Simplified ESRS (ESRS 2026): deep analysis of the revised standards

On 3 July 2026 the European Commission adopted the delegated act that revises the European Sustainability Reporting Standards (ESRS). The act amends Commission Delegated Regulation (EU) 2023/2772, which established the first set of ESRS, and it is the technical centrepiece of the Omnibus I simplification package. The revised standards, widely known as the Simplified ESRS or ESRS 2026, reduce the volume of required disclosure sharply while keeping the double materiality principle and the core objectives of the European Green Deal intact. They apply to financial years beginning on or after 1 January 2027, and undertakings already in scope may choose to apply them a year early, for financial year 2026.

For sustainability, risk and finance teams this is the most consequential change to the ESRS since they were first adopted in 2023. This analysis works through the Simplified ESRS delegated act and its annexes in detail: what has been removed, how the materiality assessment has been reset, the thirteen areas where the Commission departed from EFRAG's technical advice, the phase-in reliefs available by company size, and what the changes mean for reporting data and systems.

Why the ESRS were revised

The revision does not come from a change of heart about sustainability reporting. It follows directly from the Omnibus I Directive (Directive (EU) 2026/470), which entered into force on 18 March 2026 and must be transposed by Member States by 19 March 2027. Omnibus I narrowed the population of undertakings caught by the Corporate Sustainability Reporting Directive (CSRD) and instructed the Commission to simplify the reporting framework itself.

The Commission's own reasoning is that narrowing scope was not enough. In its staff working document accompanying the act, the Commission states that reducing the number of companies in scope would not have delivered the intended level of cost reduction if the standards had stayed the same, because the companies remaining in scope are the largest undertakings in the European Union. The scope reduction and the standards revision are designed to work together: fewer companies report, and those that do report less.

Recital 18 of Omnibus I gave the Commission a deadline of six months from entry into force to adopt a delegated act revising the standards, and required it to take account of technical advice from the European Financial Reporting Advisory Group (EFRAG). The timeline below traces the route from the Omnibus proposal to the adopted act.

Because the ESRS live in a delegated regulation rather than a directive, they take effect directly across all Member States once the scrutiny period ends. There is no separate national transposition step, so the application dates above are common to every jurisdiction. Companies working through CSRD compliance can therefore plan against a single European timetable.

The six simplification mandates

Recital 18 of Omnibus I set out six things the revised standards had to achieve. Every change in the delegated act maps back to one of these instructions, so they are a useful lens for reading the whole reform.

Two of these deserve early attention because they change the character of the standards rather than just their length. Mandate three has been implemented by removing voluntary datapoints from the standards altogether, so what remains is a mandatory set governed by materiality. Mandate two shifts the balance from long qualitative descriptions toward structured metrics, which is exactly the kind of information that can be captured, validated and audited in a data system rather than drafted by hand.

Fewer datapoints, more numbers

The headline of the reform is subtraction. EFRAG reduced the mandatory datapoints by 61 per cent in its technical advice, and the Commission's final figures describe a cut of around 60 per cent in mandatory datapoints. Because all voluntary datapoints have been removed as well, the total number of datapoints in the standards falls by roughly 70 per cent. The chart below indexes the first set of ESRS at 100 so the scale of the reduction is easy to read.

The reduction is not achieved by lowering ambition. The Commission and EFRAG both state that the core objectives of the European Green Deal are retained. What has gone is duplication, datapoints of marginal decision usefulness, and the long tail of voluntary items that added preparation effort without a clear reader in mind. The standards have also been shortened and their structure simplified, so that the text is easier to navigate as well as shorter.

The shift from narrative to quantitative matters for how reporting is produced. A datapoint that asks for a number, a percentage or a category can be sourced from systems, checked against a rule and rolled up across a group. A datapoint that asks for free text tends to be written late, reviewed subjectively and difficult to compare between companies. Prioritising quantitative disclosure is therefore not only a burden reduction, it is a move toward information that machines and assurance providers can work with. This is one reason robust ESG data management becomes more valuable, not less, as the datapoint count falls.

The cost case behind the cut

EFRAG's cost-benefit analysis puts numbers on the burden reduction. Over a five-year period, reporting cost savings average around 34 per cent of baseline costs for undertakings in scope. The savings rate starts at about 28 per cent in 2027, rises to about 38 per cent in 2028 as the reliefs take hold, then settles into a range of roughly 33 to 36 per cent from 2029 onwards once all undertakings apply the revised framework.

These are estimates attached to the standards EFRAG proposed rather than a guarantee, and the Commission's own modifications adjust the detail. The direction, however, is not in doubt. The reform is built to reduce the recurring cost of ESRS reporting materially, and to concentrate the remaining effort on information that is genuinely used.

The materiality reset

If the datapoint cut is the headline, the materiality changes are the substance. Double materiality is unchanged: companies still assess both how sustainability matters affect them and how they affect people and the environment. What has changed is how the assessment is meant to be run and what it licenses a company to leave out. The revised ESRS 1 reframes materiality from an exercise that pushed companies toward exhaustive coverage into one that actively permits proportionate judgement.

Three shifts stand out. First, a top-down approach is now explicitly endorsed. ESRS 1 states that a top-down approach lets an undertaking avoid unnecessary work and, in general, does not require it to assess the materiality of every individual impact, risk or opportunity; a conclusion can be reached at topic level. A company may combine a top-down approach for some topics with a bottom-up analysis for others. Second, the obligation has been sharpened from permission to instruction: the standard now says an undertaking shall not disclose information prescribed by a disclosure requirement or datapoint if that information is not material, subject to narrow exceptions, rather than merely stating that it is not required to. Third, a definition of informed assessment has been added, describing the reasonable evaluations that users of general purpose statements make, which anchors what materiality is serving.

Use the toggle to compare the older posture with the revised one on three points.

The practical effect is a smaller, better justified statement. A company that runs a disciplined top-down assessment can conclude that a topic is not material and omit its disclosures, provided it is transparent about the basis for that conclusion where the standards require it. For teams that have invested in a structured double materiality assessment, the revised rules reward that discipline, because the assessment now directly controls the scope of what must be disclosed.

Thirteen departures from EFRAG's advice

The Commission did not simply enact EFRAG's draft. It made targeted modifications, described in the explanatory memorandum, mostly to make the standards easier to apply and to add flexibility. There are thirteen areas of change. Filter them by theme, or browse the full set.

Read together, these changes tell a consistent story. The Commission wanted the standards to be applied proportionately, to interoperate with global frameworks, and to protect legitimate commercial and sectoral interests, all without reopening the underlying architecture of the ESRS.

Greenhouse gas boundary flexibility

One environmental change carries particular weight for interoperability. Under the first set of ESRS the organisational boundary for greenhouse gas emissions was tied to financial control. The revised ESRS E1 keeps financial control as the starting point, consistent with the Greenhouse Gas Protocol Corporate Standard, but allows a company to use the equity share or the operational control approach instead. Related to this, joint operations without operational control may be excluded from certain environmental metrics, with disclosure of the steps taken to improve coverage over time.

The point is not that one boundary is better than another, but that a company can align its ESRS emissions boundary with the one it already uses for the IFRS Sustainability Disclosure Standards or for group reporting. That reduces the need to maintain two parallel emissions inventories and is a concrete example of the interoperability mandate in action. Managing several boundary definitions cleanly is a data problem, and one that a platform built for framework interoperability is designed to solve.

Phase-ins and transitional reliefs

The revised ESRS 1 keeps and updates a set of phase-in provisions that let companies defer parts of the standard in early years. They depend on two categories. Wave-one undertakings are those required to report for financial years starting between 1 January 2024 and 31 December 2026. Other undertakings are those required to report for financial years starting on or after 1 January 2027. Within wave one, a size test applies, using a threshold of EUR 450 million net turnover and 1,000 employees.

The table summarises the main reliefs. It is a guide to the structure of the phase-ins rather than a substitute for the standard, which sets out the precise disclosure references.

There is also a choice for financial year 2026. A company already in scope can apply the existing ESRS, or adopt the revised ESRS early in full. The adopted act adds a third route, under which a company applies the existing ESRS but takes certain reliefs from the revised standards, such as the new top-down materiality approach and the value chain limitations. Whichever route is taken, the company must state clearly in its report which version of the standards it has applied. For teams planning the transition, the practical task is to record, per entity and per financial year, which reliefs are in use, so that scope can be evidenced and rolled forward. Support for this kind of tracking is part of a dedicated European Sustainability Reporting Standards workflow.

The voluntary standard and the value chain cap

On the same day, the Commission adopted a second delegated act establishing a voluntary sustainability reporting standard. It is based on the standard for non-listed small and medium-sized enterprises, known as VSME, that the Commission recommended in July 2025, with changes kept to a minimum and made mainly to align it with the revised ESRS. It gives companies outside the scope of the CSRD a simple, standardised way to disclose the same broad sustainability topics in a form suited to smaller organisations.

The voluntary standard also anchors a protection that matters to larger reporters: the value chain cap. From financial year 2027, a company in scope of the CSRD cannot require sustainability information from smaller companies in its value chain beyond what the voluntary standard covers. This limits the trickle-down of data requests that many smaller suppliers experienced under the first wave of CSRD reporting, and it gives large reporters a defined ceiling for what they can reasonably ask of partners that are not themselves in scope.

What it means for reporting data and systems

The reform changes the shape of the reporting task more than its direction. Fewer datapoints do not mean less need for structure. They mean the remaining datapoints carry more weight, are more likely to be quantitative, and are more tightly governed by materiality. Five practical consequences follow for teams and the systems they rely on.

The revised ESRS reward companies that treat sustainability data as structured, governed information rather than a drafting exercise. That is the design principle behind the Generation Impact Global platform, which connects the materiality assessment to a governed data model and supports reporting across CSRD and the ESRS, the IFRS Sustainability Disclosure Standards, the EU Taxonomy and more. If you would like to see how the revised standards map onto a working data architecture, our team can walk you through it.

Primary sources

This analysis is based on the delegated act and its annexes together with the accompanying official material. The key sources are the Commission's press release on the adoption of the revised standards, the EFRAG news item on the revised ESRS and voluntary standard, the delegated act and annexes on the Commission's Have your say portal, the first set of ESRS in Delegated Regulation (EU) 2023/2772, and the Omnibus I Directive (EU) 2026/470.