ESRS 2026: Fewer data points, more judgement

The revised ESRS are significantly shorter and more focused. But companies should not expect reporting effort to fall at the same rate. The real change is where the work happens: less data collection, more judgement, connectivity and documentation. Around 70% of all data points have been removed, while the expected reduction in cost and effort is closer to 30%.

The revised European Sustainability Reporting Standards promise substantial simplification. The standards have shrunk from 284 to 185 pages and the number of disclosure requirements from 91 to 75. Around 70% of all data points have been removed. At first sight, that sounds like a dramatic reduction in reporting effort. But that is only part of the picture.

The expected reduction in cost and effort is closer to 30%. The reason is straightforward: many of the elements that make sustainability reporting demanding remain. Governance structures, processes and IT systems still need to work. The double materiality assessment remains. And many of the quantitative disclosures that require significant effort have been retained. The revised ESRS are therefore not simply about doing less. They are increasingly about making better-founded decisions about what matters, connecting sustainability information with the wider business, and being able to document those decisions.

Here are some of the changes companies should pay particular attention to.

1. Materiality becomes even more important

One of the clearest principles in the revised standards is that companies should focus their reporting on material information. The wording has become stronger. Rather than simply stating that companies are not required to provide immaterial information, the revised approach says such information should not be reported as part of the ESRS disclosures. At the same time, the principle of fair presentation requires the sustainability statement as a whole to provide information that is understandable, comparable and verifiable. In practice, this reinforces a simple principle: more information does not automatically mean better reporting. Additional disclosures may still be included where they are required by other regulation, recognised frameworks such as GRI, or specific users such as investors or banks. But they need to be clearly identified as information that does not originate from the ESRS materiality assessment. That makes the quality of the double materiality assessment more important, not less.

2. Double materiality can become more pragmatic

The revised standards provide more room for a top-down approach. Where a topic is clearly material based on the company’s strategy, business model or sector, companies can identify it as material without taking every individual impact, risk and opportunity through the full assessment process. The relevant IROs still need to be identified, but do not necessarily need to be individually scored. Where materiality is unclear, however, the detailed IRO assessment remains necessary. And where a topic is considered clearly immaterial, that conclusion needs to be supported by robust documentation. For companies that have already completed a thorough double materiality assessment, this is important. It means the next reporting cycle does not require rebuilding the entire process from scratch. Instead, the emphasis shifts towards reviewing whether the assessment remains valid and documenting where and why decisions have changed.

3. Less prescription means more judgement

Another important change is more subtle. The standards are easier to read because overlaps and voluntary disclosures have been removed, the list of topics has been condensed and some narrative requirements have been reduced. Application Requirements have also been moved closer to the relevant disclosures, making the standards easier to navigate. But some of the material that disappeared also provided useful orientation. Examples and guidance that previously helped companies interpret individual requirements are no longer always present. This creates additional flexibility, but also additional responsibility. That is why the practical workload is shifting: from collecting data points towards judgement, connectivity and documentation. And that becomes particularly important once assurance begins.

4. “Without undue cost and effort” is useful, but not a free pass

The revised ESRS introduce the principle of “without undue cost and effort” more explicitly. It allows companies to weigh the usefulness of information against the effort required to obtain it, including in areas such as materiality, value-chain information and metrics. This could provide meaningful relief where quantitative information is particularly difficult or uncertain to obtain. But there is an important second half to the principle: using such relief itself needs to be explained. Companies therefore need to document when the judgement was made, why the required effort was considered disproportionate and whether that assessment still holds in subsequent reporting periods. That is exactly the type of question auditors are likely to ask.

5. The climate transition plan remains

One point that has caused considerable uncertainty is the climate transition plan. The revised standards do not remove the requirement. Companies are still required to disclose their climate transition plan where applicable, covering issues such as short-, medium- and long-term targets, 1.5°C alignment, decarbonisation levers, locked-in emissions, measures and progress, assumptions and dependencies, financial resources and governance approval. Where no transition plan exists, the company can state this and disclose whether and when it intends to adopt one. The important distinction is between disclosure and performance. The ESRS require companies to be transparent about where they stand; they do not turn the disclosure requirement itself into proof that the company has already achieved a 1.5°C-aligned transition.

6. Sustainability and financial reporting move closer together

The revisions also strengthen the connection between sustainability and financial reporting. Risks and opportunities should increasingly be connected to financial reporting, reflecting the broader alignment of the ESRS with international standards such as the ISSB. This matters organisationally. ESRS reporting cannot be treated as an isolated sustainability exercise. Finance, sustainability, risk management, strategy and senior management increasingly need to work from compatible assumptions and data. This “connectivity” may ultimately prove more consequential than many individual changes to data points.

7. A management summary is now explicitly possible

One change that is easy to overlook but potentially useful is the possibility of including a management or executive summary. It is voluntary. But if a company chooses to use one, it becomes part of the sustainability statement and must meet the same qualitative requirements as the rest of the report. It cannot simply serve as a marketing introduction. Done well, this could be valuable. A concise summary of the organisation’s most important impacts, risks, opportunities and management responses can give boards, investors and other stakeholders much faster access to the information that matters most. For companies struggling to make increasingly technical sustainability disclosures usable for decision-makers, that is an opportunity worth considering.

8. What will auditors want to see?

Perhaps the most practical part of the revised ESRS is not a particular disclosure requirement at all. It is the growing importance of the audit trail behind management judgement. The webinar identified several questions companies should expect from auditors:

• How was a top-down materiality decision derived from the business model, strategy and sector?
• Where was additional IRO-level analysis necessary?
• When and how was “without undue cost and effort” applied?
• If climate change was assessed as immaterial, is there a robust and strategy-consistent rationale?
• Is the chosen GHG accounting boundary consistent with financial consolidation and other climate reporting?
• Are existing measures considered in the materiality assessment actually implemented and demonstrably effective?
• Have phase-in provisions been applied correctly?

The practical rule is simple: every significant judgement should have a documented rationale, a date, an owner and a process for reviewing it. Ideally, that documentation exists before the audit begins.

What companies should do now

The revised ESRS do create real simplification. But simply waiting for fewer reporting requirements is unlikely to generate the full benefit. Companies should instead use the revision to reconsider how their reporting process is organised. For companies already reporting, this means reviewing the delta between the previous and revised standards rather than restarting from zero. For companies entering the reporting regime, the first priority is confirming scope before investing heavily in implementation. The immediate actions are clear: check reporting thresholds for the 2027 financial year, conduct a gap analysis of the revised data points and consciously decide whether early adoption makes sense. For SMEs and companies outside the EU, the picture is different again. The revised framework includes specific approaches for voluntary reporting and non-EU groups, making a dedicated scope assessment increasingly important before choosing a reporting approach.

The central conclusion is therefore not that ESRS reporting has suddenly become easy. It has become more focused. Fewer data points should allow companies to spend less time producing information with limited value and more time ensuring that material sustainability information is relevant, connected to the business and defensible. And that may be the more meaningful simplification.

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