What are the ESRS standards?

The ESRS (European Sustainability Reporting Standards) are the mandatory European standards for preparing sustainability reports in accordance with the CSRD. They define the structure, content, and indicators that companies within the scope of the directive must report on, ensuring that ESG data is comparable and verifiable throughout the European Union.

On July 3, 2026, the European Commission adopted the new, simplified version of the ESRS standards, reducing the number of mandatory data points by approximately 70% compared to the original version—one of the key changes introduced by the Omnibus Reform.

If you’re considering which standard to adopt for your reporting—whether mandatory or voluntary—you’ll find a comprehensive comparison of ESRS, VSME, and GRI in our guide to sustainability reports.

Which companies are required to apply the ESRS Standards?

All companies subject to the Corporate Sustainability Reporting Directive (CSRD )—the regulation that requires companies to disclose their impact on the environment and society in accordance with ESG principles (i.e., environmental, social, and governance principles)—are required to comply with ESRS standards.

Originally applicable to more than 50,000 companies, the scope of the CSRD was drastically reduced in 2025 by the Omnibus Reform. Since then, the companies required to prepare a sustainability report using the ESRS are all those that exceed both thresholds:

• An average of more than 1,000 employees
• More than 450 million in net revenue

The framework also includes specific requirements for certain non-EU undertakings with significant business activities in the European Union, as well as qualifying EU subsidiaries or branches.

Revised ESRS 2026: What Changes with the New Simplified Standards

On July 3, 2026, the European Commission adopted a new, simplified version of the ESRS Standards, intended to replace the standards originally published in 2023.

The new ESRS will become mandatory for fiscal years beginning on January 1, 2027. Companies already subject to the CSRD may, however, choose to apply them early, starting with the 2026 fiscal year, once the adoption process is complete.

The goal of the review is to reduce administrative burdens without eliminating the core principles of European reporting, such as dual materiality and the disclosure of information on ESG impacts, risks, and opportunities.

Reduction in the Number of Required Data Points

The most obvious simplification concerns the amount of information to be reported.

Compared to the 2023 ESRS, the new standards eliminate more than 60% of the mandatory data points and over 70% of the total data points, including the previous voluntary disclosures.

Many requirements have been consolidated, rewritten, or eliminated. In other cases, the level of detail required has been reduced.

The European Commission estimates that these changes could reduce the reporting costs incurred by each company by more than 30 percent.

Simplification of the Expected Financial Effects

One of the most significant simplifications concerns the expected financial impacts of ESG risks and opportunities.

The 2023 ESRS established specific requirements for estimating, in monetary terms, the financial impacts associated with climate change, pollution, water resources, biodiversity, and the circular economy.

Companies might have been asked, for example, to estimate how much a water-related risk, a future regulatory restriction, or the loss of biodiversity could affect their revenue, assets, or cash flows.

This was one of the most complex aspects of reporting, because it required translating environmental and social risks—which are often uncertain and long-term—into reliable economic values.

In the new version, the specific thematic requirements regarding the expected financial impacts related to pollution, water, biodiversity, and the circular economy have been removed.

This remains a general requirement in ESRS 2, but with significant simplifications. When quantification is not reliable, involves an excessively high level of uncertainty, or the company lacks the necessary expertise and resources, it is permissible to provide primarily qualitative information.

Climate change is the main exception. In fact, ESRS E1 continues to require specific information on the financial impacts of physical and transition climate risks, although it allows for greater use of estimates and simplifications.

A more balanced dual materiality

The principle of double materiality remains the foundation of the ESRS, but the process by which companies must identify material impacts, risks, and opportunities has been simplified.

Data collection along the value chain is also becoming more flexible. Companies can rely more heavily on industry data, averages, estimates, and publicly available information, without necessarily having to obtain primary data from every supplier or client.

Elimination of Sectoral ESRSs

The CSRD initially called for the future publication of ESRS Standards focused on specific economic sectors.

These standards were intended to supplement the general ESRS with new requirements and specific data points, for example, for sectors particularly exposed to environmental or social impacts.

With the Omnibus Reform, the European Commission’s obligation to adopt sector-specific standards has been eliminated. Therefore, no new mandatory sector-specific ESRS will be introduced.

Physical Climate Risks, Transition Risks, and Resilience

The new version of the ESRS E1 provides more explicit guidance on reporting climate change-related risks.

The new E1-2 requirement focuseson identifying climate risks and the potential use of scenario analysis. Companies must distinguish between:

• physical risks resulting from extreme events or long-term climate change;
• transition risks related to changes in regulations, technologies, markets, and consumer expectations.

Requirement E1-3, on the other hand, concerns climate resilience. The company must explain the extent to which its strategy and business model are prepared to address and adapt to material climate risks.

These topics were already included in the previous version of the ESRS, but they are now organized into standalone, more clearly identifiable requirements.

Why can compliance with ESRS Standards offer benefits?

Aligning with ESRS standards is not just a matter of regulatory compliance; it can also offer numerous tangible benefits—first and foremost in terms of competitiveness and reputation, but also with regard to access to sustainable financing, such as sustainability-linked loans, for example. Furthermore, with the entry into force of the new EBA guidelines, banks are required to consider ESG risks in their governance, and this translates into demands for robust ESG data from corporate clients.

In fact, thanks to the ESRS, companies will be able to disclose information in a transparent and standardized manner, thereby becoming more attractive to investors, who are increasingly basing their decisions on ESG data.

Furthermore, having uniform standards at the European level spares companies the bureaucratic headache of having to comply with multiple voluntary standards. In the long term, this will lead to a reduction in reporting costs and simplify internal processes.

It is worth noting that the ESRS does not encompass the full scope of ESG reporting requirements: it complements other European frameworks, such as the EU Taxonomy, with which consistency in data and calculation methods should be maintained.

In short, the ESRS serve as a sort of “lingua franca” of sustainability, facilitating communication and improving mutual understanding among companies, investors, and all stakeholders.

Differences Between GRI and ESRS Standards

The ESRS standards differ from the GRI (Global Reporting Initiative) Standards—one of the leading global benchmarks for sustainability reporting—primarily because of their focus on the European socioeconomic context.

Furthermore, another important difference is that the ESRS are binding, as they are linked to the CSRD, which requires European companies subject to it to report on their sustainability. In contrast, the GRI standards remain, so to speak, voluntary—even though they are widely adopted internationally.

Finally, while the ESRS are based on the principle of double materiality (considering both the company’s impact on the outside world and external risks to the company), the GRI standards focus primarily on impact materiality.

How were the ESRS Standards developed?

The ESRS standards were developed with the aim of standardizing the reporting process while taking into account the needs of businesses, rather than simply as regulations imposed from above. For this reason, they were created by EFRAG, an independent advisory body funded primarily by the European Union.

In fact, “investors, companies, auditors, civil society, labor unions, academics, and national standard-setting bodies,” thereby ensuring that the views of the various stakeholders were taken into account and allowing the ESRS to be tailored to the actual needs of businesses (for more information, see the official FAQs published by the EU).

The involvement of these stakeholders led EFRAG to make substantial changes to the first draft, significantly reducing the administrative burden on companies and cutting the number of reporting requirements originally proposed in half.

The Double Materiality Approach in the ESRS

One of the most important concepts related to the ESRS standards is the so-called double materiality approach. Those of you who are more familiar with the subject will recall that this concept is not new, as it was first introduced in 2019 in the “Guidelines on Non-Financial Reporting” and further solidified in 2021 with the CSRD.

This principle combines the two perspectives of materiality, taking into account both the impact that the company’s activities have on the external environment (impact-based or external materiality) and the extent to which risks from the external environment can affect the company’s value and economic performance (financial or internal materiality).

The principle of double materiality integrates these two perspectives, focusing on the long term: the negative impacts a company has on the world today can become future risks, which in turn will negatively affect the company’s economic value.

How to Align Your Company with the ESRS Standards

Compliance with ESRS standards may seem complex, but by following a structured approach, you can make the transition smoother and gain significant competitive advantages. Here’s how Ollum can support you:

1. Double Materiality Assessment: We conduct an in-depth double materiality assessment to understand your company’s starting point
2. Gap Analysis: We identify the discrepancies between the current state of corporate sustainability and the requirements of the ESRS standards in order to develop a targeted action plan.
3. Data Collection and Management: We structure the collection and processing of ESG data to ensure compliant and accurate reporting.
4. Sustainability Strategy Adaptation: We align your business strategy with the requirements of ESRS standards, integrating sustainability into your operations and reporting.
5. External Audit of the Report: We assist you in preparing your sustainability report and in requesting an external audit to certify its compliance.
6. In-House Training: We train your team on ESRS regulations and processes to ensure proper implementation and reporting.
7. Continuous Improvement Cycle: We apply the Deming cycle to monitor, verify, and continuously improve the implementation of ESRS standards.
8. Stakeholder Engagement: We promote effective communication and engage all stakeholders.

How can we support you?

The ESRS 2026 simplifies many requirements, but remains a complex undertaking: dual materiality, climate risk management, and data collection throughout the value chain require a structured approach. Ollum supports companies at every stage, from drafting the sustainability report to developing the sustainability plan, all the way through to training internal teams on ESRS regulations and processes.

If your company needs to comply with ESRS standards or wants to prepare in advance for their implementation, schedule a free consultation.

Sources

EU Commission Press Release: Adoption of the New ESRS Standards (July 3, 2026)