On 3 July 2026, the European Commission adopted the revised European Sustainability Reporting Standards (“ESRS“) together with the updated Voluntary Sustainability Reporting Standard for SMEs (“VSME“) designed for small and medium sized enterprises outside the scope of the Corporate Sustainability Reporting Directive (“CSRD”). The objective of both ESRS and VSME is to simplify sustainability reporting requirements, reduce administrative burdens for businesses, and maintain high-quality information for investors and other stakeholders. The full texts of the delegated acts on the revised ESRS and VSME are available at this link, and this link respectively.

The revised ESRS are one of the key outcomes of the Omnibus I simplification package, which aims to streamline the EU sustainability reporting framework. According to the European Commission, the new standards are shorter, clearer and more focused on material information, while providing companies with greater flexibility in how they report sustainability matters. The revision also significantly reduces reporting requirements, making the framework more proportionate and practical for businesses.

Most notably, the revised standards reduce the number of mandatory datapoints by more than 60% and the overall number of datapoints by more than 70%. The Commission estimates that these changes could lead to a reduction in reporting costs of more than 30% per company, addressing concerns raised by businesses regarding the complexity and resource intensity of the original requirements.

The newly adopted VSME standard establishes a single, proportionate framework for voluntary sustainability reporting by small and medium-sized enterprises that are not directly subject to CSRD requirements. It is intended to help these firms respond more efficiently to sustainability information requests from customers, investors and financial institutions, while avoiding unnecessary reporting burdens.

An important feature of the VSME framework is the introduction of a “value chain cap”, which limits the amount of sustainability information that companies subject to CSRD may request from businesses within their value chains.

Both delegated acts will now be reviewed by the European Parliament and the Council. If no objections are raised during the scrutiny period, the measures will be published in the Official Journal of the European Union and formally enter into force as of 1 January 2027.