The European Commission has launched a public consultation on the draft revised European Sustainability Reporting Standards (ESRS), alongside a new voluntary standard designed specifically for smaller enterprises. The proposal represents a significant effort to reduce the administrative burden on EU businesses while preserving the integrity of environmental, social, and governance (ESG) disclosures.
The revised standards, which underpin the Corporate Sustainability Reporting Directive (CSRD), have been redesigned to be shorter and more flexible. Building on the recent “Omnibus I” simplification package, the Commission expects the new framework to reduce reporting costs for individual companies by more than 30%.
In a major shift toward simplification, the draft revised ESRS proposes a drastic reduction in the volume of information companies must disclose. Key efficiency metrics include:
- Mandatory datapoints: A reduction of over 60%.
- Total datapoints: An overall cut of more than 70%.
- Process streamlining: Clearer language and new flexibilities to help firms navigate climate, biodiversity, and human rights reporting.
The Commission stated that these adjustments aim to ensure investors and stakeholders receive high-quality, relevant information without imposing an “undue burden” on the businesses providing the data.
A standout feature of the package is the introduction of a draft voluntary standard for companies not currently subject to mandatory CSRD reporting. To protect smaller businesses, the Commission has proposed a “value chain cap.”
This mechanism prevents larger corporations within the scope of the CSRD from demanding more sustainability data from their smaller partners (those with 1,000 employees or fewer) than what is outlined in the voluntary standard. This cap is intended to prevent “trickle-down” administrative pressure on SMEs and mid-market firms.
The standards cover the full spectrum of ESG issues, ensuring that risks related to climate change and impacts on human rights remain transparent. The public and interested stakeholders are invited to provide feedback on the drafts, with the consultation period remaining open until 3 June 2026.
Following the consultation, the Commission will finalise the standards as part of its broader strategy to foster a sustainable and competitive EU economy.
