The European Commission publishes proposed final drafts of the revised ESRS

On 6 May 2026, the European Commission launched a one-month long consultation period in respect of draft final versions of the revised European Sustainability Reporting Standards (ESRS) and a voluntary reporting standard (Voluntary Standard) to be implemented by way of delegated acts. Stakeholders have until 3 June 2026 to provide feedback on the online portal, after which the Commission will adopt the delegated acts. The acts will be subject to the two-month scrutiny process of the European Parliament and European Council (which can be extended for a further two months), before they enter into force.

Background to the ESRS

The ESRS set out the data points against which companies must disclose when reporting under the Corporate Sustainability Reporting Directive (CSRD). Following the announcement of the first Omnibus in February 2025 and the proposed simplification of the CSRD, EFRAG, the technical group responsible for drafting the original ESRS, was tasked with streamlining them to align with the simplification agenda. 

EFRAG published exposure drafts in July 2025, followed by a consultation period over the summer to seek feedback from stakeholders. In December 2025, EFRAG published its final drafts of the simplified ESRS and delivered these to the European Commission for comment. The proposed final drafts reduced the mandatory data points by over 60%, as well as incorporating a number of other measures to make the ESRS easier to use and reduce the reporting burden on companies. 

Following the entry into force of the Omnibus I Directive in March of this year, the European Commission has until 18 September 2026 to adopt a delegated act which revises the current ESRS to produce a simplified and clearer set of reporting standards. The Commission is required to build on the technical advice it received from EFRAG when developing its draft of the delegated act.

Proposed revised ESRS

The Commission’s proposed final drafts of the revised ESRS and accompanying explanatory memorandum set out how the Commission has built on EFRAG’s proposals, adopting the majority of the suggestions and introducing some additional adjustments. The Commission’s additions are largely intended to clarify certain provisions and offer additional flexibilities. 

The majority of the Commission’s amendments are technical, but it is possible that some of the clarifications may impact a company’s disclosure decisions. For example, the Commission has clarified that, when carrying out the double materiality assessment, this does not need to be performed at the level of individual impacts, risks and opportunities. Depending on how companies have previously carried out this assessment, this clarification may affect how they choose to approach the process. The draft also clarifies that companies are prohibited from disclosing non-material information, and that the reported information should be “decision-useful” for the users of the sustainability statement. 

There is also some recognition of the commercial sensitivities for companies in complying with an enhanced disclosure standard. For example, there are provisions originating from the Omnibus I Directive which allow companies to omit information in certain circumstances, including where such information could seriously prejudice the commercial position of the company, or in respect of anticipated financial effects which might involve estimates that are subject to change. The text also clarifies that only “substantiated” instances of human rights incidents are to be reported, which will require companies to review which of their incidents must be disclosed. 

The proposed adjustments reflect the wider context in which the ESRS sit. The Commission has included a number of technical amendments in relation to due diligence to ensure that the disclosure requirements align more closely with those under the Corporate Sustainability Due Diligence Directive. Additionally, companies which produce transition plans are required to be transparent about any targets which are not compatible with the 1.5⁰ target set out in the Paris Agreement. 

Once adopted, the revised ESRS must be used by companies from FY27 onwards. Companies which plan to report in respect of FY2026 will also have the option to use the revised ESRS. It is worth noting that, for non-EU undertakings required to report under the CSRD, EFRAG’s 2026 work program includes the preparation of technical advice in respect of the N-ESRS, with exposure drafts expected to be published in July 2026. It is these standards that will be relevant for non-EU undertakings reporting under the CSRD in the future. 

Voluntary Standard

In July 2025, the Commission adopted a voluntary sustainability reporting standard for small and medium-sized undertakings (VSME Standard), covering the same topics as the ESRS but in a manner that was proportionate to the size of the relevant companies. However, the Omnibus I Directive introduced a value chain cap for undertakings with fewer than 1,000 employees. This prohibits companies in scope of the CSRD from seeking information from out-of-scope companies which goes beyond that required under the Voluntary Standard. 

Consequently, in contrast to the VSME Standard, the Voluntary Standard is now relevant for companies with fewer than 1,000 employees, not just SMEs. In producing the Voluntary Standard, the Commission has made only limited changes to the VSME Standard to ensure legal certainty and continuity for those entities already reporting in line with the VSME Standard. These changes primarily ensure alignment with the revisions to the ESRS, as well as clarifying the application of the value chain cap and the datapoints included under it.

For companies in scope of the CSRD, the information set out in the Voluntary Standard which falls within the value chain cap will apply from FY27, regardless of whether that in-scope company chooses to report in line with the revised ESRS for FY26. For companies which are not in scope of the CSRD but wish to report voluntarily, the Voluntary Standard applies from the date on which the delegated act enters into force. 

What this means for companies

While some specifics of the text may still change under the scrutiny process, it is highly likely that a streamlined version of the ESRS will be in force by the end of Q3 2026. Alongside thinking about what this might mean for information gathering, companies should consider whether any of the clarifications set out in the revised ESRS affect their double materiality assessments or disclosure decisions. Companies should also think about whether they need to make any changes to the way in which they seek information from companies in their value chain given the introduction of the value chain cap. Early preparation will ensure that companies are not caught out when it comes to their reporting deadlines.