The Revised ESRS Are Here: What the 3 July 2026 Delegated Act Means for Your FY2027 Reporting

On 3 July 2026, the European Commission adopted the revised European Sustainability Reporting Standards (ESRS), marking the most significant change to EU sustainability reporting since the Corporate Sustainability Reporting Directive (CSRD) entered into force. Alongside the revised ESRS, the Commission also adopted a new voluntary sustainability reporting standard for smaller companies, introducing a long-awaited “value chain cap” designed to protect SMEs from excessive data requests.  

The headline figures are striking:

• More than 60% reduction in mandatory datapoints
• More than 70% reduction in total datapoints
• More than 30% reduction in expected reporting costs per company  

For many organisations, this will be welcome news.

But it would be a mistake to interpret the revised ESRS as meaning sustainability reporting has suddenly become simple.

Instead, the challenge has shifted.

Companies now face several important strategic decisions:

• Should Wave 1 companies voluntarily adopt the revised standards already for FY2026?
• How should existing ESRS implementation projects be re-baselined?
• What happens to supplier questionnaires under the new value chain cap?
• Which data collection processes can be simplified—and which still need to remain in place?

With the Delegated Acts now entering their two-month scrutiny period in the European Parliament and the Council (extendable by a further two months), this is precisely the window for organisations to recalibrate their reporting programmes before the revised standards become applicable.  

Who Should Read This Article?

This article is particularly relevant for:

• Sustainability directors and ESG managers
• CFOs and finance teams
• Compliance and legal professionals
• CSRD programme managers
• Internal audit teams
• Consultants and assurance providers
• SMEs and suppliers responding to customer sustainability requests

Whether your organisation reports directly under the CSRD or supplies companies that do, these changes are likely to affect your sustainability reporting processes.

Why the ESRS Were Revised

Since the original ESRS entered into force in 2023, many reporting companies highlighted several implementation challenges.

Among the most common concerns were:

• Excessive reporting complexity
• Large numbers of mandatory datapoints
• High implementation costs
• Difficult materiality assessments
• Extensive value chain information requests

The revisions form part of the Commission’s broader Omnibus simplification package, whose objective is to reduce administrative burden while preserving the core policy objectives of the CSRD.  

Rather than fundamentally changing what sustainability reporting aims to achieve, the revised ESRS focus on making reporting more proportionate and easier to implement.

What Actually Changed?

The media headlines have focused on the reduction in datapoints.

That is certainly significant.

However, the practical changes go much further.

Fewer Mandatory Disclosures

The most visible change is the reduction in mandatory reporting requirements.

The Commission estimates that:

• Mandatory datapoints have been reduced by over 60%.
• Total datapoints have been reduced by over 70%.  

The emphasis has shifted toward disclosures that are most useful for investors and other stakeholders.

Many datapoints that companies previously expected to report are now voluntary or have been removed entirely.

Simpler Materiality Assessment

One of the biggest implementation challenges under the original ESRS was determining what information was actually material.

The revised standards introduce clearer guidance and greater flexibility around the materiality assessment process, making it easier for companies to focus on genuinely material sustainability matters rather than documenting every conceivable impact, risk, or opportunity.  

This should reduce both reporting effort and assurance complexity.

Shorter and Clearer Standards

The revised ESRS have also been rewritten to improve usability.

The Commission states that the standards are:

• shorter,
• clearer,
• more proportionate, and
• easier to apply in practice.  

For organisations that have spent months interpreting complex reporting requirements, this simplification may be almost as valuable as the reduction in datapoints.

The New Voluntary Standard—and the Value Chain Cap

Perhaps the most strategically important development for many companies is not actually within the revised ESRS themselves.

It is the introduction of the new voluntary reporting standard for companies outside the mandatory CSRD scope.

The purpose of this standard is straightforward:

Smaller companies should no longer receive unlimited sustainability information requests from their larger customers.

Instead, the new framework introduces a value chain cap.

In practice, this means that companies reporting under the CSRD cannot require eligible companies in their value chain to provide sustainability information beyond what is covered by the new voluntary standard.  

For thousands of SMEs, this may become one of the most significant practical changes introduced by the Omnibus package.

What This Means for Large Companies

Many large organisations have spent the last year developing comprehensive supplier questionnaires based on the original ESRS.

Some questionnaires contain hundreds of questions.

Those approaches should now be reviewed.

Companies should consider:

• Whether supplier questionnaires exceed the new value chain cap.
• Whether supplier requests can be streamlined.
• Whether existing supplier engagement processes remain proportionate.

This is an opportunity not only to improve compliance but also to strengthen supplier relationships.

Reducing unnecessary data requests benefits both sides of the value chain.

Should Wave 1 Companies Adopt Early?

One of the biggest practical questions concerns early adoption.

Companies already reporting under the ESRS may choose to apply the revised standards voluntarily for FY2026 rather than waiting until FY2027.  

There is no universal answer.

Early adoption may offer:

Advantages

• Lower reporting effort
• Simpler implementation
• Better alignment with future reporting requirements
• Reduced assurance complexity

Potential Considerations

• Internal reporting systems may already be built around the existing ESRS.
• Assurance providers may need time to adjust.
• Existing implementation projects may require redesign.

The decision should therefore be considered carefully.

The Two-Month Scrutiny Window

Although the Commission has adopted the Delegated Acts, the legislative process is not yet complete.

The revised ESRS and the voluntary standard now enter scrutiny by the European Parliament and the Council.

The standard scrutiny period is two months and may be extended by a further two months.  

While significant changes during scrutiny are generally uncommon for delegated acts, organisations should continue monitoring developments until the process concludes.

A Practical Action Plan

Rather than waiting for the scrutiny period to end, organisations can already begin preparing.

Sustainability Teams

• Compare existing datapoint inventories with the revised ESRS.
• Update materiality assessment methodologies where appropriate.
• Identify disclosures that are no longer mandatory.

Finance Teams

• Review internal reporting processes.
• Assess cost-saving opportunities.
• Update implementation budgets where necessary.

Procurement Teams

• Review supplier questionnaires.
• Assess alignment with the value chain cap.
• Simplify supplier information requests where possible.

Compliance Teams

• Monitor the scrutiny process.
• Evaluate whether early adoption is appropriate.
• Update internal compliance roadmaps.

What This Means for SMEs

Smaller companies may not report under the CSRD themselves.

However, many have experienced growing numbers of sustainability information requests from customers.

The new voluntary reporting standard aims to create a more proportionate framework.

Rather than responding to multiple bespoke questionnaires from different customers, SMEs should increasingly be able to rely on a common reporting reference.

This could significantly reduce reporting burdens across European supply chains.

The Bigger Picture

The revised ESRS should not be viewed simply as a reduction exercise.

They represent the next phase in the evolution of European sustainability reporting.

The Commission is signalling that sustainability reporting should be:

• decision-useful,
• proportionate,
• risk-focused,
• and operationally achievable.

That is good news for reporting companies.

But it also means organisations should shift their focus.

The competitive advantage will no longer come from producing the largest sustainability report.

It will come from producing the most reliable, decision-useful, and well-governed sustainability information.

Key Takeaways

The adoption of the revised ESRS is more than a technical update.

It is an opportunity for organisations to rethink how they approach sustainability reporting.

The immediate priorities should be:

• Re-baseline your ESRS implementation programme.
• Review datapoint inventories.
• Assess whether early FY2026 adoption makes sense.
• Update supplier questionnaires to reflect the value chain cap.
• Monitor the Parliament and Council scrutiny process.
• Prepare internal reporting systems for the simplified framework.

The revised ESRS reduce reporting burden.

They do not reduce the importance of sustainability reporting.

For organisations that use this transition period wisely, the next generation of ESRS reporting may become not only simpler—but significantly more valuable.