EU Adopts Revised ESRS: Scope Narrowed, Substance Preserved

On July 3, 2026, the European Commission adopted the delegated act setting out revised European Sustainability Reporting Standards (ESRS) — the mandatory reporting framework under the Corporate Sustainability Reporting Directive (CSRD). The revision follows the Omnibus I simplification package and narrows the scope of mandatory CSRD reporting to companies with over 1,000 employees and turnover above €450 million, exempting roughly 80% of previously in-scope entities. Critically, the revised ESRS preserve the core architecture of the framework — double materiality, reporting on material impacts, risks and opportunities across environmental, social, and governance topics — while introducing greater proportionality and flexibility in how disclosure obligations are fulfilled. A voluntary reporting standard for smaller companies was adopted alongside the mandatory ESRS. The revised standards are expected to apply for financial years beginning on or after January 1, 2027, with member states required to transpose the amended directive by March 2027.