EXECUTIVE SUMMARY
EFRAG’s December 2025 technical advice reported a 61% reduction in mandatory datapoints and a 71% reduction including voluntary datapoints. It removed voluntary disclosures and introduced a fair presentation framework. The 12 standards remain (2 cross-cutting, 5 environmental, 4 social, 1 governance), but reporting flexibility increases significantly. The Commission adopted the revised ESRS on 3 July 2026. Regulation (EU) 2026/1563 was published on 21 September 2026, enters into force on 10 November 2026 and applies to financial years beginning on or after 1 January 2027.
What are the ESRS
The European Sustainability Reporting Standards (ESRS) define what companies subject to the Corporate Sustainability Reporting Directive (CSRD) must disclose in their sustainability statements. They are the content layer: the CSRD establishes who must report and when. The ESRS specify what must be reported and how.
The original ESRS Set 1 was adopted by the European Commission on 31 July 2023 as Commission Delegated Regulation (EU) 2023/2772, published in the Official Journal on 22 December 2023, and applicable from financial years beginning on or after 1 January 2024. The standards were developed by EFRAG (the European Financial Reporting Advisory Group) and represent the EU's first mandatory sustainability reporting framework, designed to bring sustainability disclosure to the same level of rigour, assurance, and comparability as financial reporting.
The original ESRS comprised 12 standards. They were widely regarded as comprehensive but operationally burdensome, a view confirmed by the experience of Wave 1 reporters in 2024 and the EFRAG-BCG implementation study. That feedback, combined with the EU's broader competitiveness agenda, drove the simplification exercise that culminated in EFRAG's December 2025 technical advice.
The revised ESRS have been adopted
EFRAG delivered its final technical advice to the European Commission on 3 December 2025. The Commission adopted the revised ESRS on 3 July 2026. Regulation (EU) 2026/1563 was published on 21 September 2026, enters into force on 10 November 2026 and applies to financial years beginning on or after 1 January 2027. Article 2 provides FY 2026 reporting options, including the revised standards or specified reliefs applied with the previous standards. The statement must identify the version used.
The simplification: what changed and why
In March 2025, the European Commission formally mandated EFRAG to simplify the ESRS in line with the Omnibus I simplification package. EFRAG published Exposure Drafts in July 2025, received over 1,500 stakeholder responses across two consultation periods, and delivered its final technical advice on 3 December 2025. The result is a substantial structural streamlining, but one that preserves the core architecture and obligations of the CSRD reporting framework.
Headline changes (December 2025 technical advice, with selected corrections)
Datapoint reduction: EFRAG's December 2025 technical advice reported a 61% reduction in mandatory datapoints and a 71% reduction including voluntary datapoints.
Fair presentation framework: sustainability reporting must fairly present material information about impacts, risks, and opportunities, considering the overall picture. This shifts the emphasis from mechanical compliance with each disclosure requirement to decision-useful, balanced reporting. Aligns with the equivalent concept in IFRS financial reporting and IFRS S1.
Top-down double materiality option: companies may now begin the DMA at the strategic/topic level, examining business model, sector, and key activities, then drill down. The original ESRS topic list was a reference for identifying material matters, not a compulsory bottom-up workflow.
Principles-based narrative disclosures: policies, actions, and targets can be described in a more flexible, less prescriptive manner. Companies choose how to structure these disclosures.
Value chain data pressure reduced: the preference for direct value chain data has been removed. Companies may use estimates, sector averages, spend-based proxies, and other indirect sources where primary data is not available without undue cost or effort.
Sector-specific ESRS eliminated: approximately 40 planned sector standards will not be developed. The Commission may provide optional sector guidance if requested.
Limited assurance retained: the planned escalation to reasonable assurance has been removed by the Omnibus I Directive.
Enhanced ISSB interoperability: the revised E1 permits GHG Protocol financial-control, equity-share or operational-control approaches, subject to the ESRS boundary provisions; anticipated financial effects provisions aligned more closely with IFRS S1; transition plan disclosures aligned with IFRS S2.
Our perspective
We suggest starting with the reporting work your organisation still needs to do. Double materiality remains mandatory, and sustainability statements remain part of the management report. Check the applicable assurance and digital tagging rules as part of that review. Use the additional time to review responsibilities, remove unnecessary data requests and address gaps in the information that remains.
The 12 ESRS standards
The ESRS retain the same 12-standard structure under the simplified framework. What changes is the depth and volume of each standard, not the architecture. The general reporting undertaking follows the financial statements. The revised E1 allows alternative GHG boundaries as described below. Below is a summary of each standard and its focus area. For a full explanation of who must report and when, see our CSRD post-Omnibus guide.
Cross-cutting standards
| Standard | Focus | Key role |
|---|---|---|
| ESRS 1 | General Requirements | The architectural standard. Defines the framework, double materiality concept, value chain scope, reporting areas (Governance, Strategy, IRO Management, Metrics & Targets), qualitative characteristics, phase-in provisions, and the fair presentation requirement. Does not contain specific disclosure requirements. |
| ESRS 2 | General Disclosures | Covers basis for preparation, governance structures, strategy and business model, and the process to identify material IROs. Under the simplified ESRS, ESRS 2 now also consolidates Policies, Actions, Metrics, and Targets (previously partly in topical standards). ESRS 2 applies across reporting topics, subject to the revised standards' information-materiality filter. |
Environmental standards
Note: These table summaries retain the article's historical account of EFRAG's technical advice of 3 December 2025, with selected corrections. The revised ESRS have since been adopted in Regulation (EU) 2026/1563. These summaries have not been fully updated against the adopted standards.
| Standard | Focus | Simplified ESRS key change |
|---|---|---|
| ESRS E1 | Climate Change | Scenario analysis no longer mandatory. Energy intensity metric removed. Transition plan disclosures consolidated and aligned with IFRS S2. The revised E1 permits the GHG Protocol financial-control, equity-share or operational-control approach, subject to the ESRS boundary provisions. Retains special status: if E1 is assessed as not material, a detailed explanation is required. |
| ESRS E2 | Pollution | Anticipated financial effects removed (retained only in E1 and ESRS 2). Microplastics disclosure enhanced to include secondary microplastics. |
| ESRS E3 | Water and Marine Resources | "Marine resources" removed from title. Water intensity metric removed. |
| ESRS E4 | Biodiversity and Ecosystems | Significant reduction. LEAP approach guidance removed. Extended phase-in: Wave 1 entities may omit all E4 information for FY 2025–2026 under the Quick Fix. |
| ESRS E5 | Resource Use and Circular Economy | Streamlined. New data point on waste management. Relevant for companies subject to the EU Batteries Regulation, where product-level circularity data intersects with ESRS reporting. |
Social standards
| Standard | Focus | Simplified ESRS key change |
|---|---|---|
| ESRS S1 | Own Workforce | Health and safety policy removed as explicit requirement. Gender pay gap must be reported unadjusted. New data point on adequate wages (anchored in ILO living-wage principles). Human rights policy moved to ESRS 2. |
| ESRS S2 | Workers in the Value Chain | Extended phase-ins. Wave 1 entities may omit all S2 information for FY 2025–2026 under the Quick Fix. |
| ESRS S3 | Affected Communities | Extended phase-in provisions as per S2. |
| ESRS S4 | Consumers and End-Users | Extended phase-in provisions as per S2. |
Governance standard
| Standard | Focus | Simplified ESRS key change |
|---|---|---|
| ESRS G1 | Business Conduct | Political influence and lobbying disclosures simplified. Average time-to-pay metric removed. Focus retained on anti-corruption, corporate culture, and supplier relationship management. |
Original ESRS vs. simplified ESRS
Original ESRS Set 1 (July 2023)
- Assessment of material impacts, risks and opportunities, using the ESRS topic list as a reference.
- Highly granular disclosure checklists
- PATs repeated in each topical standard
- ~40 sector-specific standards planned
- Preference for direct value chain data
- Hybrid GHG boundary approach
- Anticipated financial effects across all topical standards
- No explicit fair presentation framework
- Review the assessment for relevant changes. A complete annual repetition was not required.
- Limited assurance with planned move to reasonable
Simplified ESRS (December 2025 technical advice, with selected corrections)
- 61% mandatory datapoint reduction and 71% including voluntary datapoints, as reported in EFRAG's December 2025 technical advice
- Top-down or bottom-up DMA (company choice)
- Principles-based narrative flexibility
- PATs consolidated into ESRS 2 as GDRs
- Sector-specific ESRS eliminated entirely
- Preference removed. Estimates and proxies permitted
- GHG Protocol boundary options: financial control, equity share or operational control, subject to the ESRS boundary provisions
- Anticipated financial effects E1 and ESRS 2 only
- Explicit fair presentation framework (IFRS S1 aligned)
- DMA carry-forward unless significant changes
- Limited assurance. The scheduled escalation has been removed
Double materiality: simplified but unchanged
Double materiality remains the cornerstone of the ESRS framework. The simplified ESRS do not remove or dilute the double materiality assessment. They streamline the methodology, reduce prescriptiveness, and introduce a fair presentation principle, but the requirement to assess both impact materiality and financial materiality is unchanged.
Impact materiality asks: does the company have actual or potential significant impacts on people or the environment? Financial materiality asks: does a sustainability matter create material financial risks or opportunities for the company? A topic is in scope if it is material from either perspective, or both.
Key changes to the double materiality methodology under the simplified ESRS:
- Top-down approach permitted. Companies may now conduct a top-down double materiality assessment starting from their strategy and business model, while retaining the option of a bottom-up assessment. This significantly reduces the assessment burden for companies with a clear sustainability strategy.
- Fair presentation as an overarching objective. The simplified ESRS introduce fair presentation, borrowed from IFRS, as an explicit objective. This means disclosures must give a true and fair view of the company's sustainability-related impacts, risks, and opportunities, not merely comply with a checklist.
- Information materiality as an overarching filter. Greater prominence is given to information materiality: only information that is significant enough to influence users' decisions needs to be disclosed, even if a topic is otherwise material.
- Reduced prescriptiveness. The simplified ESRS give companies more discretion in how they structure their double materiality assessment and the level of detail they apply to less material topics.
Start your DMA review now
The revised ESRS introduces a simplified double materiality assessment process that is more focused and offers the opportunity to apply a top-down approach based on strategy and business model. Greater prominence is given to information materiality as an overarching filter, and the concept of fair presentation is established as an explicit objective. Companies can review these changes against the adopted Regulation (EU) 2026/1563. If you have already conducted a DMA under the original ESRS, review it against the adopted standards. Record the gaps and agree who will address them before the next reporting cycle.
Wave 1 companies: transitional reliefs for FY 2025–2026
Wave 1 companies (large public-interest entities already reporting under the CSRD for FY 2024) are in a transitional position. The Stop-the-Clock Directive (EU) 2025/794 delayed Wave 2 and Wave 3 requirements, but did not capture Wave 1 entities. To bridge the gap until the simplified ESRS take effect, the Commission adopted the "Quick Fix" Delegated Regulation (EU) 2025/1416 (adopted 11 July 2025, published in the OJ on 10 November 2025, applicable from FY 2025).
The Quick Fix provides the following transitional reliefs for all Wave 1 entities for FY 2025 and FY 2026:
May omit all information from ESRS E4 (Biodiversity), S2 (Workers in Value Chain), S3 (Affected Communities), and S4 (Consumers/End-Users), even where these topics are assessed as material. Must still report the materiality assessment outcome and a summarised description of policies, actions, targets, and relevant metrics per ESRS 2.
May omit anticipated financial effects disclosures for FY 2025 and FY 2026 (previously only a first-year exemption).
Phase-in provisions previously available only to companies with ≤750 employees are extended to companies with >750 employees for FY 2025 and FY 2026, including certain S1 (Own Workforce) disclosures.
Wave 1 scope exemption
Separately, the Omnibus I Directive permits, but does not require, Member States to exempt Wave 1 companies that fall below the new thresholds (1,000 employees and €450M turnover) from CSRD reporting for FY 2025 and FY 2026. Whether your organisation benefits from this exemption depends on national transposition. Until transposition occurs, existing CSRD obligations remain in force.
Assurance and digital tagging
Assurance: limited
All companies in CSRD scope must obtain third-party limited assurance on their sustainability statements from their first reporting year. The Omnibus amendment removed the requirement to move to reasonable assurance. The Commission must adopt harmonised limited assurance standards by 1 July 2027. Pending those standards, Member States may apply national assurance requirements. The key international reference is ISSA 5000, finalised by the IAASB in 2024.
Digital tagging (XBRL)
The applicable ESEF rules determine when sustainability reports must be digitally tagged. EFRAG published the final ESRS Set 1 XBRL Taxonomy in August 2024. EFRAG published a draft XBRL taxonomy for the revised ESRS on 17 September 2026, with consultation open until 11 November 2026. A draft taxonomy does not itself establish mandatory tagging. Companies should check the operative ESEF legal instrument for any mandatory application date. The ESRS Knowledge Hub provides access to reporting standards and guidance.
Interoperability with ISSB standards
The simplified ESRS explicitly aim to enhance interoperability with the ISSB's IFRS S1 and S2 sustainability disclosure standards. EFRAG and the IFRS Foundation published joint interoperability guidance in May 2024, illustrating the high degree of alignment between the two frameworks.
The key structural difference remains: ESRS use double materiality (impact and financial), while ISSB uses single (financial) materiality. However, the financial materiality component is aligned between the two. The simplified ESRS enhance alignment through the fair presentation principle (matching IFRS S1), the revised GHG emissions boundary options (financial control, equity share or operational control, subject to the ESRS boundary provisions), and revised anticipated financial effects provisions.
Dual compliance caution
Some simplified ESRS reliefs go beyond what the ISSB standards permit. Companies that intend to assert compliance with both ESRS and ISSB frameworks should evaluate the implications carefully, particularly around phase-in provisions, undue-cost-or-effort exemptions, and anticipated financial effects provisions.
Build audit-ready reporting systems under the simplified ESRS
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Sector-specific standards: what to do now
The simplified ESRS framework removes the planned sector-specific standards. In their absence, companies may consider other recognised frameworks, such as ISSB industry-based disclosure requirements, and align with industry best practices to maintain transparency and credibility with investors and stakeholders. The Commission may still issue non-binding sector-specific guidance depending on market demand, including guidance on conducting the double materiality assessment within a given sector.
Key milestones and timeline
How to prepare
We recommend starting with the organisation’s reporting obligations and the information it needs to produce. Companies that remain in scope can use the additional time to test data collection, controls and assurance readiness. Those outside scope can assess whether voluntary reporting serves a specific investor, lender or customer need, taking account of the work involved.
Step 1: Confirm your reporting status
Determine whether your organisation remains in CSRD scope under the revised thresholds (1,000+ employees and €450M+ turnover). If you fall below, consider voluntary reporting under the Voluntary Standard in Regulation (EU) 2026/1560. The Voluntary Standard has a Basic Module with disclosures B1 to B11 and a Comprehensive Module with disclosures C1 to C9. No double materiality assessment is required. The adopted standard builds on Commission Recommendation (EU) 2025/1710. See our CSRD post-Omnibus guide for the full scope analysis.
Step 2: Review your double materiality assessment
If you have already conducted a DMA under the original ESRS, review it against the simplified framework. The top-down approach and fair presentation filter may allow you to streamline. If you have not started, use the simplified guidance to scope the exercise efficiently. Coordinate with your auditor on methodology and documentation standards.
Step 3: Identify removable data points
Use the adopted Regulation (EU) 2026/1563 to check which datapoints have been removed from your current or planned reporting scope. Then decide which collection activities can stop and which information the organisation still needs for other purposes. Focus the remaining reporting work on data quality, internal controls and clear responsibilities.
Step 4: Redesign value chain data collection
From financial years beginning on or after 1 January 2027, the value-chain cap limits the sustainability information that in-scope reporting companies may require from value-chain undertakings with 1,000 employees or fewer. Regulation (EU) 2026/1560 was adopted on 3 July 2026 and published on 21 September 2026. Its value-chain cap is defined by the datapoints in Annex II and applies from financial years beginning on or after 1 January 2027. Companies should segment suppliers by size and sustainability risk, adopt estimates, sector averages, and spend-based proxies for smaller suppliers, and maintain deeper engagement only with high-impact value chain partners on a risk-proportionate basis.
Agree the reporting basis
Article 2 of Regulation (EU) 2026/1563 provides FY 2026 reporting options, including the revised standards or specified reliefs applied with the previous standards. The statement must identify the version used. We suggest agreeing that basis early, then reviewing the gaps in datapoints, double materiality methodology and GHG boundaries. Record the changes needed, who is responsible and when the work must be ready. That gives the reporting team and its assurance provider a clearer basis for planning.
Step 5: Align governance and assurance
Board oversight, internal controls, and structured ESG data management remain essential, even under limited assurance and simplified standards. Engage your auditor early to agree on the approach. The reduced data point count does not reduce the need for rigorous, audit-ready process and documentation.
Understand what the simplified ESRS mean for your reporting obligations
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For the broader CSRD framework changes, see our CSRD post-Omnibus guide. For ISSB interoperability, see our ISSB global adoption guide.
Frequently asked questions
Are the simplified ESRS already in force?
How many data points remain in the simplified ESRS?
Is double materiality still required?
What about sector-specific ESRS?
Will assurance move to reasonable assurance?
Can I claim compliance with both ESRS and ISSB?
What transitional reliefs are available for Wave 1 companies?
Conclusion
The revised ESRS reduce the volume and complexity of reporting while retaining double materiality, management report integration, assurance and digital tagging. We suggest using the changes to review how the reporting process works, including what information is collected, how it is checked and who is responsible for it.
The revised ESRS have been adopted and the FY 2027 application date is set. Regulation (EU) 2026/1560 defines the value-chain cap in Annex II for application from financial years beginning on or after 1 January 2027. Member States are required to transpose the Omnibus I provisions. A focused review can help teams decide what to keep, change or stop. The Commission must publish a scope assessment by 30 April 2031 and every three years thereafter, so companies close to the thresholds should monitor that review.
Disclaimer: This article is intended as a practical orientation guide, not legal advice. The underlying analysis reflects information available as of mid-March 2026, with selected factual corrections recorded on 30 October 2026. The Commission adopted the revised ESRS on 3 July 2026. Regulation (EU) 2026/1563 was published on 21 September 2026, enters into force on 10 November 2026 and applies to financial years beginning on or after 1 January 2027. Remaining implementation matters include digital tagging and Member State transposition of Omnibus I. Readers should verify all compliance-critical obligations against the authoritative legal text on EUR-Lex and seek qualified legal counsel before making compliance decisions.