ESRS 2026 Update: What the new simplified standards mean for companies

The European Sustainability Reporting Standards (ESRS) were fundamentally revised in 2025. Important to know: the simplified ESRS have not yet finally entered into force. On May 6, 2026, the European Commission published draft revised ESRS and a voluntary sustainability reporting standard for smaller companies for consultation. The feedback period ended on June 3, 2026.

Several steps are still required before the revised ESRS become applicable. The Commission must adopt the delegated act. The European Parliament and the Council will then review the text under the so-called no-objection procedure. Only after this scrutiny period has expired and the text has been published in the Official Journal of the European Union will the revised ESRS become legally binding, expected in summer 2026.

For companies, this means: the direction is clear, but the final legal text has not yet been confirmed.
 

Why are the ESRS being revised?

The first version of the ESRS was adopted as a delegated regulation in 2023 and applies to companies within the scope of the CSRD. Criticism quickly emerged from businesses, industry associations, the financial sector, investors, and other stakeholders. The standards were considered technically demanding and, at the same time, too extensive for many companies. The high number of data points, complex documentation requirements, and the reporting effort across the value chain were viewed as particularly challenging.

With the Omnibus I package, the EU now aims to make CSRD sustainability reporting more focused. Transparency requirements are to remain in place, while the administrative burden should be reduced. The revised ESRS are the central element of this simplification.
 

What changes with ESRS 2.0?

The draft revised ESRS introduce changes in several key areas.

Reduced data points

According to the Commission, mandatory data points will be reduced by more than 60%, while the total number of data points will be reduced by more than 70%. This is not merely a cosmetic adjustment, but a structural streamlining of the standards. However, fewer data points do not mean that requirements simply disappear. In many cases, disclosures have been regrouped, merged, or moved into overarching structures in the new drafts.

Simplified double materiality assessment

Double materiality remains in place: companies must continue to assess both their impacts on people and the environment, as well as financial risks and opportunities. However, the process is intended to become less granular and more strongly focused on material topics.

Voluntary disclosures removed

This is intended to make clearer what is actually mandatory and what is not. In practice, this is important because many companies previously struggled to distinguish between legal requirements, market expectations, and additional voluntary information.

Narrative disclosures become more principles-based

Companies will have more flexibility in how they describe strategies, policies, actions, and targets. The focus shifts more strongly toward management relevance rather than formal completeness.

Stronger relief for hard-to-obtain information

This particularly affects value chain information, anticipated financial effects, and topics where data quality or data availability is not yet mature.
 

You can find a detailed expert assessment of the new ESRS drafts in our interview with Julian Göbel, who discusses the question: “Are the new ESRS a smokescreen?”
 

What remains despite the ESRS simplification?

What remains becomes simpler, but not arbitrary. Three core principles remain central.

• Double materiality remains at the heart of sustainability reporting. Companies must continue to assess which sustainability topics are material from both an impact perspective and a financial perspective.
• Reporting remains assurance-relevant. Sustainability information must be reliable, traceable, and auditable. A leaner reporting framework does not remove the need for robust methodology, documentation, and internal controls.
• The connection to strategy, governance, and risk management also remains. ESRS reports should not simply collect data, but show how sustainability is embedded in the business model, decision-making processes, and corporate management.
   

Who is still affected by the CSRD after Omnibus I?

In parallel with the ESRS revision, the scope of the CSRD has also been significantly reduced. Following the Omnibus I decision, mandatory sustainability reporting is expected to remain focused mainly on larger companies. At the EU level, the threshold has been raised to companies with more than 1,000 employees and more than EUR 450 million in net turnover.

Adjusted thresholds also apply to third-country companies. The CSRD becomes particularly relevant where significant turnover is generated in the EU, and a corresponding EU presence exists.

For many medium-sized companies, this is the key point: they may fall outside the direct CSRD reporting obligation, but often remain indirectly affected. Customers, banks, investors, or parent companies may continue to request sustainability information. This is exactly where the new voluntary standard comes in.

Read more about the current status of the CSRD in 2026.
 

What applies to companies in the first CSRD reporting wave?

Companies that already had to report under the ESRS for the financial year 2024 are not automatically covered by all postponements. For this so-called first wave, the Commission adopted a “Quick Fix” in 2025. As a result, these companies do not have to make additional disclosures for the financial years 2025 and 2026 beyond the level of their first ESRS report.

This provides time, but it does not remove the fundamental task. Wave 1 companies should now specifically adapt their existing ESRS processes to the expected ESRS 2.0 framework. Data points, materiality logic, governance disclosures, value chain data, and interfaces with financial reporting are particularly relevant.
 

What should companies do now?

Companies should not wait for the final text in the Official Journal before taking action. A pragmatic five-step approach is recommended.

1. Review the scope: Is the company still expected to fall under the CSRD based on the new thresholds? If not, which customer, bank, or group-level requirements will remain?
2. Update the double materiality assessment: Existing assessments should be reviewed against the new ESRS logic. The objective is no longer maximum breadth, but a robust and well-founded focus.
3. Clean up data points: Companies should compare their current ESRS data models with the draft revised standards. Data points that are expected to be removed, shifted, or merged should be reassigned within the new ESRS structure.
4. Reassess value chain data requests: Supplier requests must become leaner, purpose-specific, and legally sound.
5. Involve assurance early: Even simplified ESRS remain assurance-relevant. Coordination with auditors, legal teams, and internal audit should take place early to avoid methodological gaps.
    

Conclusion: ESRS 2026 is not a pause, but a reset

The ESRS are set for significant simplification in 2026. Fewer data points, clearer requirements, and a stronger focus on material information are intended to make sustainability reporting more practical. At the same time, the core expectation remains: companies must explain in a transparent and traceable way which sustainability topics are relevant to their business model, risks, and impacts.

For companies subject to reporting obligations, this primarily means that existing processes should not simply continue unchanged. The double materiality assessment, data model, internal control,s and supplier data requests should be reviewed and aligned with the expected simplified ESRS.

The reform reduces complexity, but it does not replace the need for a strategic approach to sustainability. Around 60% fewer data points unfortunately does not automatically mean 60% less effort. Many requirements have not been fully removed, but have instead been bundled, shifted, or formulated more broadly. As a result, the effort partly shifts from pure data collection toward migrating existing structures, reorganizing data points, and interpreting the new requirements from a technical perspective. The decisive factor will be to set up sustainability reporting in a leaner and more auditable way.