The European Commission has adopted a significantly streamlined set of sustainability reporting rules alongside a new voluntary framework for smaller firms.
The revised European Sustainability Reporting Standards, known as ESRS, are designed to give investors clear data on environmental, social, and governance risks, alongside a company’s impact on the planet and people. This covers critical areas such as climate change, biodiversity, and human rights.
Crucially, the update delivers a massive reduction in paperwork for businesses. By cutting mandatory data points by over 60% and total data points by more than 70%, the Commission expects to slash reporting costs for individual companies by over 30%. The move builds on previous EU simplification efforts that reduced the number of businesses captured under the Corporate Sustainability Reporting Directive.
For smaller businesses operating outside the main rules, a new voluntary standard provides a single, proportionate framework. This helps them easily handle data requests from large financial institutions and corporate clients. It also features a value chain cap, preventing larger firms from demanding more data from their supply chains than this voluntary standard requires.
Both text packages now face up to four months of scrutiny by the European Parliament and the Council before they officially pass into law.
