CSRD, Omnibus, VSME and the Swiss sustainable business law: sustainability in valuation and due diligence

Introduction: why sustainability has become a price variable

Why do two companies with the same revenue and the same margin now sell at different multiples, simply on reading their sustainability profile? Because environmental, social and governance (ESG) data has ceased to be a communication topic and become a measurable financial variable: it changes the cost of capital, due diligence and, at the end of the chain, the transaction price. The Corporate Sustainability Reporting Directive (CSRD), its simplification by the Omnibus package, the voluntary VSME standard for SMEs and the new Swiss law on sustainable business now form the reference framework for this information, as the European Commission recalled when presenting its simplification package.

"The VSME standard is voluntary, designed for companies with fewer than 250 employees, and aligned with the European sustainability reporting standards.", EFRAG, voluntary standard for SMEs (VSME), 2026.

In 2026, three forces are converging to make sustainability a matter for the finance department, and no longer only for the CSR department. First, the Omnibus package has radically narrowed the mandatory scope of the CSRD, taking the vast majority of companies out of compulsory reporting while the market keeps demanding the data. Second, the value-chain trickle-down effect means that any SME supplying a large listed group remains solicited on its ESG indicators, through the VSME or the duty of vigilance. Third, acquirers and lenders now build in an explicit premium or discount according to the ESG maturity of the target. This article defines this Franco-Swiss framework, explains how sustainability translates into a risk premium and into value, proposes a mapping grid, illustrates the mechanics on three worked cases including a real sector case, then sets out five mistakes to avoid, a ten-question FAQ and a summary.

Turn your sustainability profile into a valuation argument

Before going into detail, keep the essentials in mind: a documented and credible ESG profile can be worth several points of cost of capital less, hence a significant fraction of enterprise value more, while an untreated ESG risk is paid for in a discount.

If you are preparing a fundraising, an acquisition or the sale of an SME or mid-cap whose buyers scrutinise the sustainability trajectory, book a 30-minute conversation with Hectelion to translate your ESG maturity into defensible rate and price assumptions.

Our valuations rely on a multi-method methodology aligned with IVSC standards and on a Franco-Swiss reading of risk.

Definition: CSRD, Omnibus, VSME and the Swiss sustainable business law

The Corporate Sustainability Reporting Directive (CSRD) is the European directive that requires certain companies to publish standardised sustainability information, under the ESRS standards, covering the environment, social matters and governance, with the double-materiality principle.

The Omnibus package, adopted in early 2026, simplified its application: higher thresholds, a smaller number of companies within the mandatory scope and lighter requirements, in order to relieve SMEs and mid-caps, as the European Commission explains.

The VSME (Voluntary SME standard), developed by EFRAG, is the voluntary and proportionate standard that allows an SME to publish ESG indicators useful to its customers, banks and investors, without the burden of the full CSRD.

On the Swiss side, the arrangement is distinct but convergent. The Code of Obligations already requires a report on non-financial matters (articles 964a et seq.) from large companies, supplemented by climate obligations, and the Confederation has initiated a new law on sustainable business to clarify the scope and the expected content. To this are added, at European level, the Corporate Sustainability Due Diligence Directive (CSDDD), the green taxonomy which defines sustainable activities, and the international IFRS S1 and S2 standards of the ISSB, which bring sustainability information closer to financial information.

For the valuer, what matters is not regulatory compliance as such, but the quality and financial materiality of the data that follows from it.

Origins: from non-financial reporting to ESG data that is material to value

Non-financial information was born in Europe with the 2014 NFRD directive, which required a few thousand large companies to publish little-standardised and barely comparable information. The CSRD succeeds it in order to standardise, broaden and make this information auditable, through the ESRS standards and the double-materiality principle, which distinguishes impact materiality, namely the effect of the company on the environment and society, from financial materiality, namely the effect of sustainability issues on the company's performance and value. It is this second dimension that directly concerns the valuer and the acquirer.

The year 2025 marks a turning point with the Omnibus package, which establishes that sustainability data is only justified if its production cost is proportionate to its decision-making usefulness. By taking most SMEs and mid-caps out of the mandatory scope while offering them the VSME, the legislator shifts the centre of gravity: ESG data is no longer a compliance constraint, but an asset that the company produces because its customers, its banks and its acquirers value it. In parallel, the convergence of the IFRS S1 and S2 standards of the ISSB durably brings sustainability information closer to accounting information, which makes it a legitimate input for valuation models.

Why integrate sustainability into valuation and due diligence

Integrating sustainability into a valuation answers five converging motivations.

• First, it objectifies a risk that every acquirer perceives without always quantifying it: an unmanaged carbon exposure, a non-compliant value chain or an asset threatened by regulatory obsolescence weigh on future cash flows. Translating this intuition into a rate or capex assumption moves the discussion beyond opinion.
• Second, it disciplines the rate adjustment: often set by guesswork, the ESG effect on the WACC finds, with VSME or ESRS data, a reproducible and auditable anchor, aggregated into a single factor distinct from the other risk components we detail elsewhere, such as the specific risk premium (SCRP).
• Third, sustainability conditions access to and the cost of financing: ESG-indexed loans, fund requirements, expectations of listed acquirers subject to the CSRD and the CSDDD.
• Fourth, it weighs on due diligence: an ESG audit reveals latent liabilities, compliance capex or, conversely, differentiating strengths, which makes it a now unavoidable component of financial due diligence.
• Fifth, it can constitute an indication of accounting impairment: an activity rendered unprofitable by the transition may trigger an impairment test within the meaning of IAS 36 or the Swiss GAAP FER standard.

How sustainability translates into a risk premium and into value

The financial translation of sustainability follows a five-step methodology.

Step 1: map the material issues. Sector by sector, one identifies the ESG issues that genuinely affect cash flows and risk, drawing on double materiality and, where applicable, on the VSME or ESRS indicators already published.

Step 2: qualify the exposure and the maturity. For each material issue, one assesses the company's exposure and the quality of its management, from audited data and a credible trajectory through to a complete absence of steering.

Step 3: quantify the effect on cash flows. The issues are translated into compliance capex, margin variations or probability of contract loss, integrated directly into the projections.

Step 4: translate the maturity into an aggregated ESG factor that weights the WACC. This is Hectelion's distinctive methodological contribution. Rather than breaking ESG into multiple premiums, one summarises environmental, social and governance maturity into a single aggregate that directly adjusts the weighted average cost of capital (WACC), and whose effect on enterprise value can be read off.

The orders of magnitude below are calibrated on the empirical work, which places the cost-of-capital gap between extreme ESG profiles at around a few dozen basis points to one or two points, as measured notably by MSCI; the final impact on price aggregates the rate effect, the cash-flow effect and the negotiation effect, and is observed in practice between 5% and 15% of value.

Step 5: propagate the effect on value. One injects the aggregated factor into the WACC, integrates the capex and margin variations into the cash flows, and measures the effect on enterprise value. These ranges are indicative: they adjust to the sector, the carbon intensity, the applicable regulatory framework and the market cycle, and cannot be applied mechanically.

When sustainability weighs on a financial transaction

Sustainability imposes itself in several trigger situations.

In an acquisition, the buyer, often a listed group subject to the CSRD and the duty of vigilance, conditions its price on the quality of the target's ESG profile and the absence of latent liabilities.

In a disposal, the owner has every interest in documenting its sustainability trajectory, for example through the VSME, to widen the pool of acquirers and defend its multiple. In a fundraising or a financing, investors and lenders build ESG criteria into their terms, up to impact loans whose margin depends on measured objectives.

Sustainability is also decisive in an asset impairment test affecting installations exposed to the transition, in the structuring of a transaction where part of the price depends on the achievement of ESG objectives, or in an analysis of sector multiples where one now observes a valuation gap between mature players and exposed players, as shown by our EV/EBITDA multiples analysis. Conversely, sustainability adds little for an activity with no material ESG issue, where introducing it artificially would only add noise to the valuation.

Who to call on to connect sustainability and valuation

Connecting ESG data to value requires a triple competence rarely found together. First, a critical reading of sustainability information, to distinguish a credible commitment from a communication exercise and identify the issues that are genuinely material in financial terms. Second, a command of valuation methods and of cost-of-capital construction, in order to translate this reading into rate, cash-flow and price assumptions that are defensible before an investor, an acquirer or a statutory auditor. Third, a knowledge of the Franco-Swiss frameworks, from the CSRD and the VSME to the Code of Obligations and the expectations of market practice.

Hectelion combines this Franco-Swiss double expertise and conducts its valuations in full economic independence from traditional financial intermediaries. We act on transactions of 2 to 500 MCHF, drawing on a valuation methodology aligned with IVSC and a due diligence that now integrates a material ESG component. For external-growth or disposal transactions, our M&A advisory integrates the reading of sustainability risk from the very framing of the transaction.

Advantages: objectivity, access to capital and a transparency premium

The first advantage of integrating sustainability into valuation is objectivity. By substituting measured indicators, drawn from the VSME or the ESRS, for a subjective appreciation of ESG risk, the valuer reduces arbitrariness and strengthens the credibility of its conclusions before an investment committee or an auditor. The debate no longer bears on the existence of the risk, but on its quantification within a shared grid, which is a considerable governance advance.

The second advantage is access to capital. A documented sustainability profile widens the pool of acquirers and financiers, in particular those whose own CSRD and CSDDD obligations compel them to select targets and suppliers that master their impacts. The third advantage is the transparency premium: for equal exposure, a company that measures and publishes its ESG data inspires more confidence than an opaque company, which translates into a lower risk discount and a better-defended multiple.

Limits: data availability, greenwashing and heterogeneity

The first limit relates to the availability and reliability of data. Outside the CSRD scope, many SMEs do not yet have robust indicators, and the VSME, proportionate by nature, remains less exhaustive than the ESRS. The valuer then works on incomplete information, which it must supplement with prudent sector estimates. The second limit is greenwashing: a sustainability narrative not backed by verifiable data reduces no real risk and cannot justify a premium; only documented evidence allows a favourable adjustment.

The third limit is the heterogeneity of frameworks and ratings. Between CSRD, VSME, taxonomy, IFRS S1 and S2 and Swiss obligations, the data is not always comparable, and the agencies' ESG ratings diverge sharply for the same company. The mapping grid between ESG maturity and risk adjustment must therefore be adapted to the case, the geography and the sector, and cannot be applied mechanically. Finally, sustainability does not replace fundamental analysis: it calibrates one dimension of risk, it does not dispense with assessing the business model.

The 5 mistakes to avoid

Mistake 1: Confusing regulatory compliance with financial materiality

The most frequent mistake consists in reasoning solely on the reporting obligation, concluding that an SME removed from the CSRD scope by the Omnibus would no longer have an ESG issue. The opposite is true: the financial materiality of a sustainability risk exists independently of the obligation to publish it. A company not subject to the CSRD may carry a major carbon risk, and a company that is subject may have only marginal issues. The valuer reasons in financial materiality, not in a ticked regulatory box.

Mistake 2: Accepting the ESG narrative without evidence

The sustainability profile presented by a management team is often optimistic, not out of dishonesty but out of enthusiasm. Accepting this narrative without verification amounts to importing a bias into the rate and the price. The level of ESG maturity must be established from tangible evidence, measured data, audits, VSME or ESRS indicators, certifications, and not from intentions. An announced commitment is not a reduced risk until it is documented and monitored.

Mistake 3: Applying the adjustment grid mechanically

The mapping between ESG maturity and risk adjustment provides a framework, not an absolute truth. Applying the ranges without adapting them to the sector, the carbon intensity, the regulatory framework and the market cycle produces wrong rates with false precision. A climate issue critical for a cement maker does not carry the same weight as for a software publisher. The grid adjusts to the case, it does not substitute for it.

Mistake 4: Counting the same ESG risk twice

A classic mistake consists in integrating a sustainability risk both into the cash flows, in the form of capex and margin losses, and into the discount rate, in the form of a premium. One then doubles the penalty and undervalues the company. Each material issue must be treated only once, either in the cash flows when it is quantifiable, or in the risk premium when it relates to uncertainty, never in both. Consistency between cash flows and rate is the condition for a fair valuation.

Mistake 5: Ignoring the Franco-Swiss dimension of the framework

Mechanically transposing the European framework to a Swiss target, or vice versa, leads to misunderstandings. Switzerland does not apply the CSRD but its own obligations arising from the Code of Obligations and climate regulation, while a European acquirer remains subject to the CSDDD across its entire value chain, including its Swiss suppliers. The valuer must read the target within its national framework while anticipating the acquirer's requirements, on pain of mis-calibrating the discount or the premium.

Case 1: ESG due diligence of a Swiss industrial SME at 40 MCHF

A Swiss industrial SME, valued at around 40 MCHF in enterprise value on the basis of its cash flows, is the subject of an acquisition by a listed European group, subject to the CSRD and the duty of vigilance. The ESG due diligence conducted by the acquirer highlights two material points: a high carbon intensity of the production process, which will require a decarbonisation investment estimated at 3 MCHF in present value to remain competitive and compliant with the group's expectations, and a dependence on a supplier whose practices do not yet meet the requirements of the acquirer's value chain. For want of structured ESG data, the target sits in the low-maturity band of the grid.

The effect on the price can be quantified directly. For want of structured data, the target falls within the weak profile, to which the grid associates an aggregated ESG factor of about +1.0 point on the WACC, whose discounted effect represents nearly 2 MCHF of value. The acquirer adds the 3 MCHF of decarbonisation capex, carried on the cash flows. The total discount thus amounts to about 5 MCHF, bringing enterprise value from 40 to 35 MCHF, a decline of around 12%, within the 5% to 15% range observed on transactions, without any commercial assumption having changed. For the seller, this calculation demonstrates the value of a decarbonisation plan launched and documented before the sale: moving up one notch of ESG maturity would have erased most of this discount.

Case 2: Disposal of a French mid-cap voluntarily adopting the VSME

A French mid-cap in industrial services generates EBITDA of 6M EUR. Removed from the mandatory scope of the CSRD after the Omnibus package, it nonetheless chooses to adopt the VSME standard and to publish verifiable ESG indicators over two financial years, with a view to its disposal. This transparency places it in the advanced-maturity band of the grid. On the basis of a sector multiple of 7.0 times EBITDA, its enterprise value comes to 6 × 7.0 = 42M EUR.

A listed strategic acquirer, itself subject to the CSRD and the CSDDD, values this de-risked profile: the VSME data reduces the uncertainty of its own due diligence and secures the integration of the target into its value chain. The aggregated ESG factor lowers the WACC by about 0.4 point and, above all, supports an expansion of the multiple, from 7.0 to 7.6 times EBITDA. Enterprise value then rises to 6 × 7.6 = 45.6M EUR, a gain of 3.6M EUR, around +8.6%, within the 5% to 15% range, attributable to the documented sustainability profile. The cost of VSME reporting, in the order of a few tens of thousands of euros, is thus very largely covered by the value premium captured at disposal.

Case 3: greening the fleet of a Swiss hydro-jetting and sanitation SME

A French-speaking Swiss SME active in hydro-jetting and sanitation, whose family transfer we supported, illustrates the mechanics on a real small-scale case. The company, with around 3 MCHF of revenue and 0.5 MCHF of normalised EBITDA for a multiple of 6 to 7, presents an equity value in the order of 4.4 to 4.7 MCHF, driven by a positive net cash position and a real-estate asset. As part of the buyout of an outgoing partner's stake, the family buyer plans to rejuvenate the fleet with a new-generation hydro-jetting truck, markedly less emitting, for a budget of 500,000 to 650,000 CHF. This green reinvestment thus represents 10% to 15% of equity value, exactly the impact range we observe on cases with an ESG dimension.

For the valuer, this truck raises a decisive question: is it maintenance capex, a simple fleet renewal already captured in the normative cash flow, or an incremental decarbonisation investment? The answer changes the value. Hectelion distinguishes the ordinary-renewal portion, neutral for valuation, from the greening portion, which falls under ESG. On the cash flows, the extra cost of the clean truck weighs on liquidity in the short term, but it secures access to public markets and to principals subject to the CSRD and the duty of vigilance, which increasingly require low-emission fleets. On the aggregated factor, this greening advances the company's ESG profile and can justify a compression of about 0.2 point of the WACC, whose effect on value offsets part of the cost of the reinvestment.

In a family transfer, this trade-off becomes a matter for negotiation: should the outgoing partner bear part of an investment whose benefits will accrue to the buyer? By isolating the greening tranche and treating it both in the cash flows and in the ESG factor, without counting it twice, the valuer sets a defensible buyout price, as in our financial due diligence mandate on this type of case. This case confirms the grid: on an SME of a few million, a green reinvestment of 10% to 15% of value is not a mere expense, it is a value lever and an argument for durability, provided it is quantified rigorously.

A word from the founder

"In the mandates we support, sustainability has moved in two years from the status of a communication topic to that of a price variable. A listed acquirer's first question is no longer only the margin, it is the soundness of the target's ESG profile and the absence of latent liabilities."

"My conviction is that ESG data can be measured, financed and sold. Explicitly connecting sustainability maturity to the risk premium of the cost of capital makes visible to owners the hidden value of a credible trajectory, and the fragility of an unproven narrative."

"Our role as an independent valuer is to distinguish genuine commitment from a stylistic exercise, then to translate it into rate and price assumptions that are defensible before an investor or an acquirer. It is this discipline, at the crossroads of finance and sustainability, that secures transactions and protects value."

Aristide Ruot, Ph.D.
Founder | Managing Director, Hectelion SA

FAQ: the 10 essential questions on sustainability and valuation

Introduction: what to remember before the questions

The questions below capture the most frequent concerns of owners, finance directors and shareholders on the link between sustainability and value. The guiding idea is simple: material ESG data changes the risk, the risk translates into a premium or a discount in the rate and the price, and only documented evidence allows a favourable adjustment. The rest is a matter of calibration and rigour of execution.

Q1: CSRD, Omnibus and VSME, what is the difference?

The CSRD is the directive that requires standardised sustainability reporting under the ESRS from companies within its scope. The Omnibus package simplified its application in 2026, raising the thresholds and reducing the number of companies obliged. The VSME is a voluntary and proportionate standard, developed by EFRAG, that allows SMEs outside the scope to publish ESG indicators useful to their customers, banks and acquirers without the burden of the full CSRD.

Q2: My company has left the CSRD scope, so ESG no longer concerns me?

That is an analytical error. The obligation to publish has disappeared, but the financial materiality of your sustainability issues remains. If your customers, your banks or your potential acquirers build in ESG criteria, the absence of data exposes you to a discount or an exclusion, independently of any regulatory obligation. The VSME exists precisely to meet this market demand without legal constraint.

Q3: How does sustainability concretely influence valuation?

It acts through two channels. On the cash flows, via compliance capex, margin variations or contract-loss risks. On the WACC, via an aggregated ESG factor, positive for an exposed profile and negative for a mature profile. The more ESG maturity progresses and is documented, the lower this factor, the higher the present value of the cash flows.

Q4: What rate adjustment should be associated with a given ESG profile?

Our grid aggregates ESG maturity into a WACC adjustment: about -0.5 point for a leader profile, -0.2 point for an advanced profile, nil for a sound reference profile, +1.0 point for a weak profile, and up to +2.0 points capped, supplemented on the cash flows, for a critical risk. In terms of impact on value, this translates in practice into a range of 5% to 15%, calibrated on the empirical work of MSCI, KPMG and Deloitte, and to be adjusted to the sector, the carbon intensity and the regulatory framework.

Q5: Is the VSME worth the cost for an SME preparing its disposal?

In most cases, yes. The cost of VSME reporting is measured in tens of thousands of euros or francs, while the value premium captured at disposal, through compression of the risk premium and widening of the acquirer pool, is often measured in points of multiple. As our second worked case illustrates, the ratio between cost and value created is very favourable as soon as the target aims at ESG-sensitive acquirers.

Q6: How can the reality of an announced ESG profile be verified?

Verification goes through the examination of tangible evidence: indicators measured over several financial years, VSME or ESRS data, audits and certifications, possible alignment with the taxonomy. The independent valuer reconstructs the profile from this evidence rather than from the narrative, and treats any undocumented commitment with caution, without allowing it to reduce the risk premium.

Q7: Does sustainability apply to services and technology companies?

Yes, but the material issues differ. For an industrial company, climate and the supply chain dominate. For a services or software company, social issues, governance, cybersecurity and the footprint of data centres weigh more heavily. The materiality exercise must therefore be sector-specific: introducing non-material issues would only add noise to the valuation.

Q8: What is the link between sustainability and access to financing?

The link has become direct. Banks offer impact loans whose margin depends on measured ESG objectives, funds build sustainability criteria into their decisions, and listed acquirers, subject to the CSRD and the CSDDD, must master the profile of their targets and suppliers. A documented ESG profile therefore widens access to capital and can reduce its cost.

Q9: Can sustainability trigger an accounting impairment?

Yes. An activity rendered structurally less profitable by the transition, for example a highly emitting asset threatened with regulatory obsolescence, can constitute an indication of impairment. The recoverable amount, based on discounted future cash flows or fair value, must then integrate this effect, within the framework of IAS 36 or the applicable Swiss GAAP FER standard, which we detail in our publication on impairment testing.

Q10: From what transaction size is sustainability relevant?

It is relevant as soon as a sustainability issue is material to the formation of value, regardless of size. In practice, Hectelion integrates it on transactions of 2 to 500 MCHF, whether an acquisition, a disposal or a fundraising. The decisive criterion is not the amount, but the weight of the sustainability risk in the cash flows and in the acquirer's perception.

Conclusion: making sustainability a valuation asset

Sustainability is not a touch of soul clumsily imported into finance. It addresses a real blind spot of valuations: the inability of classic models to quantify a transition, value-chain or compliance risk that nonetheless weighs on future cash flows. By connecting each level of ESG maturity to a risk-premium adjustment, the valuer transforms a shared intuition into an auditable rate assumption, and makes sustainability data an asset that can be measured, financed and sold.

The paradox of the post-Omnibus era is that ESG data, freed from the compliance constraint for most SMEs, becomes a strategic choice: to produce it, through the VSME, because the market values it. The worked cases demonstrate this, from a discount of around 12% for an exposed and undocumented industrial profile, to a premium close to 9% for a transparent mid-cap. It remains necessary to establish the profile with independence and to translate it with rigour, within a Franco-Swiss framework that has its own specificities. This is precisely the work of an independent valuer at the crossroads of finance and sustainability.

Article summary

Sustainability has become a price variable. The CSRD standardised sustainability information, the Omnibus package eased the obligation for most SMEs and mid-caps, the VSME offers the latter a voluntary and proportionate standard, and Switzerland applies its own framework through the Code of Obligations and climate regulation. For the valuer, the issue is not compliance, but the financial materiality of ESG data and its translation into risk.

Applied to valuation, sustainability acts on the cash flows, via capex and margins, and on the WACC, via an aggregated ESG factor. A mapping grid connects each level of ESG maturity to a WACC adjustment, from a slight bonus for leaders to around +2 points capped, supplemented on the cash flows, for critical-risk profiles, namely in practice an impact of 5% to 15% on value. Due diligence now integrates a material ESG component, and undocumented data allows no favourable adjustment.

The three worked cases quantify the stakes: 5 MCHF of discount for an exposed and opaque Swiss industrial SME, and 3.6M EUR of premium for a transparent French mid-cap adopting the VSME. A third case, in hydro-jetting and sanitation in French-speaking Switzerland, shows that a green reinvestment of 10% to 15% of equity value is as much a value lever as an expense. The five mistakes to avoid recall the necessary discipline: distinguish compliance from materiality, require evidence, adapt the grid, do not count the same risk twice, and read the Franco-Swiss framework correctly. Hectelion, an independent Franco-Swiss firm, supports these analyses on transactions of 2 to 500 MCHF.

Sources

• Autorité des marchés financiers (AMF), sustainable finance and extra-financial information
• Deloitte (Switzerland), the existence of an ESG value premium
• EFRAG, SMEs and sustainability reporting, the voluntary VSME standard
• European Commission, corporate sustainability due diligence (CSDDD)
• European Commission, Omnibus package simplifying the sustainability rules
• European Commission, taxonomy of sustainable activities
• European Commission, voluntary sustainability reporting standard for SMEs (VSME)
• IFRS Foundation (ISSB), IFRS S1 and S2 sustainability standards
• International Valuation Standards Council (IVSC), ESG and valuation
• KPMG, Cost of Capital Study, integrating ESG into the WACC
• MSCI, ESG and the Cost of Capital
• Swiss Confederation, Code of Obligations, report on non-financial matters (art. 964a et seq.)

Author

Aristide Ruot, Ph.D.
Founder | Managing Director, Hectelion SA