EC adopts delegated acts on revised ESRSs and on voluntary standard for sustainability reporting
EC adopts delegated acts on revised ESRSs and on voluntary standard for sustainability reporting
As part of its ‘Omnibus I’ package of changes to reduce sustainability and due diligence reporting requirements in the EU, the European Commission (EC) requested the European Financial Reporting Advisory Group (EFRAG) to provide its technical advice on the simplification of the European Sustainability Reporting Standards (ESRS). This technical advice was delivered by EFRAG to the EC in December 2025.
On 6 May 2026, following additional consultations and the completion of its review of EFRAG’s technical advice, the EC issued a draft delegated act proposing amendments to the ESRS and opened a public consultation on those amendments to the ESRS and, in addition, a draft delegated act on a sustainability reporting standard for voluntary use (VS) for smaller companies. The comment period on the draft delegated act ended on 3 June 2026.
On 3 July 2026, the EC finalised the delegated act that sets out the revised ESRSs.
Amendments to EFRAG's technical advice on the revised ESRS
Key revisions to EFRAG’s technical advice proposed modifications relate to the following issues:
Sustainability reporting standard for voluntary use (VS)
Alongside the revised ESRS, the EC has adopted a VS aimed at companies that are not subject to mandatory CSRD requirements. The VS builds on EFRAG’s Voluntary Sustainability Reporting Standard for SMEs (VSME), which the EC endorsed through a recommendation in the year 2025 and is intended for undertakings with up to 1,000 employees. This standard is intended to support consistent and proportionate sustainability reporting by smaller companies.
EFRAG followed an extensive due process to ensure market acceptance, including a four-month public consultation field testing. Stakeholder feedback resulted in significant simplifications, including:
Consistent with the Omnibus I mandate, the VS retains the VSME’s overall architecture, disclosure logic and two-module structure (Basic Module and Comprehensive Module).
The VS introduces no new modules or datapoints, with amendments limited to those necessary to:
Additional protections are provided for the smallest undertakings:
Next steps
The EC has submitted the delegated act revising the ESRSs, together with the delegated act introducing the voluntary sustainability reporting standard, to the European Parliament and the Council of the EU for scrutiny. Both institutions have an initial two-month review period, which may be extended by a further two months if required. If neither institution rejects, the delegated act will enter into force at the end of the scrutiny period.
The delegated act, and the ESRSs contained in its annex will apply to financial years beginning on or after 1 January 2027, with early adoption permitted for periods beginning on or after 1 January 2026 once the delegated act becomes effective. Alternatively, entities that continue to apply the existing version of Delegated Regulation (EU) 2023/2772 during 2026 may still benefit from certain reliefs introduced by the amending delegated act.
The VS will apply to financial years starting on or after 1 January 2027.
Following entry into force, the legislation will be applicable and binding across all EU Member States.
For further information, please refer to the press release from the EC.
For the revised European sustainability reporting standards, sustainability reporting standard for voluntary use and related delegated regulation, please refer to the link.
On 6 May 2026, following additional consultations and the completion of its review of EFRAG’s technical advice, the EC issued a draft delegated act proposing amendments to the ESRS and opened a public consultation on those amendments to the ESRS and, in addition, a draft delegated act on a sustainability reporting standard for voluntary use (VS) for smaller companies. The comment period on the draft delegated act ended on 3 June 2026.
On 3 July 2026, the EC finalised the delegated act that sets out the revised ESRSs.
Amendments to EFRAG's technical advice on the revised ESRS
Key revisions to EFRAG’s technical advice proposed modifications relate to the following issues:
- Materiality and materiality assessment
- Clarifies that undertakings are not expected to meet the specific information needs of each individual user.
- Emphasises that the objective of the standards is to ensure decision‑useful information for users.
- Specifies that undertakings ‘shall not’ report information that is not material, except in clearly defined circumstances (as opposed to not being required to report information that is not material).
- Reinforces that a ‘top‑down’ approach to the materiality assessment can avoid unnecessary work, including assessing each individual impact, risk or opportunity.
- Fair presentation
- Clarifies that fair presentation applies to the overall sustainability statement, not to each individual datapoint.
- States more clearly that applying ESRS results in fair presentation.
- Notes that changes to materiality and the materiality assessment also support the application of the fair presentation principle.
- Level of aggregation and disaggregation
- Provides greater discretion regarding whether specific geographical contexts need to be considered in the materiality assessment.
- Clarifies that the level of disaggregation used for the materiality assessment does not determine the level at which information must be reported.
- Omission of information
- Incorporates new provisions from the Omnibus I Directive allowing the omission of certain information in specific circumstances.
- This includes situations where disclosure would be seriously prejudicial to the undertaking’s commercial position.
- Anticipated financial effects
- Clarifies that reporting anticipated financial effects is likely to involve estimates.
- Allows estimates to be updated as new information becomes available without constituting a reporting error.
- Confirms that omission provisions, including for commercially sensitive information, also apply to anticipated financial effects.
- The phasing-in period for both qualitative and quantitative information has been extended by one additional year.
- Greenhouse gas emissions
- Aligns more closely with global sustainability reporting standards by giving undertakings flexibility to use either the financial control or operational control approach when defining the reporting boundary. However, this alignment needs to be applied in the context of the requirements in ESRS 1 which may restrict the extent of flexibility.
- Climate transition plans
- Requires undertakings with transition plans and targets not compatible with the 1.5°C target to be transparent about this fact.
- Microplastics
- Limits disclosure requirements to primary microplastics.
- Does not require reporting metrics on secondary microplastics for reasons of feasibility and proportionality.
- Emission of pollutants
- Specifies that decisions on which pollutants are material should result from a managerial assessment.
- The assessment should consider the undertaking’s activities and sector of operation.
- Substances of very high concern
- Introduces a one‑year phase‑in period for undertakings that are users of articles containing substances of very high concern.
- Coherence with the Corporate Sustainability Due Diligence Directive (CSDDD)
- Introduces technical modifications regarding due diligence to ensure better alignment with the CSDDD.
- Human rights incidents and discrimination
- Clarifies that only ‘substantiated verified’ incidents must be reported.
- Recognises that not all reported instances are necessarily substantiated.
- Removes the reference to ‘initiated’ for the judicial and non- judicial proceedings.
- Asset management activities
- Financial institutions managing investments on behalf of clients may be permitted to exclude those investments from their sustainability statement. The aim is to avoid duplicate disclosures and reduce reporting burden where sustainability requirements are already addressed under existing EU sustainable finance regulations.
Sustainability reporting standard for voluntary use (VS)
Alongside the revised ESRS, the EC has adopted a VS aimed at companies that are not subject to mandatory CSRD requirements. The VS builds on EFRAG’s Voluntary Sustainability Reporting Standard for SMEs (VSME), which the EC endorsed through a recommendation in the year 2025 and is intended for undertakings with up to 1,000 employees. This standard is intended to support consistent and proportionate sustainability reporting by smaller companies.
EFRAG followed an extensive due process to ensure market acceptance, including a four-month public consultation field testing. Stakeholder feedback resulted in significant simplifications, including:
- Removal of a proposed narrative reporting module.
- Replacement of the materiality assessment requirement with a simpler applicability principle.
- Integration of targeted information requests from financial institutions into the existing structure rather than creating additional modules.
Consistent with the Omnibus I mandate, the VS retains the VSME’s overall architecture, disclosure logic and two-module structure (Basic Module and Comprehensive Module).
The VS introduces no new modules or datapoints, with amendments limited to those necessary to:
- Align the standard with the revised ESRS.
- Improve clarity, structure and presentation.
Additional protections are provided for the smallest undertakings:
- Certain disclosures are voluntary for companies with 10 employees or fewer.
- These companies are subject to a lower value-chain cap, reducing the risk of disproportionate reporting requests and ‘trickle-down’ reporting burdens.
Next steps
The EC has submitted the delegated act revising the ESRSs, together with the delegated act introducing the voluntary sustainability reporting standard, to the European Parliament and the Council of the EU for scrutiny. Both institutions have an initial two-month review period, which may be extended by a further two months if required. If neither institution rejects, the delegated act will enter into force at the end of the scrutiny period.
The delegated act, and the ESRSs contained in its annex will apply to financial years beginning on or after 1 January 2027, with early adoption permitted for periods beginning on or after 1 January 2026 once the delegated act becomes effective. Alternatively, entities that continue to apply the existing version of Delegated Regulation (EU) 2023/2772 during 2026 may still benefit from certain reliefs introduced by the amending delegated act.
The VS will apply to financial years starting on or after 1 January 2027.
Following entry into force, the legislation will be applicable and binding across all EU Member States.
For further information, please refer to the press release from the EC.
For the revised European sustainability reporting standards, sustainability reporting standard for voluntary use and related delegated regulation, please refer to the link.