The European Commission has adopted the finalized revised European Sustainability Reporting Standards (ESRS) for companies covered by the EU’s mandatory Corporate Sustainability Reporting Directive (CSRD), along with a voluntary reporting standard for smaller companies, ESG Today reports. 

The move may be the final major step in the Commission’s Omnibus I drive to simplify sustainability reporting. The underlying delegated acts now go to the European Parliament and Council, entering into force unless either objects.

What Omnibus changed

Approved by EU lawmakers earlier this year, the Omnibus package cut the number of companies covered by the CSRD by 90%, exempting those with under €450 million in revenue and fewer than 1,000 employees — against a previous threshold of 250 employees. 

For companies below the CSRD threshold, information requests from larger companies are limited to data in a planned voluntary standard, based on the Voluntary Standard for SMEs (VSME) endorsed last year.

Fewer datapoints, more flexibility

The Commission tasked the European Financial Reporting Advisory Group (EFRAG), author of the original ESRS, with technical advice on simplification. 

EFRAG’s finalized revision, submitted in December 2025, proposed cutting mandatory datapoints by 61% and scrapping voluntary disclosures — a total reduction of over 70%. 

May’s draft kept most of that advice while adding «targeted modifications» to clarify provisions and grant flexibility. 

A key change aligns the ESRS more closely with the IFRS Foundation’s ISSB standards: for greenhouse gas (GHG) reporting, companies may choose either a «financial control» or an «operational control» approach when deciding which entities’ emissions enter their GHG inventory. 

The proposal also requires firms whose transition-plan targets are not compatible with 1.5°C to say so transparently.

A clarification for asset managers

The adopted standards add that firms managing investments «subject to a fiduciary duty on behalf of clients» need not disclose information on those investments, as it relates to the client’s activities rather than the manager’s — avoiding, the Commission said, disproportionate administrative burden and duplicated reporting. 

The voluntary standard for companies outside CSRD scope closely mirrors May’s draft: though the VSME was designed for firms under 250 employees, the Commission kept changes minimal and deems the new standard proportionate for undertakings of up to 1,000 employees.

The adopted ESRS and voluntary sustainability reporting standards are available on the European Commission website.

Source: ESG Today