Revised ESRS: fewer datapoints, sharper decisions

The European Commission has substantially simplified the European Sustainability Reporting Standards. For reporting teams, the result should be a more focused sustainability statement - but getting there will still require sound judgement, reliable data and a well-managed reporting process.

In July 2026, the European Commission adopted a revised set of European Sustainability Reporting Standards (ESRS). The update is one of the most significant outcomes of the EU's Omnibus simplification agenda and is intended to make sustainability reporting more proportionate and less costly without weakening the information available to investors and other stakeholders.

The headline number is striking: the revised standards contain more than 60% fewer mandatory datapoints, while the total number of datapoints has fallen by more than 70%. The text has also been shortened, repetitive requirements have been removed and the relationship between the general and topical standards has been clarified.

That is meaningful relief. But it does not turn ESRS reporting into a simple compliance exercise. Instead, the emphasis moves from completing an extensive checklist to deciding which information is genuinely material and explaining it clearly.

Materiality moves further to the center

Double materiality remains the foundation of ESRS reporting. Companies must still assess both their impacts on people and the environment and the financial risks and opportunities that sustainability matters create for the business.

The revised standards do, however, give companies more practical ways to conduct that assessment. Reporting teams are not expected to investigate every conceivable impact, risk and opportunity across every part of the organization and value chain. They can use reasonable and supportable information that is available without undue cost or effort, and may take either a top-down or bottom-up approach.

The information disclosed is also subject to a clearer materiality filter. This should help companies avoid sustainability statements filled with immaterial detail. It also increases the importance of documenting why topics and disclosures were included or excluded. A shorter report still needs a defensible process behind it.

New reliefs address familiar reporting challenges

Several changes respond directly to difficulties companies encountered during the first reporting cycles.

The revised ESRS introduce more flexibility when value-chain information is incomplete. Depending on what is practical and reliable, companies may use estimates or information obtained directly from value-chain partners. If reliable data cannot be collected without disproportionate effort, a metric may in some cases cover only a clearly defined part of the reporting boundary, accompanied by an explanation of how coverage and data quality will improve.

There is also relief for acquisitions and disposals. A newly acquired business may be brought into the sustainability statement in the following reporting period, while disposals may be reflected from the start of the year in which they occur. Additional provisions address non-material subsidiaries, leased assets, joint operations and investment-management activities.

These options can reduce operational pressure, but they should not become disconnected reporting choices. Each relief affects data collection, controls, review, assurance and the story presented in the final report. Reporting teams therefore need to decide early which provisions they intend to use and keep a transparent record of those decisions.

More flexibility in the sustainability statement

The revised standards create greater freedom in how the sustainability statement is presented. Companies may add an executive summary, place EU Taxonomy disclosures in a separate appendix and use appendices for detailed tables, mappings and cross-references. An alternative structure is also possible when the company provides a reasoned explanation.

This opens the door to reports that are easier to navigate. The opportunity is not merely to move content around, but to build a clearer hierarchy: the most important impacts, risks, opportunities and strategic responses should be visible first, with supporting detail available where readers need it.

At the same time, the revised ESRS explicitly reinforce fair presentation. Companies must consider the overall picture created by the sustainability statement, rather than treating each disclosure as an isolated item. Where the standards do not provide enough detail for readers to understand a material company-specific matter, entity-specific disclosure remains necessary.

Greater alignment with international reporting

The revision also improves interoperability with international sustainability reporting frameworks. This is particularly relevant for groups that report under both ESRS and the IFRS Sustainability Disclosure Standards.

One example is the treatment of anticipated financial effects. The requirements have been brought together more clearly in ESRS 2 and aligned more closely with the international approach. Companies may use amounts or ranges, and quantitative information may be omitted where effects cannot be identified separately, measurement uncertainty is too high or the necessary capabilities and resources are not available. Qualitative information and a clear explanation of limitations remain important.

Climate reporting has also changed. When measuring greenhouse gas emissions, companies may select the financial-control, operational-control or equity-share approach defined in the GHG Protocol. That flexibility makes the boundary decision more consequential: the method selected must be applied consistently and explained clearly.

What should reporting teams do now?

The revised ESRS are intended to apply to financial years beginning on or after 1 January 2027. For financial years beginning in 2026, companies have early-application options, including applying the revised standards in full or using specified new reliefs alongside the 2023 standards. The chosen approach must be stated clearly.

Reporting teams should use the transition period to revisit the design of their reporting process:

• reassess the double materiality methodology and its supporting evidence;
• map existing disclosures and datapoints to the revised requirements;
• decide which reliefs are relevant and document the rationale for using them;
• review reporting boundaries, especially for value-chain data, acquisitions and greenhouse gas emissions;
• involve assurance providers early where methods, estimates or scope will change;
• redesign the sustainability statement around material information and reader needs; and
• adapt data collection, ownership, controls and workflows before the next reporting cycle begins.

The reduction in datapoints is welcome, but the biggest opportunity lies elsewhere. Companies can use the revised ESRS to produce sustainability statements that are shorter, more focused and more connected to strategy and financial performance. Achieving that outcome will depend less on collecting everything and more on controlling the right information from source to final publication.