European Commission Proposes Simpler ESRS and Voluntary Standard

The European Commission has proposed changes to the EU sustainability reporting framework through revised ESRS and a new voluntary standard. The drafts are open for public feedback and are intended to simplify reporting while clarifying how sustainability information can be requested from smaller value-chain partners.

On 6 May 2026, the European Commission opened public feedback on draft final versions of two delegated acts: revised European Sustainability Reporting Standards (ESRS) and a voluntary sustainability reporting standard for smaller companies. Feedback is open until 3 June 2026.

The proposed shift is from a broad, detailed reporting set to a more filtered system: revised ESRS for companies that remain in scope, a voluntary route for companies outside mandatory CSRD reporting, and a limit on sustainability information requests to smaller value-chain partners.

The Two Delegated Acts

The first draft delegated regulation would amend Commission Delegated Regulation (EU) 2023/2772, which contains the first set of ESRS. The revised ESRS are proposed to apply from financial year 2027 to undertakings subject to mandatory sustainability reporting under the Accounting Directive.

The second draft delegated regulation would establish a voluntary standard for undertakings not subject to mandatory sustainability reporting. It also gives effect to the value chain cap, which limits what reporting undertakings may request from smaller entities in their value chains.

Both texts remain drafts. Each states that it has not been adopted or endorsed by the European Commission and reflects only preliminary views of Commission services. The legal position will change only after adoption and publication in the Official Journal of the European Union.

Who is Covered, and When

The revised ESRS are proposed to apply from financial year 2027 to undertakings subject to sustainability reporting requirements under Articles 19a and 29a of the Accounting Directive. Undertakings already subject to the existing ESRS for financial year 2026 may choose to apply the revised ESRS for that year instead of the current Delegated Regulation (EU) 2023/2772.

The draft voluntary standard is intended for undertakings that do not exceed an average of 1,000 employees during the preceding financial year. It does not impose legal reporting obligations. It provides a standardised reporting route for companies outside mandatory CSRD reporting and helps meet the data needs of larger reporting undertakings, banks and investors.

The Commission’s draft also states that undertakings exceeding EUR 450 million in net turnover and an average of 1,000 employees are required to report sustainability information under the Accounting Directive, as amended. Their reporting must cover both own operations and the value chain.

What Would Change in the ESRS

Double materiality remains. Companies must report material impacts on people and the environment, as well as material sustainability-related risks and opportunities. The sustainability statement should cover governance, strategy including financial effects, management of impacts, risks and opportunities, and metrics and targets.

The simplification is mainly a filter. According to the Commission, the draft revised ESRS are expected to reduce per-company reporting costs by more than 30%, cut mandatory data points by over 60% and cut total data points by over 70%. The draft also gives priority to quantitative data points where possible, separates mandatory and voluntary data points more clearly, clarifies materiality and improves consistency with Union legislation and global sustainability reporting standards.

EFRAG’s technical advice sits behind the Commission proposal. The Commission states that EFRAG submitted advice on the revised ESRS on 2 December 2025. EFRAG’s revised draft reduced mandatory data points by 61% and introduced more flexibility, reliefs and phase-ins.

Where the Value Chain Cap Applies

The value chain cap is the main link between the voluntary standard and CSRD reporting. Mandatory reporting undertakings may not require protected value-chain undertakings with no more than 1,000 employees to provide sustainability information beyond the voluntary standard. Protected undertakings have a statutory right to refuse requests above that limit.

The cap is not a general limit on all information requests. It applies to information gathered for sustainability reporting under national law transposing the Accounting Directive. It does not affect information required under other Union or national law.

For reporting teams, this changes supplier questionnaires. Only disclosures marked as “necessary” are covered by the cap. For undertakings with 10 employees or fewer, some disclosures that are necessary for larger undertakings are voluntary and therefore sit outside the cap.

What Reporting Teams Need to Decide

The first decision is scope: mandatory ESRS reporter, voluntary-standard user, or protected value-chain undertaking. That decision affects governance, assurance planning and how far value-chain data requests can go.

For mandatory reporters, the main operational change is the materiality filter. The revised ESRS are shorter and add flexibilities, but they still require evidence of how material impacts, risks and opportunities were identified, including how the value chain was considered. Data collection should start from material topics and required data points, not from a full inventory of every supplier.

For value-chain requests, questionnaires need to be mapped against the voluntary standard. CSRD in-scope companies cannot ask partners with 1,000 employees or fewer for more information than the voluntary standard covers. For those partners, the practical choice is whether the Basic Module is enough, or whether the Comprehensive Module is needed because banks, investors or corporate clients are likely to ask for more.

The Next Procedural Step

After the consultation closes, the Commission says it will adopt the two delegated acts as soon as possible and send them to the European Parliament and the Council for scrutiny under the no-objection procedure. That scrutiny period is two months and may be extended by a further two months at the request of either institution.

Until adoption and publication, the texts remain drafts. Reporting teams should track the final wording, confirm scope and prepare for the revised 2027 framework, while assessing whether early use of the revised ESRS for financial year 2026 is useful.