Revised ESRS: What Changes for 2027

The publication of the revised ESRS in the Official Journal of the European Union closes more than a year of negotiations on simplifying sustainability reporting. For companies still in scope of the CSRD, the framework is now settled, with a clear timeline and a sharply reduced volume of data. For companies that have left the scope, a voluntary standard now sets the boundary for what their clients and financiers can demand. Yet fewer datapoints do not mean lower expectations: materiality, governance and the value chain remain at the heart of the exercise. Here is what to remember, and how to turn this new framework into a management tool rather than a mere compliance exercise.

1. A framework finally settled: what the Official Journal publication means

Since the first set of standards was adopted, which we unpacked in our analysis of the 12 ESRS standards driving CSRD reporting, European sustainability reporting has gone through a period of unprecedented uncertainty. That phase is now over. According to ESG Today, the European Commission has published in the Official Journal both the revised ESRS for CSRD-covered companies and the voluntary standard designed for smaller companies. The publication follows the Commission’s adoption of the texts in July and the expiry of the scrutiny period by the European Parliament and the Council.

The timeline is now fixed. Under the published text, the regulation enters into force on 10 November 2026 and applies to financial years beginning on or after 1 January 2027. Both acts can be consulted directly on EUR-Lex: the delegated regulation on the revised ESRS and the delegated regulation establishing the voluntary standard. There is an important point for companies wishing to move early. EFRAG notes that the revised standards may be applied early for financial year 2026 once the delegated act has entered into force.

The road travelled is worth recalling, because it explains the spirit of the texts. The process was launched in early 2025 under the Omnibus I initiative. EFRAG delivered its final revision in December 2025, the Commission published draft texts with minor modifications in May 2026, and it adopted the final texts in July. During the May 2026 consultation, the Commission described the new standards as shorter and clearer. It said they would give companies new flexibilities and a simpler materiality assessment. As early as June 2025, our article on ESRS simplification identified the levers that would shape this reform: an overhaul of double materiality assessment procedures, business model-driven approaches, and a restructured relationship between minimum disclosure requirements and topical specifications.

The orders of magnitude are significant. The Commission’s 3 July 2026 announcement states that the revised ESRS cut mandatory datapoints by more than 60% and total datapoints by more than 70%. These changes are expected to lower reporting costs by more than 30% per company, exceeding the Commission’s target of a 25% reduction in reporting burdens.

The scope has also been profoundly redrawn. The Omnibus package reduced the number of companies covered by the CSRD by 90%. It removed companies below the thresholds of €450 million in revenue and 1,000 employees, compared with the previous 250-employee threshold. This is where the second piece of the framework comes in: the voluntary standard. EFRAG, welcoming the adoption of both standards, explains that this voluntary standard builds on the VSME Recommendation. It is meant to help SMEs respond to information requests from larger companies, investors and financial institutions. EFRAG has also updated its non-mandatory guidance, published it in English on its Knowledge Hub, and is working with national standard setters on translations.

2. Fewer datapoints, not lower expectations: what really matters

It would be tempting to read this revision as a signal of disengagement. That would be a misreading. Cutting datapoints shifts the demand rather than removing it. The focus moves to the quality of judgment, the robustness of processes, and the ability to demonstrate what is truly material.

Double materiality becomes the real core of the framework. Fewer imposed datapoints mean greater responsibility for choosing what gets disclosed. The principle remains the one we described in Understanding the Concept of Double Materiality. Companies must manage the financial risks that social and environmental factors create for them. They must also take responsibility for the actual and potential adverse impacts of their decisions on people, society and the environment.

The method for mapping impacts, risks and opportunities (IROs) therefore remains decisive. As we stressed in our guide to conducting a double materiality analysis, companies are held accountable for their double materiality, so tracing each IRO together with its analysis and results is critical. A more “top-down” approach does not remove the need for traceability. On the contrary, it requires the reasoning to be documented, defensible before the auditor, and consistent with strategy.

Governance does not come out of the reform any lighter. Shorter reporting is also more exposed reporting: every materiality trade-off becomes a leadership decision. As we wrote in our article on CSRD and board-level ESG accountability, boards have a role to play, which makes CSRD an exercise in which top management has real skin in the game. Directors must be able to explain why an issue is retained or dismissed. They must also show how it translates into targets, action plans and remuneration.

Social and human rights issues remain fully in scope. Simplification does not remove the social topical standards, particularly those on value chain workers and affected communities. Our case study on how a food company uses ESRS S3 shows how the notion of “affected communities” is spreading to new sectors. That notion was long handled mainly by extractive industries. For companies exposed to agricultural, mining or manufacturing supply chains, these issues will remain material, however many datapoints there are.

The value chain cap changes the relationship with suppliers. This is probably the most structurally important innovation for business ecosystems. The Commission introduced a cap: CSRD companies cannot require value chain partners with 1,000 employees or fewer to provide information beyond what the voluntary standard sets out. That standard is itself based on EFRAG’s 2024 VSME, which the Commission endorsed through a recommendation in 2025. We anticipated this issue in our analysis of CSRD simplification under the Omnibus package. There we noted that value chain reporting remains, but with capped requirements, and that data gathering must not overwhelm smaller business partners. In practice, supplier questionnaires, ESG clauses and data collection platforms will need to be reviewed to stay within this framework. They must still preserve the information needed to manage risks.

The link with due diligence remains a point of attention. Reporting and due diligence were simplified by the same Omnibus package, but they follow different logics. Our article CSDDD Under Siege: Why Business Divides on Regulation described how the Omnibus created confusion and regulatory uncertainty. It also argued for building robust due diligence systems without waiting for full regulatory clarity. A cap on the data requested from suppliers does not reduce the risks present in the value chain. As we recalled in Why Due Diligence Demands Real Dialogue, effective due diligence is impossible without genuine dialogue. Engagement must be calibrated to the nature and severity of the risks identified. Reporting should reflect that dialogue, not replace it.

3. Roadmap: turning compliance into a management lever

With entry into force on 10 November 2026 and application to financial years beginning on or after 1 January 2027, the preparation window is short. Here are the workstreams we recommend opening now.

Workstream 1: run a gap analysis between current reporting and the revised ESRS. Companies that have already published a sustainability statement have a valuable foundation. The task is to identify what can be kept, what becomes optional and what needs to be reworded. Our article CSRD and EU ESRS Standards: What You Need to Know recalls that EFRAG and the Commission aligned the CSRD’s technical criteria with other EU regulations. This applies in particular to the SFDR for principal adverse impact indicators and to the taxonomy. These interdependencies must be built into the gap analysis. Removing a datapoint from the sustainability statement does not necessarily remove it from investors’ expectations.

Workstream 2: revisit the double materiality assessment. Checklist approaches have shown their limits. The revision is an opportunity to return to a strategic, business model-based reading. Our briefing on CSRD and data collection makes a related point. Companies that have already reported need to verify and update their data collection. Good governance of that process is critical for data quality, integrity and compliance. This is precisely the spirit of the new standards.

Workstream 3: redesign value chain data collection. Two groups of partners must now be distinguished. The first are partners covered by the cap, whose information requests must stay within the content of the voluntary standard. The second are all other partners. Companies will benefit from aligning their questionnaires with the voluntary standard and with EFRAG’s updated guidance. Doing so also eases the burden on suppliers who receive requests from several clients. In high-risk supply chains, information needed for due diligence will have to be obtained by other means: audits, dialogue and field-level support programmes.

Workstream 4: plan for international interoperability. Groups operating across several jurisdictions must deal with the ESRS, the ISSB and other regimes. Our comparison of SEC rules with CSRD/ESRS and IFRS provides a framework for building a single data foundation that can be adapted to each standard. Stronger convergence with the ISSB makes this approach more realistic than it was under the first set of standards.

Workstream 5: decide at board level whether to apply the standards early. Applying the revised ESRS from financial year 2026 can immediately lighten the workload and signal control to the markets. However, this decision requires internal processes to be ready and statutory auditors to be involved upstream. It is a governance decision as much as a technical one.

Workstream 6: support SMEs in your value chain in adopting the voluntary standard. For companies outside the scope, the voluntary standard is not an obligation. It is, however, becoming the common language of information requests. Buyers have every interest in helping their suppliers adopt it. This leads to more reliable and comparable data, and it strengthens the resilience of their supply chains.

Ultimately, this revision confirms a conviction we have long defended: sustainability reporting is only valuable if it informs decisions. The revised ESRS offer a framework that is more readable, more proportionate and better aligned with international standards. It is now up to companies to use it for what it should be: a tool for steering risks and opportunities, in service of the competitiveness and resilience of their business models.

Ksapa supports companies in implementing the revised ESRS, from double materiality assessments to structuring value chain data collection. Contact us.

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