The Simplified European Sustainability Reporting Standard (ESRS): What's Changed and What It Means for Businesses

The European Sustainability Reporting Standards, usually shortened to the ESRS, are the rulebook that sits underneath the EU's Corporate Sustainability Reporting Directive (CSRD), the law requiring companies to disclose their climate and wider sustainability performance.They set out exactly what a company has to report about its climate and wider sustainability performance, and in what format. 

Since they were first adopted in 2023, one criticism has come up again and again: there are simply too many datapoints, and the burden falls hardest on the companies least equipped to carry it.

In 2025 and 2026 the EU acted on that feedback. The standards have been through a full overhaul aimed at making them shorter, clearer and more proportionate, while keeping the core intact. For any business that reports under EU rules, supplies a company that does, or is weighing up whether the rules will reach it, the revised ESRS are worth understanding. This article explains what the ESRS are, how the original version has changed, how the standards relate to the CSRD, the EU Omnibus package and the European Green Deal, which businesses are in scope, and why emissions data sits at the heart of the ESRS climate standard. 

What are the European Sustainability Reporting Standards (ESRS)?

The ESRS are the set of standards companies use to report under the EU's Corporate Sustainability Reporting Directive (CSRD). The CSRD is the law that says certain companies must disclose sustainability information. The ESRS are the detailed instructions for how to do it, in much the same way that accounting standards govern how financial statements are prepared.

The original standards were adopted by the European Commission in July 2023 as Delegated Regulation (EU) 2023/2772. This first set is made up of 12 standards:

• Two cross-cutting standards: ESRS 1 (general requirements) and ESRS 2 (general disclosures), which apply to every reporter.
• Ten topical standards covering the environment (E1 to E5), society (S1 to S4) and governance (G1). ESRS E1 is the climate change standard, and it is where greenhouse gas emissions are reported.

A defining feature of the ESRS is double materiality. Companies have to look at sustainability from two directions: how their activities affect people and the environment (impact materiality), and how sustainability issues affect the business financially (financial materiality). A topic only has to be reported if it is material under one or both of those lenses.

What does reporting under the ESRS involve in practice?

Knowing the structure is one thing. In practice, reporting under the ESRS follows a few clear steps, and the simplification changes how much you report rather than how the process works.

It starts with the materiality assessment. The double materiality test described above decides which topics, and therefore which datapoints, actually apply. Every company applies the two cross-cutting standards, then only the topical disclosures that are material to it.

The result is not a separate document filed with Brussels. It is a sustainability statement published inside the company's annual report, alongside the financial statements, and digitally tagged so it can be read and compared electronically. That statement is then independently checked. Companies in scope must obtain limited assurance from an external auditor or assurance provider, a lighter check than a full financial audit, where the auditor confirms that nothing has come to their attention to suggest the information is materially misstated. It is not reviewed by the EU itself, and following the Omnibus, the requirement stays at limited assurance rather than moving to the stricter reasonable assurance.

Within the statement, the information is made up of datapoints: the individual items a company reports, some quantitative and some narrative. A few examples give the flavour:

Crucially, the ESRS ask for more than numbers. For each material topic, a company sets out its policies, actions and targets. On climate, that means disclosing emission reduction targets and a transition plan, and if a company does not have them, it has to say so and, for the transition plan, when it intends to adopt one. The standards stop short of forcing every company to set a target on day one, but they make the presence, or absence, of a credible plan plain to see.

Why are the ESRS being simplified?

The first set of standards was thorough. In total it ran to more than a thousand individual datapoints, though no single company reports all of them, since most apply only where a topic is material. Even so, companies preparing their first reports, particularly smaller and first-time reporters, raised consistent concerns about cost and feasibility. 

The wider political backdrop matters too. Following reports by Enrico Letta and Mario Draghi on European competitiveness, and the Budapest declaration of November 2024 calling for a simplification of EU rules, the European Commission launched its Omnibus I package in February 2025. One part of that package was a formal request to EFRAG, the EU's technical adviser on sustainability reporting, to revise and simplify the ESRS.

EFRAG approached the task using six simplification levers: clarifying the content and structure, confirming the materiality rules, recalibrating the volume of required data, reducing unnecessary granularity, expanding phase-ins and reliefs, and improving alignment with global standards. The aim was to lower the burden without losing the comparability and rigour the standards were built for.

What has changed in the revised ESRS?

The revisions touch all 12 standards. The headline is a substantial reduction in how much companies have to report. According to the European Commission, the draft revised standards reduce mandatory datapoints by over 60% and total datapoints by over 70%, and are expected to lower reporting costs per company by more than 30%.

The main changes include:

• Far fewer datapoints. Mandatory datapoints are cut by over 60%, and every voluntary "may disclose" datapoint has been removed.
• A simpler materiality assessment. Companies can take a top-down approach, concluding that a topic is not material from an analysis of their strategy and business model, without scoring every individual item in detail.
• Less reporting of non-material information. The draft is explicit that companies should not report information they have judged to be non-material, which is intended to reduce over-reporting.
• More principles-based narrative. Disclosures on policies, actions and targets are now described in a more flexible, narrative way, rather than against a long checklist.
• Fair presentation over box-ticking. The emphasis shifts to presenting a fair overall picture, applying judgement about what matters and why.
• Better global alignment. Interoperability with the ISSB standards (IFRS S1 and S2) has been strengthened, including on the greenhouse gas boundary and anticipated financial effects, which helps companies reporting under more than one framework.
• More phase-ins and reliefs. Transitional reliefs and "undue cost or effort" exemptions have been widened for disclosures that proved hardest to produce.

For climate specifically, ESRS E1 keeps its central requirements. Companies in scope still report Scope 1, 2 and 3 greenhouse gas emissions, describe their transition plan, and set out targets, with the standard aligned to a 1.5 degree pathway. E1 is also the one environmental standard that retains the requirement to disclose anticipated financial effects. The details of the climate standard can be seen in the July 2025 ESRS E1 exposure draft.

A short comparison of the two versions:

It is worth being clear on status. At the time of writing, the revised standards are still a draft. They were issued by the Commission for a four-week feedback period that closed on 3 June 2026, and the Commission is expected to formally adopt the delegated act soon after. That's not the end of the process, though. The European Parliament and Council then get up to four months to scrutinise the act, and could still reject it, before it enters into force. Until that act takes effect, companies already reporting continue to use the 2023 ESRS, along with the transitional reliefs granted in 2025.

How do the ESRS fit with the CSRD, EU Omnibus and EU Green Deal?

These terms are often used interchangeably, but they sit at different levels. Seeing how they connect makes the whole picture easier to follow.

• The European Green Deal is the EU's overarching strategy to become climate neutral by 2050, with a binding interim target of at least a 55% cut in emissions by 2030. It is a framework covering energy, industry, transport, buildings, food and nature, and corporate reporting is one of its transparency mechanisms.
• The CSRD is the directive within that framework that requires companies to disclose sustainability information. It introduced double materiality and brought far more companies into mandatory reporting than the law it replaced.
• The ESRS are the standards that make the CSRD operational. The CSRD says you must report; the ESRS say what and how.
• The EU Omnibus (Omnibus I) is the 2025 to 2026 simplification package that amended the CSRD, and the related due diligence directive (the CSDDD), narrowed who has to report, and triggered the ESRS revision above. The Council of the EU gave it final sign-off on 24 February 2026.

In table form:

The short version: the Green Deal sets the ambition, the CSRD creates the legal duty, the ESRS define the detail, and Omnibus I has recently made both the duty and the detail lighter.

Who do the revised ESRS apply to?

The Omnibus changes significantly reduced how many companies fall under the CSRD, and therefore how many have to apply the ESRS. Under the rules signed off by the Council in February 2026, the CSRD now applies to:

• EU companies with more than 1,000 employees and net annual turnover above €450 million.
• Non-EU companies with net turnover above €450 million generated in the EU, where they also have a qualifying EU subsidiary or branch generating more than €200 million.

Companies below these thresholds are not required to report. The package also gives relief to some "wave one" companies that had started reporting but now fall out of scope.

There is an important second layer, though, and it is the one that matters most for mid-market businesses across the UK, US, Canada and beyond. Large companies in scope still have to account for their value chain, including the emissions of their suppliers. That means a smaller business that never reports under the CSRD itself can still be asked for emissions data by a larger customer that does.

The Omnibus did add a safeguard, often called the value chain cap. A CSRD reporter cannot ask a value chain partner with 1,000 or fewer employees for information beyond what is set out in the EU's voluntary standard for smaller companies. This limits how much can be pushed down the chain, but it does not remove the request altogether. For a supplier that does fall into this position, being able to hand over clean emissions data is becoming part of being a straightforward company to work with.

When do the changes take effect? Key ESRS timelines

• July 2023: The original ESRS adopted as Delegated Regulation (EU) 2023/2772.
• February 2025: The European Commission proposes the Omnibus I simplification package.
• 31 July 2025: EFRAG issues exposure drafts revising all 12 standards, with public consultation running to 29 September 2025.
• 3 December 2025: EFRAG submits its final technical advice on the simplified ESRS to the Commission.
• 18 March 2026: The Omnibus I directive enters into force, narrowing CSRD scope.
• 6 May 2026: The Commission publishes its draft delegated act with the revised ESRS and opens a four-week feedback period.
• 3 June 2026: The feedback period closes. The Commission is expected to adopt the final delegated act shortly afterwards.
• Financial years from 1 January 2027: The revised standards are set to apply, with companies already reporting able to apply them early for financial year 2026 once the act is published.

Two points are worth holding onto. First, the standards are not yet final law, so the details could still shift slightly before adoption. Second, EU member states have until 19 March 2027 to write the updated CSRD rules into national law, so exact timing can vary by country.

Why emissions data sits at the heart of ESRS reporting

Whatever happens to the finer detail, one thing does not change: the climate standard, ESRS E1, is built on a full greenhouse gas footprint. A company cannot report its emissions, describe a transition plan or set a credible target without first measuring Scope 1, 2 and 3. Emissions data is the foundation the whole climate disclosure rests on, and it is also the data large customers most often ask their suppliers for.

This is the point where carbon accounting becomes practical rather than abstract, and where Seedling fits in.

How Seedling can help

Seedling combines carbon accounting software with one-to-one support from a dedicated expert, so you can build the emissions data ESRS E1 is based on without needing a carbon specialist in-house. Here is how that maps to what the climate standard asks for:

• A full-scope, GHG Protocol-aligned footprint. We measure Scopes 1, 2 and 3, assured by our team, in the format recognised reporting frameworks expect. That is the emissions backbone of any ESRS E1 disclosure.
• Accurate data that reflects real change. We do not rely on spend-based estimates alone. Spend data is a reasonable starting point, but it tracks what you pay rather than what you emit, so it struggles to show genuine reductions over time. We help you collect activity data that reflects actual progress.
• Supplier data, collected for you. If you need Scope 3 figures from your own suppliers, our supplier engagement tool sends a simple data request and pulls the responses straight into your footprint.
• Science-based targets and a transition plan. Our target-setting tool helps you set an SBTi-aligned Net Zero target and build the reduction plan that sits behind it.
• One footprint, many frameworks. A single, well-built footprint can support an ESRS E1 disclosure, an SBTi target, a SECR submission, a B Corp Climate Transition Plan or a customer's data request, without starting again each time.

More than 500 businesses already trust Seedling to measure and reduce their emissions, with over 500,000 tonnes of CO2e measured on the platform. If the CSRD, the ESRS, or a customer asking for your emissions data has put carbon reporting on your agenda, we can help you get it right.

FAQs

What are the ESRS?

The European Sustainability Reporting Standards are the standards companies use to report under the EU's Corporate Sustainability Reporting Directive (CSRD). They set out what sustainability information must be disclosed and in what format. The first set was adopted in 2023, and a simplified version is being finalised in 2026.

What is the difference between the CSRD and the ESRS?

The CSRD is the law that requires certain companies to report on sustainability. The ESRS are the detailed standards that say what and how to report. The CSRD creates the obligation; the ESRS make it operational.

Have the ESRS been scrapped or weakened?

No. They have been simplified, not removed. The revised standards cut mandatory datapoints by over 60% and remove voluntary ones, but double materiality and the core climate, social and governance disclosures remain. The emphasis has shifted from volume to judgement.

Do the ESRS apply to companies outside the EU?

Directly, only if a non-EU company meets the CSRD thresholds through significant EU turnover and a qualifying EU subsidiary or branch. Indirectly, a business anywhere can be asked for emissions data by a larger customer that reports under the CSRD, since that customer's value chain includes its suppliers.

When will the simplified ESRS take effect?

The revised standards are set to apply for financial years beginning on or after 1 January 2027, with optional early application for financial year 2026 once the delegated act is published. As of mid-2026 the act is in its final stages but not yet formally adopted, and even once the Commission adopts it, a Parliament and Council scrutiny period of up to four months must pass before it becomes legally final. 

Do the revised ESRS still require Scope 3 emissions?

Yes. ESRS E1, the climate standard, still requires Scope 1, 2 and 3 greenhouse gas emissions where climate is material, alongside a transition plan and targets.

Where can I read the official ESRS documents?

The draft simplified standards and supporting materials are on EFRAG's draft simplified ESRS page. The Commission's announcement of the draft delegated act and the original Delegated Regulation (EU) 2023/2772 (via EUR-Lex) are the other primary sources.

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