EU Commission Adopts Revised European Sustainability Reporting Standards

On July 3, 2026, the European Commission adopted its draft delegated regulation aimed at revising and simplifying the European Sustainability Reporting Standards “ESRS”, as well as its draft delegated regulation on the voluntary standard for SMEs (the “VSME” standard). As a reminder, a public consultation on these draft texts had closed on June 3.

The draft delegated act revising the ESRS significantly reduces the administrative burden on companies. The European Commission states that mandatory data points are reduced by 60%, while all data points - both mandatory and optional - are reduced by 70%, as all optional data points have been eliminated.

This revision does not alter the fundamental structure of the ESRS or the principle of double materiality, but it significantly reduces the volume of information to be disclosed, clarifies the rules for applying the standards, and introduces several flexibility measures designed to improve the proportionality of the framework. According to EFRAG, cost savings from reporting could average approximately 34% over five years for the companies concerned, while the European Commission estimates that the reduction in reporting burdens will exceed 30% per company.

The main changes concern:

• materiality analysis: a streamlined approach to materiality assessment through the introduction of a “top-down” approach without systematically requiring a detailed analysis of each IRO (impacts, risks and opportunities); the requirement to disclose only relevant information; and an explicit affirmation of the principle that non-material information need not be disclosed (except in certain cases). The information disclosed must be useful for decision-making purposes;
• fair presentation, which must be applied to and assessed at the level of the sustainability report as a whole, rather than for each individual data point;
• greater flexibility regarding the granularity of information: certain requirements related to the aggregation and disaggregation of information have been relaxed. Companies have greater discretion to determine the extent to which specific geographic contexts should be taken into account in the materiality analysis;
• omission of certain information: pragmatic adjustments have been made to allow companies to omit certain disclosures in specific cases. Furthermore, “anticipated financial effects” that may involve estimates may be reported at a later stage without constituting a reporting error;
• greenhouse gas emissions data: the Commission’s proposal provides greater flexibility in reporting by allowing companies to choose the approach that best suits them (“financial control approach” or “operational control approach”);
• greater alignment with international standards regarding greenhouse gas emissions;
• climate transition plans: companies publishing transition plans containing targets incompatible with the '1.5°C' objective must provide detailed explanations;
• coordination with the CS3D: several adjustments have been introduced to ensure greater consistency between the obligations arising under the CSRD and CS3D;

Next steps: These two draft delegated acts will now be submitted to the European Parliament and the Council of the European Union for a scrutiny period of two months, which may be extended by a further two months, during which either institution may raise objections. Absent any objection, the two texts will be published in the Official Journal of the European Union. The expected publication date is Q4 2026.

As a reminder, companies will be required to apply these revised ESRS for financial years beginning in 2027 (sustainability report published in 2028), with the option, if they so choose, to apply them as early as the 2026 financial year (sustainability report published in 2027).

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