European Commission Adopts Revised ESRS and Voluntary Standard
The European Commission’s latest sustainability reporting package marks the next stage of the EU’s simplification agenda under Omnibus I. By adopting revised ESRS and a Voluntary Standard, the Commission is seeking to reduce the reporting burden for companies that remain in scope while setting clearer limits on sustainability information requests across value chains.
The European Commission has adopted two delegated acts that reshape the next phase of European sustainability reporting: revised European Sustainability Reporting Standards (ESRS) and a Sustainability Reporting Standard for Voluntary Use (VS). The package affects both undertakings that remain in the mandatory Corporate Sustainability Reporting Directive (CSRD) regime and undertakings that receive sustainability information requests from larger business partners in their value chains.
The package recalibrates the first ESRS reporting architecture around reduced datapoints, stronger materiality filtering and a formal value chain cap.
A Two-Part Reporting Package
On 3 July 2026, the Commission adopted a delegated act amending Commission Delegated Regulation (EU) 2023/2772 as regards the simplification of certain sustainability reporting standards. It also adopted a delegated act establishing sustainability reporting standards for voluntary use by undertakings protected by the value chain cap.
The legal basis remains the Accounting Directive, as amended by the CSRD and the Omnibus I Directive. The revised ESRS specify the sustainability information that in-scope undertakings must disclose under Articles 19a and 29a of the Accounting Directive. The Voluntary Standard sits alongside the mandatory regime and defines the reference point for the value chain cap.
The revised ESRS simplify mandatory sustainability reporting for undertakings that remain in scope. The Voluntary Standard serves a different role: it gives undertakings outside mandatory reporting a simplified framework for voluntary disclosure and for responding to information requests from banks, investors and corporate clients.
Mandatory Reporting and Voluntary Disclosure
The revised ESRS remain mandatory for undertakings within the CSRD reporting scope, while the Voluntary Standard follows a different logic: it does not itself impose mandatory sustainability reporting obligations. It is intended for undertakings that do not exceed an average number of 1,000 employees during the preceding financial year, including self-employed undertakings, non-incorporated undertakings and listed micro-undertakings.
To minimise compliance costs, undertakings applying the Voluntary Standard are not obliged to seek assurance for the information they report.
Its legal significance comes through the value chain cap. When reporting undertakings seek sustainability information from protected undertakings in their value chain, they are prohibited from requiring information beyond the cap. In the final regulation, the cap is not the whole Voluntary Standard: it comprises the disclosures set out in both the Basic Module and the Comprehensive Module that are marked as “necessary”, as specified in Annex II.
The cap excludes disclosures marked as “voluntary” or as “consideration when reporting sector information”. It also excludes disclosures marked as “necessary if applicable”, and, for undertakings with 10 employees or fewer, disclosures marked as “voluntary for undertakings with 10 employees or less”. Protected undertakings have a statutory right to refuse requests beyond the cap.
The cap applies only to information gathering for sustainability reporting under the Accounting Directive. It does not prevent voluntary sharing of information commonly exchanged in a sector, nor does it override contractual or legal obligations to provide information that does not exceed the information specified in the standard.
Scope and Thresholds
The Omnibus I Directive narrows the mandatory sustainability reporting scope to undertakings exceeding an average of 1,000 employees and EUR 450 million in net turnover during the financial year. The Staff Working Document states that this reduces the number of companies in scope by about 85%.
For some wave-one undertakings, the transitional provisions allow temporary omission of selected topical disclosures, including ESRS E4, S2, S3 and S4, and phased-in reporting of anticipated financial effects.
The value chain cap is based on a single employee threshold. It protects undertakings with no more than 1,000 employees in the value chain of reporting entities. This means it does not fully mirror the revised CSRD scope.
The Voluntary Standard builds on Commission Recommendation (EU) 2025/1710, through which the Commission endorsed EFRAG’s Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME). The Commission states that changes from the VSME standard have been kept to a minimum and were mainly made to align the standard with the revised ESRS.
The Voluntary Standard keeps the modular structure of the VSME standard. The Basic Module covers general information, environmental metrics, social metrics and governance metrics. The Comprehensive Module adds datapoints likely to be requested by banks, investors and corporate clients. Applying the Basic Module is a prerequisite for applying the Comprehensive Module.
Double Materiality Remains
The revised ESRS retain double materiality. Undertakings must disclose material impacts on people and the environment, and material sustainability-related risks and opportunities. The sustainability statement is still expected to present fairly the undertaking’s material impacts, risks and opportunities and how they are managed.
The main change is the reporting filter. The revised ESRS state that an undertaking shall not disclose information prescribed by an ESRS disclosure requirement or datapoint if that information is not material. Materiality therefore becomes a basis for excluding non-material information, not only for identifying relevant topics.
The simplification is substantial. According to the Commission, the revised ESRS reduce mandatory datapoints by over 60% and the total number of datapoints by over 70%. The Commission expects these changes to reduce reporting costs per company by more than 30%.
The standards also clarify the assessment process. Undertakings may use a top-down approach based on strategy, business model, sectors, geographies and the features of the upstream and downstream value chain. They may combine this with a bottom-up approach where appropriate.
The revised ESRS introduce a dedicated provision on “reasonable and supportable information that is available without undue cost or effort”. Undertakings are not required to assess every possible impact, risk or opportunity across all operations and value chains. They may use average regional data, sector data or generally available information where direct value-chain input is not necessary.
Implementation Focus for Reporting Teams
For in-scope undertakings, the first task is to compare existing ESRS implementation work with the revised standards. The key areas are materiality conclusions, datapoint mapping, value-chain information, evidence quality and cross-references to financial statements.
For value-chain requests, companies will need to distinguish between information covered by Annex II, information above the cap and information that may still be requested under another legal or contractual basis.
For undertakings outside mandatory scope, the practical decision is whether to use the Voluntary Standard as a structured response to market requests. The Basic Module may be sufficient for some undertakings; the Comprehensive Module is designed for cases where banks, investors or corporate clients need additional information.
A More Proportionate EU Model
The package recalibrates EU sustainability reporting around a narrower mandatory scope, simplified ESRS and a protected route for undertakings with no more than 1,000 employees in value chains.
The Staff Working Document estimates cumulative gross reporting cost savings of around EUR 3.7 billion over 2027–2031 for companies remaining in scope, rising to around EUR 4.7 billion when value-chain effects are included.
The delegated acts are now subject to scrutiny by the European Parliament and the Council. Unless they are rejected, they will be published in the Official Journal of the EU. Publication could take place around September 2026 if the scrutiny period is not extended; an extension would move the timeline later. The acts will enter into force in accordance with the dates set out in each act. The revised ESRS will apply to financial years beginning on or after 1 January 2027, with early application for financial year 2026 permitted once the act enters into force.
Additional materials
Revised European sustainability reporting standards
Delegated regulation - C(2026)5010
Staff working document - SWD(2026)500
Sustainability reporting standard for voluntary use
