (e.g. the various types of ‘pollution’ that may be covered under such section), and background information for organisations using data produced by the standard in the context of other regulations (e.g. in the case of banks, links to the European Banking Authority’s Pillar 3 prudential framework).
- Value chain cap: The precise list of disclosures covered by the value chain cap, including (in Annex II) VSME metrics that companies with fewer than 11 employees are not expected to provide under the standard. Parent companies are “recommended” to prepare a sustainability report on a consolidated basis, including information from subsidiaries, while subsidiaries may be exempt if their parent has already prepared such a report. Reports should be consistent with the reporting firm’s financial calendar and may be done through incorporation by reference – i.e. referring to sections of other public documents containing the relevant information (see page 24 of this Swedish firm’s report for an early example).
Next steps
The delegated act introducing the VS and revised ESRS will take effect once the review process by the European Parliament and the Council has been completed – typically around two months – September 2026 – but possibly longer due to the Summer break.
Once completed, and if there are no objections, the delegated act will enter into force following its publication in the Official Journal of the European Union, in time to begin applying on fiscal years from 1st January 2027.
How to prepare for what the VS (and VSME) prescribe
For aircraft lessors, the VS should ultimately be treated as a standardised ESG information pack, as opposed to a mini-CSRD exercise. Its main value is practical: one coherent report can replace many separate questionnaires from banks, investors, airline customers and other counterparties.
The first step is to run a gap analysis against the two modules. The Basic Module should be the foundation, covering preparation basis, company information, sustainability practices, energy use, Scope 1 and location-based Scope 2 emissions, GHG intensity, pollution where relevant, biodiversity, water, waste, workforce metrics, health and safety, pay and training, and corruption or bribery fines.
Lessors should focus on data quality early. Direct emissions may be relatively limited compared with airlines or manufacturers, but energy use and Scope 1 and Scope 2 emissions still need clear boundaries, reliable source data, internal ownership, and alignment with the financial reporting period.
The Comprehensive Module should also be considered where stakeholders are likely to expect more detail, especially lenders, investors or larger value-chain partners. It adds information on business model and relationships, sustainability initiatives, relevant Scope 3 information, GHG targets, transition planning, climate risks, workforce and human rights information, benchmark-related disclosures and governance diversity.
For aircraft lessors, this will need to be handled delicately. The VS does not create an aircraft-specific emissions standard, so lessors will need to be careful with any claims that try to attribute aircraft operating emissions to the lessor without a clear methodology. This could include portfolio-level estimates of fuel burn or emissions from aircraft flown by airline lessees, book-value-weighted emissions metrics, residual-value-adjusted carbon intensity, or “avoided emissions” claims based on owning newer aircraft.
These figures may be useful as separate management or risk indicators if the assumptions are transparent. Still, they should not be presented as VS-prescribed disclosures or as a substitute for a formal Scope 3 approach.
Where a lessor reports use-phase emissions from leased aircraft, it should explain whether it is applying a recognised framework such as GHG Protocol Category 13 for downstream leased assets, what data comes from lessees or estimates, and what limitations apply. Lessors can still use the VS framework to explain how they assess transition risk, asset age, technology exposure, customer demand, aircraft liquidity, financing risk and potential impacts on residual values.
Preparation should be simple and repeatable: appoint an internal owner, define the reporting perimeter, decide whether reporting is individual or consolidated, and build a data file across finance, HR, legal, facilities, risk and fleet teams. Existing CSRD preparation, policies, emissions inventories and governance work can often be reused.
Done well, the VS gives lessors a proportionate way to respond to rising ESG information requests, support financing discussions, and show counterparties how sustainability-related risks are managed without taking on the full burden of CSRD.
Conclusion
Although the VS, and the VSME upon which it is based, is voluntary, companies that supply products or services to larger corporations, seek external financing, or maintain strong business ties with the EU may face significant commercial disadvantages if they do not participate. These could include losing business opportunities, reduced access to financing, or exclusion from supplier and procurement lists.
As the VSME is designed as a relatively low-burden reporting framework, leasing companies that have already undertaken preparations for CSRD are likely to be well positioned to comply. For those that have not yet started, now is the ideal time to take a proactive approach and prepare for increasing sustainability-related information requests from customers, financiers, and other stakeholders.
This is a joint report by Harvey Carlin, a Digital Communications Specialist at low-carbon commodity company StarCB (SCB), and Eduardo Mariz, Sustainability Lead and Senior Analyst at Ishka Airfinance.
