Sustainability Reporting: Publication of the Revised ESRS as a Delegated Act

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The revision of the ESRS is part of the European Union’s Omnibus I initiative to simplify sustainability reporting. According to the Commission, mandatory data points will be reduced by more than 60%, while the total number of data points will decrease by more than 70%. The target is to reduce the reporting burden for companies while ensuring the provision of decision-relevant sustainability information.

Revision Process: From EFRAG Drafts to the Final Version

The now adopted ESRS are the culmination of a multi-stage revision process. The starting point was the “Draft Simplified ESRS” submitted by the European Financial Reporting Advisory Group (EFRAG) to the European Commission in November 2025. These served as a technical recommendation for the revision of the ESRS that have been in force since July 2023.

Based on the EFRAG recommendations, the European Commission published a draft delegated act on May 6, 2026, and initiated a public consultation until June 3, 2026, which received a total of 453 responses. With the now adopted delegated act, this revision process is provisionally concluded.

Key Changes to the Previously Valid Set 1 of the ESRS

The essential conceptual and structural changes compared to the original ESRS of 2023 were already developed as part of the EFRAG revision.

EFRAG identified six key simplification levers:

1. Simplification of the double materiality assessment
2. Improved readability and conciseness of the sustainability statement and stronger integration into corporate reporting
3. Revision of the relationship between minimum disclosure requirements (MDRs) and thematic standards
4. Clearer differentiation of the structure and language of the standards
5. Introduction of further facilitations to reduce the reporting burden
6. Stronger interoperability with international frameworks

This resulted in the following specific changes, which are still reflected in the final delegated act:

• Significant Reduction in Data Points: A central target of the revision was to reduce the scope of reporting. The EFRAG drafts already foresaw a reduction of mandatory data points by approximately 61%. Numerous disclosures were deleted, consolidated, or simplified.

• Stronger Materiality Orientation: Reporting will be even more focused on material impacts, risks, and opportunities. The target was to focus on decision-relevant information while reducing the effort for identifying and documenting non-material topics.

• Expanded Proportionality Mechanisms: To improve practicability, additional facilitations were provided, including extended transitional arrangements, the “undue cost or effort” principle, and more flexible consideration of special company situations such as acquisitions or divestitures.

• Clearer Structure of the Standards: The EFRAG drafts more clearly separated mandatory requirements and supporting guidance. At the same time, numerous redundancies were reduced, and application requirements (ARs) were structurally placed directly after the respective disclosure requirements to improve readability.

• Introduction and Strengthening of New Principles: The concept of “Fair Presentation” gained particular importance. The sustainability statement should not only meet regulatory requirements but also provide relevant, balanced, and understandable information for its users.

• Improved Interoperability: In addition, various adjustments were made to improve compatibility with international reporting standards such as ISSB and GRI and to reduce duplicate reporting.

What Key Changes Did the Commission Make Compared to the EFRAG Drafts?

The delegated act lists the following key changes compared to the EFRAG drafts:

• Materiality Assessment: The Commission has further clarified the requirements for the materiality assessment. In particular, it is more clearly emphasized that companies do not have to address the information needs of every single stakeholder. The target of the ESRS remains the provision of decision-relevant information for the users of the sustainability statement. It is also clarified that non-material information generally does not need to be reported. Furthermore, the top-down approach in the materiality assessment is explicitly highlighted to avoid unnecessary detailed analyses of individual impacts, risks, and opportunities.

• Fair Presentation: The final version clarifies that the principle of “Fair Presentation” refers to the sustainability statement as a whole and not to every single data point. At the same time, it is made clear that the application of the ESRS should generally lead to a fair presentation of sustainability information.

• Option to Omit Certain Information: Regulations from the Omnibus I Directive, which allow for the non-disclosure of individual information under certain conditions, have been newly included. This particularly concerns cases where the publication of certain information could significantly impair a company’s market position.

• Anticipated Financial Effects: Additional clarifications have been made in the area of anticipated financial effects. The standards now explicitly state that corresponding disclosures are regularly based on estimates, subsequent adjustments of estimates do not constitute a reporting error, the non-disclosure of sensitive information can also be applied to disclosures on financial effects, and the transitional provisions for qualitative and quantitative disclosures are each extended by another year until the financial year 2028.

• Greenhouse Gas Emissions: The requirements for determining the reporting boundary have been made more flexible. Companies can now apply either the financial control approach, the operational control approach, or the equity share approach in line with the GHG Protocol.

• Further Technical Adjustments: Other changes include: the restriction of disclosure requirements to primary microplastics, clarifications on pollutant emissions, additional transitional facilitations for substances of very high concern (SVHC), technical adjustments for better alignment with the Corporate Sustainability Due Diligence Directive (CSDDD), clarifications on reportable human rights and discrimination incidents, and special regulations for asset management activities in financial institutions.

Voluntary Sustainability Reporting Standard for Companies Outside the CSRD

Parallel to the revision of the ESRS, the European Commission adopted the voluntary sustainability reporting standard (VS) for companies with up to 1,000 employees. The standard is largely based on the VSME standard developed by EFRAG, which was already issued as an official recommendation by the EU Commission in July 2025, and aims to create a uniform reference framework for voluntary sustainability reporting.

Closely linked to the voluntary standard is the so-called Value-Chain-Cap. According to this, CSRD-reporting companies may generally only request sustainability information from companies with fewer than 1,000 employees that is covered by the voluntary standard. This aims to create a uniform European framework for information requirements along the value chain and to limit the burden on smaller companies from extensive ESG data requests.

What Companies Should Do Now

For companies that continue to fall within the scope of the CSRD, the final version of the ESRS provides an opportunity to review existing implementation projects and reporting processes. In particular, double materiality assessments already carried out should be adapted to the revised requirements, and data collection processes should be aligned with the reduced disclosure requirements. Furthermore, it is advisable to analyze the new and extended transitional arrangements and to evaluate the impact of the changes on governance, control, and audit processes.

Companies outside the scope of the CSRD should consider introducing voluntary sustainability reporting based on the VS. The standard offers a recognized European reference framework for providing sustainability information to customers, banks, investors, and other stakeholders and can significantly simplify responding to individual ESG inquiries.

Outlook: From Adoption to Application

With the adoption of the revised ESRS, the legislative process is not yet fully complete. The delegated act will now be submitted to the European Parliament and the Council of the European Union for scrutiny (“Scrutiny Period”). The planned scrutiny period is initially two months and can be extended by another two months upon request. If neither the European Parliament nor the Council raises objections, the revised ESRS will enter into force after this period and will be mandatory for CSRD reporting from January 1, 2027. Optionally, reporting for the financial year 2026 can already be done using the new standards.