Executive Summary
- On July 3, 2026, the European Commission adopted the revised European Sustainability Reporting Standards (“Simplified Draft ESRS”) as well as a voluntary standard for smaller companies—as part of the “Omnibus I” simplification package.
- The number of mandatory data points will decrease by over 60%, and the total number by over 70%; reporting costs are expected to fall by more than 30% per company. According to the European Commission’s assumptions, reports will become shorter, clearer, and more flexible without compromising the quality of the information provided.
- At the same time, EFRAG’s “State of Play 2026” study—which analyzed over 900 reports from the first CSRD reporting year—shows where current practice stands: climate, the company’s own workforce, and corporate governance are material almost everywhere, yet there is a gap between declared materiality and strategic integration (goals, compensation).
- Important: The legislation is not yet final—it will undergo at least a two-month review by the European Parliament and the Council.
1. What the EU Has Decided
Fewer, but more targeted obligations. The revised ESRS are part of the Omnibus I package, which simplifies sustainability reporting while also narrowing the scope of companies subject to the CSRD. Key promises: shorter, clearer standards, new flexibilities, and leaner processes.
- Data points: Mandatory data points −60%, total number −70%; expected cost reduction > 30% per company (Commission’s target: −25% bureaucracy).
- Voluntary SME standard: a uniform, proportionate framework for companies outside the scope of the CSRD to respond to data requests from banks and major customers.
- “Value-chain cap”: CSRD-covered companies may not require more information from suppliers than is covered by the voluntary standard—a safeguard for smaller partners in the supply chain.
2. The Key Relief Measures in Detail
- Longer transition periods for “expected financial impacts”: First-time adopters (Wave 1) may defer reporting until the 2028 reporting year and quantitative disclosures until 2030; other companies have two or four years, respectively. This is one year more generous than in the May 2026 draft.
- No “error” is considered a violation if these estimates are updated later; additionally, trade secrets are protected.
- Flexible reporting structure: The mandatory four-part division (General/Environmental/ Social/Governance) is no longer required—an alternative layout is permitted with a substantive justification.
- The investment exemption remains in place but is more narrowly defined (only with a formal client mandate)—it remains legally controversial.
- No direct ISSB compatibility: An optional format for simultaneous ESRS/ISSB compliance was not included despite investor demands; criticism regarding interoperability and transparency remains.
3. What Practice Shows – EFRAG State of Play 2026
EFRAG has analyzed over 900 reports from the first CSRD reporting year (all prepared in accordance with ESRS Set 1, 2023) using AI. The results provide a realistic benchmark:
| Key metric (FY2025, ESRS Set 1) | Result |
|---|---|
| Reports analyzed (AI-assisted) | > 900 |
| Ratio of sustainability report pages to annual report pages | ~34% across all reporting jurisdictions |
| Reports with their own executive summary | only 6% |
| Most frequently reported material standards | E1 Climate 99%, S1 Workforce 99%, G1 Business Conduct 95% |
| Key topics / of which with measurable targets | Average 6.4 out of 10 / only 3.3 |
| Sustainability in executive compensation | 63% |
| Climate transformation plan disclosed | 55% (FY24) → 69% (FY25) |
| Human rights / discrimination reported | 93% / 85% |
| ESG criteria in supplier selection (if G1 is identified as material) | 81% |
Recommendations for Action for Companies
- Use the relief, maintain continuity: Fewer mandatory data points do not mean lower investor expectations—continue to consistently collect material data.
- Include an executive summary: Only 6% of companies do so—a simple way to stand out positively.
- Strategically embed materiality: Set measurable targets for material issues and link them to compensation systems.
- Prepare a climate transformation plan: a clearly rising trend (69%); early planning pays off.
- Use flexibility wisely: Use an alternative layout only with a clear justification; keep an eye on ISSB dual reporting and the value chain cap.
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