Omnibus Simplification Updates for ESRS

The European Sustainability Reporting Standards (ESRS) are the mandatory reporting standards for companies that fall under the scope of the Corporate Sustainability Reporting Directive (CSRD).

Starting in 2025, the EU launched its Omnibus Simplification Package approach to reduce the administrative burden on companies complying with EU regulations. One of the first regulations reviewed with this approach was the CSRD and its underlying ESRS.

The Omnibus Simplification Package for the ESRS was approved by a delegated act in 2026 by the EU Commission. The European Council and European Parliament still need to formally approve it (expected by the end of 2026).

How and Why the ESRS Changed

For companies required to report in the EU under CSRD, the ESRS are now streamlined for more efficient reporting.

The simplified draft includes significant reductions to the content of the original ESRS (31 July 2023) by:

  1. Reducing the total number of ESRS data points by roughly 70%.

  2. Reducing the mandatory ESRS data points by roughly 60%.

These changes aim at minimizing the administrative burden on companies, streamlining the standards, removing redundancies in the ESRS draft text.

In addition, the scope of companies that need to comply with ESRS dropped by roughly 90%, falling well below the number of companies that the prior Non-financial Reporting Directive (NFRD) applied to.

According to EFRAG: “This simplification fosters greater competitiveness by easing the regulatory landscape without compromising the fundamental objective of the Green Deal to advance sustainability in the European Union.”

ESRS: What changed and what stayed the same

The main structure of the ESRS remains the same:

  • 12 standards, including two cross‐cutting standards and ten topic‐specific standards

  • Minimum disclosure requirements for all material topics still include policies, actions, metrics and targets.

  • A double materiality assessment still frames what to include in the report, but a stronger emphasis is placed on fair representation of all material information and limiting the reporting to decision-useful information.

Various improvements make the simplified ESRS more user-friendly:

  • Removing redundancies, specifically across application and disclosure requirements, and structuring the information to require less cross-referencing.

  • Using less jargon and more understandable language throughout the standards.

  • Stronger interoperability with IFRS’s ISSB S1 and S2 standards with alignment on key term definitions.

New reliefs for companies offer options to extend companies’ delay of reporting of climate-related financial information and wait a reporting year after companies are added or disposed through mergers and acquisitions to include the new information. Others include the top-down DMA, value-chain reliefs (not asking for supply chain data for companies with fewer than 1000 employees), specific scope reliefs, the EU Taxonomy appendix and executive summary.

What comes next for reporting companies

Timeline for reporting

  • Wave 1 companies continue until the simplified ESRS is formally adopted

  • Optional early adoption: Financial year 2026

  • Mandatory application: Financial year 2027

CSRD reporting scope

  • The CSRD reporting company size threshold is 1,000 employees and net annual turnover above €450 million.

  • A separate N-ESRS is available for Non-European companies that meet a different threshold of net turnover of €450 million or more (EU-wide) and a net turnover of €200 million or more generated by EU subsidiaries.

  • For companies that don’t meet the CSRD reporting thresholds, the Voluntary Standard serves as the best reporting approach for aligning with stakeholder expectations in the EU.

  • Alternatively, the simplified ESRS can be adopted by companies as voluntary reporting standards for SMEs.

Helpful Reporting Resources

Key resources from EFRAG to support reporting under the simplified ESRS help reporting companies comply :

Erica EllerComment