The European Commission has recently adopted the revised European Sustainability Reporting Standards (ESRS) and a voluntary reporting standard for smaller companies.
The ESRS govern the disclosure of environmental, social, and governance matters, including climate change, biodiversity, and human rights. They provide investors and other stakeholders with information to understand the sustainability-related risks to which companies are exposed, as well as their impact on people and the environment.
The adopted revised standards are designed to reduce administrative burdens on European companies while ensuring high-quality reporting. They are part of the "Omnibus I" package, which streamlines sustainability reporting in the EU and reduces the number of companies subject to the Corporate Sustainability Reporting Directive (CSRD).
Key points of the new ESRS
The new ESRS are shorter and clearer; they introduce greater flexibility and streamline reporting processes—specifically:
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they reduce the number of mandatory data points to be reported by over 60% and the total number of required data points by over 70%
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these changes are expected to reduce reporting costs by more than 30% for each company, in line with the Commission's objective of reducing the burdens associated with reporting obligations by 25%.
The revision of the standards takes into account the technical advice from EFRAG (European Financial Reporting Advisory Group), prepared based on stakeholder input gathered in the spring of 2025 and the public consultation held in the summer of that same year on the drafts prepared by EFRAG.
What changes for businesses
The voluntary reporting standard (VSME) provides a single, proportionate framework for sustainability reporting by small and medium-sized enterprises (SMEs) that fall outside the scope of the CSRD
It will enable companies not subject to the CSRD to more easily respond to specific requests for sustainability information from large financial institutions and corporations. It also sets a limit regarding the value chain, meaning that companies subject to the CSRD cannot require companies within their value chains to provide information beyond what is stipulated in the voluntary standard.
As for the next steps, the delegated act amending the ESRS and the delegated act establishing the voluntary reporting standard will now be submitted to the European Parliament and the Council of the EU for scrutiny. The measures will apply once the two-month scrutiny period—which may be extended by a further two months—has concluded.