Few regulations have changed as much between adoption and full application as the EU Corporate Sustainability Reporting Directive (CSRD). Companies that spent 2023 and 2024 preparing for the first European Sustainability Reporting Standards (ESRS) watched the ground shift in 2025 with the “stop-the-clock” postponement, and again in 2026 as the Omnibus I simplification package and a revised, much shorter set of ESRS were finalized. Many sustainability and finance teams now face a basic question: what exactly do we have to report, from when, and how much of what we built still matters?
This article sets out what changed, who is in scope, what the revised standards require and how organizations should adapt their data, processes and technology. It is written for sustainability leads, controllers and data teams in EU companies and in non-EU groups with significant EU activity.
The Omnibus in Brief: A Much Narrower Scope
The Omnibus I package amended both the CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD). According to PwC Luxembourg’s summary of the final agreement, CSRD obligations, including the use of ESRS, now apply only to EU companies and groups that exceed both 1,000 employees and €450 million in net turnover. The European Parliament endorsed the agreement in December 2025, and EY’s overview reports that the revised CSRD entered into force in March 2026, with Member States required to transpose it by 19 March 2027. EY describes the reduction in in-scope entities as more than 80%.
Key timing and scope points include:
- Wave one companies (those that started reporting for FY2024) continue to report for FY2024 to FY2026, with options described below for FY2026.
- Other in-scope undertakings report from financial years beginning on or after 1 January 2027 under the new thresholds.
- Member State relief: Member States may exempt companies below the new thresholds for financial years 2025 and 2026, which matters for wave-one companies that no longer meet the criteria.
- Financial holding undertakings gain an option to omit consolidated sustainability reporting, subject to transposition.
- Future review: a Commission report on whether to broaden scope is due by April 2031.
On the due diligence side, PwC notes that the CSDDD now applies to EU companies with more than 5,000 employees and over €1.5 billion turnover, and to non-EU companies with more than €1.5 billion EU turnover, and that the obligation to adopt a Paris-aligned climate transition plan under the CSDDD was removed.
The Revised ESRS: Fewer Datapoints, Same Core Logic
The Commission adopted the revised ESRS delegated act on 3 July 2026. Hogan Lovells reports that the revised standards were published in the Official Journal on 21 September 2026 and enter into force on 10 November 2026. They apply mandatorily to financial years beginning on or after 1 January 2027, with wave-one companies allowed to apply them early for FY2026.
The scale of simplification is substantial. The Commission states that mandatory datapoints fall by more than 60% and total datapoints by more than 70%, and Forvis Mazars notes that voluntary datapoints were removed entirely and the standards are less than half their previous length. The Commission estimates per-company reporting cost reductions of more than 30%, though advisers caution that actual savings depend heavily on each company’s starting point.
What stayed the same
- Double materiality remains the foundation: companies report on sustainability matters that are material from an impact perspective, a financial perspective or both.
- Topical structure continues to cover climate, pollution, water, biodiversity, circular economy, own workforce, value-chain workers, communities, consumers and business conduct.
- Scope 3 emissions remain required in the climate standard; they did not become optional.
- Limited assurance of the sustainability statement continues to apply.
What changed
Forvis Mazars describes the revision as organized around six levers: a simplified materiality assessment, conciseness, a revised relationship between general and topical disclosures, clearer drafting, burden-reduction reliefs and interoperability with other frameworks. Notable changes include an emphasis on fair presentation, more flexibility in how the double materiality assessment is performed and presented, and a new “undue cost or effort” principle.
In the climate standard, EY’s analysis highlights several practical shifts:
- GHG inventories can follow any of the three GHG Protocol consolidation approaches (financial control, operational control or equity share), replacing the previous additive approach.
- Targets must be expressed as gross absolute values for Scopes 1, 2 and 3; intensity targets need accompanying absolute values, with an exemption for financial institutions on Scope 3 category 15.
- Climate scenario analysis is required to be disclosed only where it has actually been performed.
- If a company has no transition plan, it must say so and state whether it expects to adopt one; targets not aligned with 1.5°C are allowed if disclosed transparently.
The revised ESRS cut the volume of reporting, not the need for reliable data. The datapoints that survived are the ones investors and auditors care about most, so the bar for data quality on climate, workforce and value-chain metrics is, if anything, higher.
The Value-Chain Cap and the Voluntary Standard
One of the most consequential changes for supply chains is the value-chain cap. In-scope companies are limited in what they can request from smaller value-chain partners. EY explains that undertakings are bound by the voluntary standard’s cap when requesting information from protected value-chain undertakings with fewer than 1,000 employees. That voluntary standard, referred to as the VESRS, was published alongside the revised ESRS and entered into force in September 2026, according to Hogan Lovells.
For reporting companies, this has two implications. First, data requests to suppliers and customers should be redesigned around the VESRS content rather than bespoke questionnaires. Second, estimation methods and secondary data will remain essential, particularly for Scope 3, because the cap restricts how much primary data can be demanded from smaller partners.
Wave One in FY2026: Choosing a Path
Wave-one reporters face a decision for their FY2026 statements. EY describes three options: continue applying ESRS Set 1, early-apply the revised ESRS, or apply Set 1 with selected reliefs, disclosing which option was chosen. Each path has trade-offs:
- Stay on Set 1 if your FY2024 and FY2025 processes run smoothly and changing now would add risk late in the year. You keep comparability with prior reports but carry more datapoints.
- Early-apply the revised ESRS if you want to reduce effort immediately and align with the standard you will use from FY2027. This requires updating your datapoint inventory, materiality documentation and assurance plan quickly.
- Set 1 with reliefs can be a pragmatic middle path where specific reliefs remove known pain points without a full transition.
Whichever path you choose, involve your assurance provider early. Changing the basis of preparation affects assurance planning, comparatives and the explanatory disclosures required.
What This Means for Non-EU Groups and Wave Two
Many companies that expected to report from FY2025 or FY2026 as “wave two” are now either out of scope or will report from FY2027 under the new thresholds. That gives time, but not a reason to stop. In-scope companies from FY2027 will need double materiality assessments, data collection and controls in place during 2027 to report in 2028.
Non-EU parents with significant EU activity face separate criteria, and EFRAG is developing a standard for them. Hogan Lovells notes that the consultation on that draft closed on 31 October 2026, with EFRAG’s advice expected in January 2027. Non-EU groups should track this closely and avoid assuming the revised ESRS will apply unchanged.
Global groups also need to consider interoperability. Many jurisdictions are adopting ISSB standards, and the revised ESRS were explicitly designed with interoperability as one of their levers. Building one datapoint-level sustainability data model that can be mapped to ESRS, ISSB-based local rules and other frameworks is the efficient path.
EU Taxonomy Reporting and Assurance Readiness
The simplification also touched EU Taxonomy (Article 8) reporting. PwC notes that revisions to the Taxonomy disclosure rules were published in the Official Journal on 8 January 2026. EY’s overview adds that the explicit Taxonomy link in transition plan requirements was removed and that, for FY2026, Taxonomy disclosures may be placed in an appendix, while physical climate risk analysis remains necessary for alignment and fossil-fuel CapEx disclosures still apply where relevant. Companies should therefore keep their Taxonomy eligibility and alignment processes running, even if presentation becomes lighter.
Assurance deserves the same attention. Limited assurance continues, and assurance providers will expect a stable basis of preparation, documented materiality judgments and traceable data. Practical steps include:
- Holding a readiness review with the assurance provider before year-end on the chosen FY2026 option and on any changes to consolidation approach for GHG emissions.
- Documenting estimation methods, especially for Scope 3 categories and value-chain data obtained under the cap, with clear rationale and sensitivity where judgments are significant.
- Embedding sustainability controls in the same framework as financial reporting controls, with owners, review evidence and change management for calculation logic.
Companies that treat assurance as a design input, rather than a year-end event, typically see fewer findings and lower total effort.
Data and Technology Implications
Fewer datapoints do not automatically mean less work, as several advisers note. The effort in sustainability reporting is concentrated in a relatively small number of hard metrics, such as Scope 3 emissions, workforce data across many countries and value-chain impacts, and most of these survived the simplification. The practical priorities are:
- Rebuild the datapoint inventory against the revised ESRS and EFRAG’s datapoint list, marking each as retained, removed or changed, and retire collection processes for removed items.
- Establish governed data pipelines from HR, ERP, procurement, energy and facilities systems into a sustainability data platform, replacing spreadsheet consolidation.
- Document lineage and calculation logic for every reported metric so assurance providers can trace figures to source.
- Prepare for digital tagging. EFRAG released a draft XBRL taxonomy for the revised ESRS in September 2026; although tagging is not yet mandatory, structuring data at datapoint level now avoids rework later.
- Integrate with financial reporting so shared figures, such as revenue, CapEx and headcount, come from the same governed sources as the financial statements.
Worked Example: A Wave-One Manufacturer Recalibrates
Consider a hypothetical EU industrial manufacturer with about 3,000 employees and revenue well above €450 million. It published its first ESRS report for FY2024 and remains in scope after the Omnibus. Its FY2024 effort was heavy: hundreds of datapoints, collected through spreadsheets from 15 sites, with significant consultant support.
In mid-2026, the sustainability lead and the group controller review the revised ESRS. They map their existing datapoint inventory and find that a large share of items they collected are no longer required, mostly voluntary or narrative datapoints. However, their most effortful metrics, including Scope 3 purchased goods, own-workforce metrics across several countries and water data for sites in stressed regions, remain.
They decide to early-apply the revised ESRS for FY2026 to align with the long-term standard, after confirming the plan with their assurance provider. They stop collecting removed datapoints, redesign supplier data requests around the VESRS content and invest the saved effort in automating the remaining hard metrics: connecting procurement spend data to emission factors, integrating HR data from regional systems and documenting lineage. They also update their double materiality assessment using the more flexible approach allowed by the revised standards, focusing documentation on the topics that matter.
The result is not a dramatically smaller project, but a better one: fewer distractions, more reliable core metrics and a data foundation ready for digital tagging and future framework changes.
Common Pitfalls
- Assuming scope without checking transposition. National implementation may differ in detail; confirm how your Member States transpose the Omnibus.
- Dismantling data processes too fast. Removed datapoints may still be requested by investors, lenders or customers.
- Treating Scope 3 as optional. It remains required in the ESRS and in ISSB-based regimes.
- Ignoring the value-chain cap. Over-asking smaller suppliers can conflict with the new limits and damage relationships.
- Re-running materiality from scratch every year. Use the new flexibility to update and document efficiently.
Action Plan for the Next 12 Months
- Confirm scope for each EU entity and group under the new thresholds and national transposition.
- For wave-one companies, decide the FY2026 basis of preparation and agree it with the assurance provider.
- Map the existing datapoint inventory to the revised ESRS and retire unnecessary collection.
- Redesign value-chain data requests in line with the VESRS and the value-chain cap.
- Automate the hard metrics with governed pipelines and documented lineage.
- Structure data at datapoint level in preparation for ESRS digital tagging and ISSB interoperability.
- Monitor EFRAG’s work on standards for non-EU groups and the final ESRS XBRL taxonomy.
Conclusion
The Omnibus and the revised ESRS have made EU sustainability reporting narrower and leaner, but not trivial. Fewer companies are in scope, and those that are will report fewer datapoints, yet the metrics that remain are the hardest and most scrutinized. Companies that use the simplification to retire low-value effort and invest in governed, automated data for core metrics will produce better reports at lower cost and be ready for digital tagging and global interoperability.
How Hanoi Technology Can Help
Hanoi Technology builds sustainability data platforms and pipelines that automate ESRS metrics with documented lineage, as projects, dedicated teams or managed services.