ESRS 2026: What Actually Changed in the Revised Sustainability Reporting Standards?
The European Commission adopted the final delegated act containing the revised European Sustainability Reporting Standards (ESRS 2026) (adopted on 3rd July, published on 21st Sept 2026). This closes out a process that began in February 2025 as part of the Commission's Omnibus simplification package, one of the final steps of the European Commission's February 2025 'Omnibus' package intended to simplify EU sustainability reporting rules.
The headline number
Mandatory datapoints are down by more than 60%, and total datapoints, including the voluntary ones EFRAG had proposed removing entirely, are down by more than 70%. This is widely regarded as the most consequential change to the ESRS since their original adoption in 2023. The Commission expects this to cut reporting costs by more than 30% per company on average, ahead of its own 25% burden-reduction target.
What didn't change?
It's worth stating this early, because simplification narratives can overstate themselves: despite sustained lobbying, including from German corporates and the ISSB itself, to move ESRS toward a single financial-materiality lens, the Commission retained double materiality as the reporting basis. Companies still assess both their impact on people and the environment, and the financial risks and opportunities sustainability issues pose to them.
How the materiality assessment changed?
The mechanics of getting to materiality are where the real simplification sits. The 'minimum disclosure requirements' for policies, actions, targets, and metrics in the original ESRS 2 have been replaced by 'general disclosure requirements' in ESRS 2 (2026), with the overall datapoint count for these elements reduced across ESRS 2 and the topical standards.
Companies now have flexibility to disclose this information either at the level of an individual material impact/risk/opportunity (IRO) or at a higher, grouped level (top-down approach) on the basis of an analysis of its strategy and business model including its sector(s) of operations, its geographies, and the features of its upstream and downstream value chain. This means that companies can now reason from strategy/sector/geography straight to a topic-level materiality conclusion without a granular bottom-up IRO-by-IRO assessment. However, if no policy, action, or target exists for a given material IRO, that absence must still be stated.
What relief was granted?
A few specific reliefs stand out for how targeted they are:
Acquisitions and disposals: If a company acquires a subsidiary mid-year, it can now defer including that subsidiary in its materiality assessment and sustainability statement until the following reporting period. If a subsidiary leaves the group mid-year, the company can adjust its reporting boundary from the start of the current period rather than carrying it through. Either way, it still has to disclose any significant event affecting the subsidiary during the year, so this isn't a silent exclusion, it's a timing relief.
Reliefs for preparing the statement (new ESRS 1, Chapter 7.3): three separate allowances have been provided. A company can (i) exclude activities from a metric's calculation if they aren't a significant driver of what that metric represents, (ii) report a metric on a partial reporting scope where full coverage isn't achievable without undue cost or effort (with a requirement to disclose the gap and describe how coverage will improve over time), and (iii) exclude joint operations if it doesn't operationally control from the E2–E5 environmental metrics. Note this last one specifically doesn't apply to GHG emissions (E1-8), which stay fully in scope regardless of operational control.
Microplastics. The original ESRS asked companies to account for microplastics broadly, which in practice meant grappling with an almost unmeasurable category plastic that has broken down from larger products, tyre wear, or textile shedding, none of which a company can meaningfully quantify at its own site. The revision narrows the mandatory disclosure to primary microplastics: those manufactured at microscopic size and intentionally added to a product, such as microbeads in cosmetics or glitter. Secondary microplastics, the breakdown products, are excluded from the metric entirely, on the reasoning that reliable measurement isn't feasible and the reporting burden wasn't proportionate to the decision-usefulness of the data.
Human rights: only "substantiated" instances are reportable, and only "ongoing" proceedings are covered.
Pollutant emissions - management judgement. Rather than requiring companies to work through an exhaustive list of regulated pollutants, the revised ESRS E2 lets companies determine which pollutants are material through a managerial assessment that reflects their actual activities and sector using thresholds from the European Pollutant Release and Transfer Register and the Industrial Emissions Portal as reference points rather than a mandatory checklist.
Substances of very high concern (SVHC) - new phase-in. Companies that are users of articles containing SVHCs (as opposed to manufacturers) get a one-year phase-in before this disclosure becomes mandatory, giving downstream companies time to gather data from suppliers on substances embedded in purchased articles rather than being caught immediately at first application.
Asset management exclusion. A narrower, more mechanical fix: asset managers running investments under a fiduciary mandate without retaining the risks or rewards of ownership aren't required to assess or report on the impacts, risks, and opportunities of the underlying investments themselves. This addressed a real mismatch in the original standard, which didn't clearly distinguish an asset manager's own operational footprint from the sustainability profile of the assets it manages on clients' behalf.
New flexibility mechanisms
The revised standards introduce additional flexibility through new reliefs and phase-ins, alongside efforts to enhance interoperability with global sustainability reporting standards such as the ISSB's. Phase-in reliefs are calibrated by company size, giving smaller in-scope reporters more runway than larger ones.
The value chain cap and the new voluntary standard
Alongside the mandatory ESRS revision, the Commission finalised a separate, standalone voluntary reporting standard for smaller companies which, for the first time, sets a hard "value chain cap" on what larger companies can demand from smaller suppliers and counterparties down the chain. This is particularly relevant for companies with up to 1,000 employees that may otherwise face sustainability data requests from larger CSRD-reporting companies.
Timeline
The standards enter force on 10 November 2026, following scrutiny by the European Parliament and Council, and become mandatory for reporting periods starting in 2027.
Companies already applying the original ESRS may adopt the revised standards in full for 2026, or apply select reliefs early including the top-down DMA approach, relief for undue cost and effort, treatment of acquisitions and disposals, and a partial reporting boundary for metrics.
As a delegated act, the standards apply directly across the EU without needing transposition into national law.
The bottom line for reporting teams
The shift is real, but it's a redesign, not a retreat. Double materiality survives intact; what's gone is much of the granular, box-ticking datapoint burden that made the original ESRS notoriously heavy to operationalise. For teams that built out data collection against the 2023 standard, the near-term task is a gap analysis against the ~320-datapoint 2026 framework: identifying what can be retired, what the new top-down DMA changes about the assessment process itself, and which 2026 transitional reliefs (if any) are worth adopting early.
For further assistance, feel free to reach out to us at info@esgityadvisors.com.
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