EU Moves to Streamline Sustainability Reporting: Commission Launches Consultation on Revised ESRS

The European Commission has launched a public consultation on revised European Sustainability Reporting Standards (ESRS), alongside a new voluntary reporting standard for smaller companies, marking a significant step in simplifying sustainability reporting across the EU.

The consultation, open until June 3, 2026, invites stakeholder feedback on draft standards designed to reduce administrative burden while maintaining the quality, comparability, and decision-usefulness of sustainability disclosures under the Corporate Sustainability Reporting Directive (CSRD).

Simplification without dilution 
The revised ESRS are part of the EU’s broader Omnibus I simplification package, which aims to streamline sustainability reporting requirements while preserving core policy objectives.
The proposed changes are substantial:

  • More than 60% reduction in mandatory datapoints
  • Over 70% reduction in total datapoints
  • Estimated 30% reduction in reporting costs per company

In addition, the revised standards are shorter, clearer, and more flexible, with a simplified approach to materiality designed to help companies focus on relevant, decision-useful information.
At the same time, the Commission has emphasized that these adjustments are targeted refinements, intended to reduce complexity without weakening the CSRD’s objectives of enhancing transparency on companies’ environmental, social, and governance impacts.

Introducing a voluntary standard for smaller companies
In parallel, the Commission has proposed a voluntary sustainability reporting standard for companies not subject to mandatory CSRD requirements, particularly smaller firms. A central feature of this framework is the introduction of a “value chain cap”, which limits the extent to which large companies can request sustainability data from smaller partners in their supply chains.

This measure aims to reduce reporting pressure on SMEs, while still enabling larger organizations and investors to access essential sustainability information.

Building on EFRAG’s technical work
The draft standards largely build on the technical advice provided by EFRAG, following extensive stakeholder consultations throughout 2025. The Commission has introduced targeted adjustments to further ease the reporting burden and improve usability, reflecting practical experience from early ESRS implementation and feedback from market participants.

What happens next Following the consultation period, the Commission plans to adopt the revised ESRS and the voluntary standard through delegated acts, which will then be submitted to the European Parliament and Council for scrutiny. The revised standards are expected to apply from financial year 2027, with the possibility of earlier voluntary application. Implications for global companies The consultation marks another important step in shaping the future of EU sustainability reporting, with direct implications for both European and international companies.

For organizations operating across jurisdictions, the revised ESRS highlight the need to:

  • Adapt to streamlined but still robust disclosure requirements
  • Strengthen materiality assessments and data governance frameworks
  • Navigate evolving expectations around value chain reporting and SME engagement

Relevance for Beyond the Balance Sheet
The EU’s move to simplify and refine sustainability reporting standards reflects a broader global trend: shifting from complex rule-setting toward practical, scalable implementation.
For IFC’s Beyond the Balance Sheet (BBS) program, this evolution is particularly relevant. BBS supports the adoption and operationalization of sustainability reporting frameworks—especially those aligned with ISSB standards—across emerging markets.
EFRAG’s and the Commission’s focus on interoperability, proportionality, and usability reinforces the importance of building coherent reporting ecosystems that work across different regulatory environments and levels of market maturity.

Looking ahead
As stakeholder feedback is gathered and the final standards take shape, the revised ESRS are expected to strike a more practical balance between regulatory ambition and operational feasibility. By reducing complexity while preserving rigor, the EU is positioning sustainability reporting to deliver more focused, decision-useful disclosures, supporting investors, policymakers, and companies navigating the transition to a more sustainable economy.

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