Simplified ESRS Guide: What Has Changed and How to Prepare for 2027

After more than eighteen months of negotiation, consultation and redrafting, Europe’s sustainability reporting rules have taken a settled shape. On 21 September 2026, the simplified ESRS—the revised European Sustainability Reporting Standards were published in the Official Journal of the EU as Commission Delegated Regulation (EU) 2026/1563. During their two-month scrutiny period, neither the European Parliament nor the Council had any objection, so the regulation enters into force on 10 November 2026.

According to the view of many companies, “2026 is no longer a reporting year but a planning year.” With the final standards now published, that planning has a more solid shape in terms of text, and it’s not just a draft anymore. This guide sets out what has changed, who reports when, and what companies should be doing before the first reporting year begins.

Why the ESRS were revised

The first set of ESRS, adopted in 2023, contained more than 1,000 datapoints. Companies preparing their first CSRD reports found the volume difficult to manage, and the cost of compliance became a central argument in the EU’s wider push for competitiveness and simplification.

The response came in two parts. The Omnibus I Directive, which entered into force in March 2026, narrowed who must report under the CSRD. The simplified ESRS now changes what those companies must report. Crucially, the principle of double materiality, reporting both a company’s impacts on people and the environment and how sustainability matters affect the company financially, has been kept.

Who must report under the CSRD

Following the Omnibus, the CSRD applies to companies that exceed both €450 million in net turnover and an average of 1,000 employees. Hence, a large majority of companies do not need to report yet, as expected.

The timing depends on where a company started:

• Companies already reporting (“wave 1”) that fall below the new thresholds are out of scope for financial years 2025 and 2026, subject to national transposition.
• Companies newly in scope report on the financial year 2027 for the first time, with reports published in 2028.
• Non-EU groups with significant EU activity follow a separate track. EFRAG is developing dedicated standards for them, with first reports expected in 2029 for financial years starting on or after 1 January 2028.

What does the simplified ESRS change

Far fewer datapoints

According to the European Commission, the simplified ESRS cut mandatory datapoints by more than 60% and total datapoints by more than 70%, with expected reporting cost reductions of more than 30%. All voluntary “may disclose” items have been removed, and mandatory requirements are now set out in the main text rather than scattered across appendices.

The overall architecture stays familiar. There are still two cross-cutting standards (ESRS 1 and ESRS 2), five environmental standards (E1–E5), four social standards (S1–S4) and one governance standard (G1).

A more practical materiality assessment

The double materiality assessment was one of the most demanding parts of first-year CSRD reporting. The simplified ESRS change it in three important ways:

1. A top-down approach is accepted. Companies do not need to assess every individual impact, risk and opportunity. They can reach conclusions at topic level, drawing on their strategy and business model.
2. Non-material information should be left out. The standards now state that companies shall disclose only material information, with narrow exceptions. The aim is a shorter, more focused sustainability statement.
3. Fair presentation applies to the statement as a whole. Judgement is exercised on the report overall, rather than datapoint by datapoint.

Greater flexibility on climate reporting

Under ESRS E1, companies can now choose how they set the boundary for greenhouse gas emissions: financial control, operational control or equity share. This brings the ESRS closer to the GHG Protocol and the ISSB’s IFRS standards, which is relevant for groups reporting in several jurisdictions. Companies with climate transition plans must also be transparent where their targets are incompatible with limiting warming to 1.5°C.

Other targeted adjustments

In finalising the standards, the Commission made several further adjustments to EFRAG’s technical advice. These include a provision allowing companies to omit information whose disclosure would be seriously prejudicial to their commercial position and greater discretion on how far to break down data by geography;

It also treats estimates of anticipated financial effects as updatable, without counting changes as errors.

Additionally, limiting microplastic disclosure to primary microplastics and clarifying that only substantiated human rights incidents need to be reported.

Transitional reliefs that ease the first years

The simplified ESRS includes phase-ins, so companies do not have to report everything from day one:

• Value chain information: for their first three years, all companies may explain their efforts and plans where value chain data is not yet available.
• Comparative figures: comparative information for changed metrics is not required in the first year of applying the revised standards.
• Anticipated financial effects: for wave 1 companies, qualitative disclosures are deferred until 2027 and quantitative disclosures until 2030. The Commission extended this relief by a further year compared with EFRAG’s advice.
• Specific topics: biodiversity (E4), value chain workers (S2), affected communities (S3) and consumers (S4) benefit from phase-ins during the initial reporting years.

The voluntary standard and the value chain cap

Alongside the simplified ESRS, the Commission adopted a Voluntary Standard (VS), published as Delegated Regulation (EU) 2026/1560 and in force since 24 September 2026. It builds on EFRAG’s earlier VSME standard and is designed for companies outside CSRD scope that want to report voluntarily — often because customers, banks or investors are asking for sustainability data.

The Voluntary Standard also sets the limit of what large companies can ask of their smaller suppliers. From financial year 2027, a company in the CSRD scope cannot require sustainability information from smaller companies in its value chain beyond what the Voluntary Standard covers. For SMEs, this is one of the most practical outcomes of the whole simplification process: it gives them a clear, defensible answer to lengthy supplier questionnaires.

FY 2026: three options for companies already reporting

The simplified ESRS applies mandatorily from financial years beginning on or after 1 January 2027. For financial year 2026, companies still in scope can choose between three approaches:

1. continue with the original ESRS;
2. apply the original ESRS together with eight specified reliefs from the revised version; or
3. Adopt the simplified ESRS in full, one year early.

Whichever route a company takes, it must state clearly in its sustainability statement which version of the standards it has applied.

A Europe-wide picture, with national steps still to come

The simplified ESRS are a delegated regulation, which means they apply directly in every Member State without needing national legislation. The Omnibus changes to the CSRD’s scope are different: they are part of a directive, and Member States have until 19 March 2027 to write them into national law.

In practice, this means the content of reporting is now harmonised across Europe, while the precise scope, and details such as national assurance arrangements, will depend on each country’s transposition. Companies should follow the national process in each EU market where they operate, as each Member State updates its CSRD legislation over the coming months.

How to prepare: six steps for 2027

1. Confirm your scope. Check every group entity against the €450 million and 1,000-employee thresholds, and follow national transposition where you operate.
2. Decide your FY 2026 approach. If you are still reporting this year, choose between the original standards, the original standards with reliefs, or early adoption — and document the reasoning.
3. Refresh your double materiality assessment. Use the top-down approach to focus on what is genuinely material, and remove disclosures that no longer need to be made.
4. Map your data to the final datapoint list. Retire data collection that is no longer required, and close gaps in what remains.
5. Review climate reporting choices. Decide which GHG boundary approach fits your group and other reporting obligations, and check how your transition plan targets compare with a 1.5°C pathway.
6. Reset supplier requests. Align value chain questionnaires with the Voluntary Standard before the cap applies in 2027. If you are an SME, consider using the Voluntary Standard to respond to customer and lender requests in a consistent way.

Conclusion

The simplified ESRS ask for less, but they rely more on judgement. A top-down materiality assessment, the requirement to leave out non-material information, and greater flexibility on presentation all place more weight on the people preparing the report. Fewer datapoints do not mean less expertise — they mean expertise applied more selectively.

That is why the year ahead is a good moment to invest in skills as well as systems. Sustainability, finance and reporting teams that understand double materiality, the new reliefs and the Voluntary Standard will be in the strongest position when the first reporting year begins. EcoSkills’ ESG Reporting Readiness for Businesses is a hands-on workshop designed to help cross-functional teams move from “we should report” to “we’re ready to deliver”.