The EU has just reshaped sustainability reporting.

Today, on 3 July 2026, the European Commission adopted the revised ESRS — the biggest update since CSRD came into force. The new Delegated Act cuts mandatory datapoints by 61%, strengthens interoperability with ISSB and the EU Taxonomy, and clarifies how materiality should be applied in practice.

For companies preparing their next sustainability report, this is a turning point:

• Optional early adoption in 2026
• Mandatory application from 2027
• New reliefs, clearer rules, and lower reporting burden
• Stronger focus on standardized, decision‑useful, material information

Below we have summarized the key changes — and what they mean for your reporting processes.

You can download the revised ESRS here: https://ec.europa.eu/finance/docs/level-2-measures/csrd-delegated-act-2026-5010-annex_en.pdf

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The 2026 CSRD Delegated Act: What You Need to Know for Your Next Sustainability Report

On 3 July 2026, the European Commission adopted a major update to the European Sustainability Reporting Standards (ESRS). This Delegated Act simplifies the reporting framework, reduces mandatory datapoints, and clarifies how companies should apply materiality. It is the most significant revision since ESRS was first introduced in 2023—and it directly affects how companies will report from financial year 2027, with optional early adoption in 2026.

1. Why the ESRS were revised

The revision is part of the Omnibus I simplification package, which aims to reduce administrative burden while preserving the core objectives of the CSRD. The Commission explains that the update was needed to:

“remove datapoints deemed least important… prioritise quantitative datapoints… further distinguish between mandatory and voluntary datapoints… and provide clear instructions on how to apply the materiality principle.”

The goal is to make sustainability reporting simpler, clearer, and more proportionate, especially for companies with complex value chains.

2. When the new standards apply

The Delegated Act states:

“Undertakings must use the revised ESRS from financial year 2027. They may choose to use the revised ESRS also for financial year 2026.”

Timeline

• 2026: Optional early adoption
• 2027: Mandatory application for all companies in scope
• Entry into force: Four months + one week after adoption at the latest (≈ November 2026)

Companies reporting for FY2026 must explicitly state which version of ESRS they apply.

3. Key simplifications companies will notice

3.1 Fewer mandatory datapoints (‑61%)

EFRAG’s technical advice led to a dramatic reduction in mandatory disclosures:

“Reducing the mandatory datapoints by 61% while retaining the core objectives of the European Green Deal.”

This means shorter reports, fewer tables, and more focus on what is truly material.

3.2 Clearer and more practical materiality rules

Materiality is the central mechanism for determining what to report.

The Commission clarifies that companies:

“shall not report information that is not material, except in certain clearly defined circumstances.”

New guidance includes:

• A top‑down approach allows the undertaking to avoid unnecessary work and in general to avoid assessing the materiality of each individual impact, risk or opportunity.
• Explicit permission to omit information that is commercially sensitive.
• More flexibility regarding the need to consider specific geographical contexts when carrying out the materiality assessment – also clarifies that the level of disaggregation for materiality assessment does not imply that information must be reported at that same level of disaggregation.
• The text states that reporting anticipated financial effects is likely to involve estimates and that these can be updated in the future in light of new information without this constituting a reporting “error” – and an additional year of phasing-in is introduced for both qualitative and quantitative information.
• Reliefs for undue cost or effort and value chain limitations

3.3 More interoperability with global standards

The revised ESRS improves alignment with:

• ISSB standards
• EU Taxonomy
• CSDDD (Corporate Sustainability Due Diligence Directive)

For example, companies may now use either financial control or operational control when defining GHG reporting boundaries—matching global practice.

3.4 New reliefs and phase‑ins

Companies get additional flexibility, including:

• Extra year of phase‑in for anticipated financial effects
• One‑year phase‑in for substances of very high concern
• Reliefs for new acquisitions, joint operations, and non‑significant activities

These changes reduce the risk of non‑compliance and lower implementation costs.

4. What remains mandatory

Despite simplification, several core areas remain essential:

• Double materiality and reporting on IROs, policies, actions, targets and metrics
• Climate transition plans (with transparency if not aligned with 1.5°C)
• Primary microplastics disclosures
• Pollutant emissions (based on managerial assessment)
• Human rights incidents (only “substantiated verified” cases)

The Commission emphasizes that simplification must not undermine the European Green Deal.

5. Expected cost savings

EFRAG’s cost‑benefit analysis shows substantial reductions:

“Reporting cost savings correspond on average to 34% of baseline costs… cumulative savings raise to around EUR 4.7 billion over 2027–2031.”

This is one of the strongest signals that ESRS aim to become more manageable for companies.

6. What to do now

Step 1 — Decide whether to adopt early (FY2026)

Early adoption may simplify your 2026 report, but requires clear disclosure of the chosen ESRS version.

Step 2 — Update internal reporting systems

The revised ESRS structure is simpler, but companies must ensure:

• updated templates
• updated data models
• updated governance and controls
• alignment with CSDDD and EU Taxonomy

During summer we will update Cleerit with the final texts. We will then contact you to plan the implementation in your application.

7. Final takeaway

The 2026 Delegated Act marks a turning point and the end of a long period of uncertainty. ESRS becomes more proportionate, more aligned with global standards, and significantly easier to understand and implement. Companies that embrace the materiality‑driven standardized reporting approach will produce shorter, clearer, and more decision‑useful sustainability reports—with lower cost and less administrative burden.

A well‑structured, machine‑readable sustainability statement also strengthens governance, accelerates internal learning, reveals strategic blind spots, and positions your organization for the EU’s dual green and digital transition.

If your first ESRS report is due in FY2027, remember: early reporters will already be on their fourth cycle. Building processes, collecting data, and aligning teams takes time. Waiting until 2027 means falling years behind. Now is the time to start.

 Contact us if you want to use our guided digital ESRS end-to-end templates to get a head start.

EFRAG’s second State of Play edition, based on the FY2025 reporting cycle, analyses 905 assured FY2025 sustainability statements, offering the most comprehensive evidence to date of how companies are applying ESRS in their second CSRD reporting year.

The findings show continuity with refinement, not structural transformation.

The message is clear: ESRS reporting is becoming more consistent and evidence-based. The next frontier is strengthening the link between materiality, measurable targets, and strategic decision-making.

Geographies and sectors in scope

The FY2025 sample shows a shift in which countries are most represented in the sustainability reports analysed. Last year, France, Germany, and Finland had the largest share. This year, Sweden is in the lead (14%), followed by Germany (12%) and France (11%). There is also a strong Nordic increase, with Norway growing from 2% to 7% of the sample.

However, the report warns that these numbers are partially influenced by the cut-off date (20 April 2026). Some countries publish their reports (especially English versions) later in the year, so they are under‑represented in this dataset.

Among the non-financial companies, Manufacturing remains by far the largest sector, accounting for 36% of the entire baseline.

Cross-cutting insights

• Materiality remains stable: Companies report on average 6.4 material topics, with E1 Climate Change, S1 Own Workforce, and G1 Business Conduct material for >95% of undertakings.
• DMA methodology: 67% use a hybrid approach combining the benefits of bottom-up and top-down analysis for different topics. 82% updated their DMA since FY2024 through modifications ranging from minor refinements to scope changes.
• IROs: Companies disclose ~30 IROs, heavily concentrated in E1 and S1 followed by G1 (60%). At country level, Spain leads with an average of 44 total IROs per company followed by Italy with 40 IROs and France at 35 while Sweden is positioned at 24 IROs. IROs are a key component of double materiality assessment, helping companies to determine which sustainability topics they should report on, and to identify how their business affects people and the environment (impacts), and how sustainability matters are material from a financial perspective.
• Targets & incentives: Only 50% of material topics have measurable targets and 63% embed sustainability in executive remuneration, revealing a widening discrepancy between declared materiality and strategic commitment. At country level, France leads with 4 average number of material topics with targets.
• Structure: Sustainability disclosures represent 34% of annual report length. Only 6% include an executive summary.

Environmental standards

• Climate Transition Plans: Adoption increased from 55% to 69%, reflecting continued momentum in corporate climate planning.
• 1.5°C alignment: 57% disclose near‑ and long‑term targets compatible with 1.5°C.
• Non-climate topics (E2–E5): Slight rise in materiality. However, 77% report metrics only at global level, with minimal geographic disaggregation at regional and site level.

Social standards

• Gender pay gap: Average unadjusted gap is 14.3% in favor of men, with the widest gaps concentrated in the financial sector. Only 12% of companies have enriched this figure with the adjusted pay gap to better account for the particularities of their workforce (i.e. geographic distribution and roles of their employees across the undertaking). At country level, Belgium has the lowest gap (7.7%) followed by Finland (10.7%) and Sweden (12.5%).
• Discrimination & human rights incidents: Disclosure is high (85% and 93% respectively).
• Human rights policies: 89% have policies covering Workers in the Value Chain and/or Affected Communities.

Governance (G1)

• Materiality: a slight increase with Supplier relationship management, including payment practices, material for 54% of the undertakings vs. 50% in FY2024.
• Supplier ESG criteria: 81% reference ESG criteria, but the nature of that integration is predominantly declarative – mostly via codes of conduct – operational integration remains limited.
• SME payment terms: Only 7% disclose SME-specific terms. Average SME payment term is 24 days. This requirement has proved particularly challenging given – amongst others – the limitations of standard ERP systems in segmenting supplier data by company size.

If your first ESRS report is due in FY2027, remember: early reporters will already be on their fourth cycle. Building processes, collecting data, and aligning teams takes time. Waiting until 2027 means falling years behind.

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🌿 A well‑structured, machine‑readable sustainability statement strengthens governance, accelerates internal learning, reveals strategic blind spots, and positions your organization for the EU’s dual green and digital transition.

👉 Contact us if you want to use our guided digital ESRS end-to-end templates to get a head start.

 

Read the full report from EFRAG here: EFRAG_State of Play 2026_vShared_Layout checked – DD.pdf