On 3 July 2026, the European Commission adopted a sweeping revision of the European Sustainability Reporting Standards — the detailed rules that sit beneath the Corporate Sustainability Reporting Directive and govern how companies disclose their sustainability performance. Mandatory datapoints have been cut by 61%. Total datapoints, including voluntary ones, have been reduced by more than 70%.
Reporting costs per company are expected to fall by over 30%. Alongside the revised ESRS, the Commission adopted a separate voluntary sustainability reporting standard for companies with up to 1,000 employees that sit outside mandatory CSRD scope. Together, these two documents mark the most significant revision to EU corporate sustainability reporting architecture since the original ESRS were published in 2023.
The revision is an implementation of the Omnibus I simplification mandate — the political decision taken earlier this year to narrow the scope of the CSRD and reduce its operational weight. The core structure of the framework survives intact. Double materiality remains: companies must still assess and disclose both the impact of sustainability matters on their business and the impact of their business on people and the environment. The revised standards are still topic-based, still require a materiality assessment, and still produce disclosure that must be decision-useful for users. What has changed is the granularity of what that assessment requires and the volume of datapoints that must be populated. The Commission's stated aim is proportionality — the framework should be demanding where it matters and lenient where it does not.
Several specific areas have been materially simplified. Greenhouse gas reporting now permits companies to use either financial control or operational control approaches when defining their reporting boundary — a flexibility that was contested in the original standard. Climate transition plans remain required, but companies whose plans are not aligned with a 1.5°C pathway must now be transparent about that rather than being required to align. Human rights incident reporting has been narrowed to substantiated, verified cases rather than all allegations. In technically complex areas — microplastics, substances of concern, anticipated financial effects — there are new phase-in reliefs and more room for managerial judgement. Financial institutions managing assets on behalf of clients under a fiduciary mandate no longer need to disclose sustainability information about those client holdings in their own statement, where the sustainability matters are primarily relevant to the client rather than the manager.
The voluntary standard for smaller companies follows EFRAG's VSME framework, structured around a Basic Module and a Comprehensive Module covering greenhouse gas emissions, pollution, biodiversity, workforce metrics, anti-corruption and transition-related information. Its significance extends beyond the companies that will report under it: from financial year 2027, it becomes the benchmark for the value-chain cap — the ceiling on what large, CSRD-in-scope companies can request from smaller suppliers. This is a practical simplification measure for supply-chain sustainability data collection, and one that will affect procurement, supplier engagement, and Scope 3 data strategies at large companies.
The two delegated acts now move to the European Parliament and the Council for a two-month scrutiny period, extendable by a further two months. The revised ESRS apply from financial year 2027, with optional early application for FY2026. For companies that have invested heavily in ESRS readiness over the past two years, the revision is not a reason to restart — it is a reason to audit which datapoints they no longer need to collect, and where the materiality filter now permits a lighter treatment than originally assumed.
Sources: EC Commission adopts revised sustainability reporting standards Detailed analysis of ESRS revision ESRS Guide — Sunhat