The European Commission has formally adopted the revised European Sustainability Reporting Standards, closing out a process that began with EFRAG's draft revision back in August 2025. Two things change for reporters. First, the mandatory ESRS itself is streamlined — fewer required datapoints, with the explicit goal of cutting administrative burden without lowering disclosure quality. Second, and less noticed, is a brand-new voluntary reporting standard aimed specifically at smaller companies that find themselves fielding sustainability data requests from larger CSRD-obligated customers and financial institutions further up their value chain.
That second piece matters more than it might first appear. The Commission has built in a value chain cap: companies subject to the CSRD cannot demand more sustainability information from their smaller suppliers than what the voluntary standard covers. For SMEs that have spent the past two years fielding open-ended ESG questionnaires from larger clients, this creates an actual ceiling on what can reasonably be asked of them — arguably the most SME-friendly element of the whole package.
The Commission has also clarified reporting obligations for asset managers, confirming that financial institutions managing investments under fiduciary duty don't need to disclose sustainability statement information about those specific investments, since that data is primarily relevant to the client's own reporting, not the manager's.
For any business preparing FY2026 or FY2027 disclosures, the practical next step is straightforward: check whether you fall under the revised mandatory ESRS or the new voluntary baseline, and if you're a supplier to a CSRD-obligated company, familiarise yourself with the value chain cap — it may reduce what you're being asked to report.
Source: Lexology