The revised ESRS has entered into force.

On 3 July 2026, the European Commission formally adopted the revised ESRS as part of the Omnibus I legislative package.

The key simplifications were already included in the May draft: over 60% fewer mandatory datapoints, more than 70% fewer datapoints overall, and approximately 30% lower costs per company.

The July step was largely a formal fine-tuning—featuring a few substantive clarifications regarding human rights and data-request limits across the value chain.

Timeline of Entry into Force and Practical Application

• Publication: The regulation was published in the Official Journal of the European Union on 21 September 2026.

• Revised mandatory ESRS standards (Delegated Regulation (EU) 2026/1563): Entered into force on 10 November 2026.

• Start of mandatory application: The revised ESRS standards must be applied for financial years beginning on or after 1 January 2027.

• Transitional rule for the 2026 financial year: For the 2026 financial year, companies may choose whether to apply the original ESRS, its simplified version, or the new, revised ESRS in its entirety.

The regulation is available here.

What was decided on 3 July 2026? The Commission adopted the revised ESRS for companies subject to the CSRD, along with the voluntary VS Standard for entities reporting on a voluntary basis. Both form part of the first Omnibus package, through which the EU intends to substantially streamline sustainability reporting.

• More than 60% fewer mandatory datapoints compared to the previous ESRS package

• Over 70% fewer datapoints in total (combining mandatory and voluntary)

• Around 30% lower costs per reporting company

• A significantly leaner structure, fewer overlaps, and greater flexibility

Under the S1–S4 social standards, human rights incidents must now be substantiated and confirmed to trigger reporting obligations. “Confirmed” status requires an official determination—such as by a court, an OECD National Contact Point grievance mechanism, or a public authority.

For in-scope companies, the revised ESRS brings tangible relief: fewer mandatory datapoints, an extended phase-in period for E1-11, and greater freedom in structuring the report. Furthermore, the stricter threshold for human rights incidents reduces research and data collection burdens across social standards.

However, the double materiality assessment remains the cornerstone of reporting. It determines which of the reduced datapoints are genuinely material to the company.

Following publication in the Official Journal, the text is finalized—processes can now be tailored directly to the revised ESRS. Companies are advised to decide early which version to apply for the 2026 financial year, prioritizing materiality, databases, and reporting workflows.

The recommended next step: With legal clarity now established, align materiality assessments and databases with the final text—and determine which ESRS version will be applied for the 2026 financial year.

• Shortening and clarifying the text of the standards
• Introducing new, additional flexibility mechanisms
• Reducing the number of mandatory datapoints in the standards by 61%
• Improving the interoperability of the revised ESRS with international standards and other EU legislation
• Simplifying the materiality assessment

• The final delegated regulation
• Annex I to the delegated regulation, containing the ESRS standards themselves
• Annex II to the delegated regulation, containing the list of acronyms and the glossary of terms
• The Commission Staff Working Document accompanying the delegated regulation

What Are the Significant Changes?

Fair Presentation

Practical Considerations

• Stating that an undertaking is not required to assess every conceivable IRO across its entire operations and upstream/downstream value chain to identify material topics.
• Allowing the undertaking to use reasonable and supportable information available without undue cost or effort.
• Enabling the undertaking to draw conclusions regarding whether an IRO is material based on its strategy, business model, operating sectors, geographic location, and specific characteristics of its value chain—establishing the option to conduct the assessment using either a top-down or a bottom-up approach.
• Allowing the undertaking not to evaluate every time horizon or individual severity criterion for every IRO if it determines that no further assessment is needed to reach a materiality conclusion.

Materiality of Information

• Primary users of general-purpose financial reports: current and potential investors, lenders, and other creditors, including asset managers, credit institutions, and insurance undertakings.
• Other users of general-purpose sustainability statements: business partners, trade unions, social partners, civil society, and non-governmental organizations (NGOs).

Disaggregation

Reporting Reliefs and Exemptions

Acquisitions and Disposals

• An undertaking may elect to defer including a newly acquired subsidiary in its sustainability statement until the following reporting period.
• An undertaking that disposes of a subsidiary during the reporting period may choose to “adjust the scope of the materiality assessment and reporting boundaries” from the beginning of the current reporting period.
• Where an undertaking relies on this relief, it must disclose, using available information, any significant events affecting the subsidiary during the reporting period that impacted the group’s IROs.

Value Chain Information

Undue Cost or Effort

• Identify material IROs
• Determine the scope of the value chain
• Determine what value chain information should be included in the sustainability statement
• Prepare metric-related disclosures
• Report current and anticipated financial effects

Calculation of Metrics

Investment Management Entities

Reporting Boundary

• Immaterial subsidiaries: An undertaking may exclude an immaterial subsidiary from its sustainability statement, unless that subsidiary exposes the group to material impacts.
• Leased assets: Lessees present impacts related to the use of leased assets as part of their own operations, while lessors report impacts related to the use of leased assets within their downstream value chain. Risks and opportunities associated with leased assets, as well as impacts related to asset ownership, may be shared between lessor and lessee.
• Long-term employee benefit funds: IROs arising from assets held in an undertaking’s long-term employee benefit plans must be reported as part of the upstream value chain.
• Joint operations: Undertakings may exclude information from joint operations over which they do not exercise operational control from the scope of environmental metrics under ESRS E2, ESRS E3, ESRS E4, and ESRS E5.

Structure of the Sustainability Statement

• An executive summary containing key messages regarding the undertaking’s material impacts, risks, or opportunities;
• A separate annex dedicated to EU Taxonomy disclosures;
• Annexes for more detailed information, tables of contents, supplementary data, and mapping/cross-reference tables.

Anticipated Financial Effects

• The undertaking is not required to disclose quantitative information on anticipated financial effects if those effects are not separately identifiable, or if “the measurement uncertainty associated with estimating the effects is so high that the resulting quantitative information would not be useful.”
• The undertaking is not required to provide quantitative information if it lacks the “skills, capabilities, or resources” necessary to do so.
• Undertakings are permitted to present quantitative information either as single amounts or as ranges.

Omission of Information

• In exceptional cases, if disclosure “would be seriously prejudicial to the commercial position of the undertaking”;
• If it relates to “intellectual capital, intellectual property, know-how, technological information, or results of innovation,” provided it constitutes a trade secret;
• If classified (state secret / protected) information is involved;
• If disclosure is otherwise restricted “under other EU legislation or national law to protect against unauthorized access or disclosure, or to safeguard the privacy or security of natural persons or the security of legal entities.”

General Disclosure Requirements (GDRs)

Transitional Provisions

• “Wave one” entities: Undertakings required under the CSRD to report on sustainability matters for financial years beginning between 1 January 2024 and 31 January 2026;
• “Other” entities: Undertakings required under the CSRD to report on sustainability matters for financial years beginning on or after 1 January 2027.

Updates to Topical Standards

Structural Changes to the Standards

• Mandatory requirements have been moved into the main body of each standard. Voluntary disclosures have been deleted or rephrased as Application Requirements (AR). “May”-type disclosures retained in the standards or ARs offer presentation options or flexibility, but do not constitute standalone datapoints.
• Application Requirements have been condensed and positioned directly in the main body alongside their respective disclosure requirements, including specific paragraph cross-references.
• Topical standards in ESRS (2023) contained supplementary disclosure and application requirements tied to ESRS 2 GOV-1, GOV-3, IRO-1, SBM-2, and SBM-3, which complicated application. These were either consolidated into ESRS 2 (2026) or deleted.

When Can Undertakings Apply ESRS (2026)?

1. Apply ESRS (2023), as amended by the “Quick Fix” delegated act extending certain transitional provisions;
2. Apply ESRS (2026) in its entirety;
3. Apply ESRS (2023) as amended by the “Quick Fix” delegated act, combined with selected reliefs and options adopted from ESRS (2026).

What Comes Next?

Transitional Provisions in ESRS (2026)

ESMA Publication