Dive Brief:
- The European Commission adopted a simplified version of the European Sustainability Reporting Standards last week, which will reduce the number of mandatory data points by 60% and the total number of data points by over 70%, according to a July 3 press release.
- The Commission also adopted a voluntary sustainability reporting standard for companies not covered by the European Union’s Corporate Sustainability Reporting Directive.
- Companies covered by the CSRD are required to use the ESRS for their sustainability metrics. However, the voluntary standard will be for smaller companies, and CSRD-aligned companies are not allowed to ask for more information than what is included in the voluntary standard from parts of their supply chain.
Dive Insight:
The simplified sustainability reporting standards are part of the omnibus package the Commission first adopted in February 2025. The package kicked off legislative work to simplify the CSRD, the Corporate Sustainability Due Diligence Directive and other sustainability laws in the bloc. EU legislators in the European Parliament and Council agreed on changes to the underlying laws in December that will remove roughly 90% of companies from the CSRD’s original scope and 70% of companies from the CSDDD’s remit.
The Commission said the changes to reporting requirements are expected to decrease reporting costs by 30% per company, according to the release.
Following the adoption of the altered CSRD scope, the Commission said it would adopt revised ESRS standards within six months, “to deliver swiftly on the simplification and streamlining of sustainability reporting without undermining the objectives of the CSRD,” according to a staff document. The Commission’s staff called the revision of the ESRS “a central element” of the omnibus package.
“The narrowing of the CSRD scope alone would not have delivered the intended cost reductions’ level if the reporting standards had remained unchanged,” the staff document said. “The ESRS revision is therefore necessary to ensure that companies remaining in the amended scope are subject to less costly reporting requirements.”
Additionally, the staff said that narrowing the scope of the CSRD alone “would not sufficiently address the trickle-down effects borne by smaller companies through value-chain information requests,” which is why voluntary standards were also adopted. The Commission’s staff said the adoption of the voluntary standard is a “a translation of the legal requirement in the Omnibus I to protect smaller undertakings with a concrete mechanism framing how sustainability information may be requested from non-CSRD companies in the value chains.”
The two standards will now go to EU co-legislators, the European Parliament and European Council, to scrutinize the changes and updates for two months, with an option to extend the period of scrutiny for an additional two months, according to the release.
As part of its simplification work, the EU has delayed reporting for the next wave of CSRD reporting companies. The bloc is also working to simplify its sustainability taxonomy.
