What is ESRS?

What is ESRS? The Short Answer

ESRS — the European Sustainability Reporting Standards — are the twelve mandatory standards that define what a company in scope of the EU’s Corporate Sustainability Reporting Directive must actually disclose about its environmental, social and governance performance. They are EU law, adopted as a delegated regulation, and they are directly binding without national transposition.

The cleanest way to hold the two apart: the directive creates the duty; the standards define the content. The CSRD says an undertaking must report on sustainability. It does not tell anyone what to write. That job belongs to ESRS.

Where the 2026 rewrite landed, in three numbers:

• 60%+ — the cut in mandatory datapoints, from roughly 1,073 to around 320
• ~5,000 — companies still in scope, down from an original population near 50,000
• FY2027 — the first mandatory financial year, with reports published in 2028

The distinction between directive and standards matters more than it sounds, because the two have moved on separate tracks at different speeds. The CSRD was amended by the Omnibus I Directive, in force since 18 March 2026, which narrowed dramatically who must report at all. The standards themselves were rewritten through a separate process, adopted on 3 July 2026, and are — at the time of writing — still waiting to clear parliamentary scrutiny. Anyone reading a summary published between those two dates is reading a description of a moving target. That is the single largest source of confusion about ESRS in 2026, and it is worth resolving before anything else.

ESRS at a Glance

Everything a first-time reader needs to hold in their head, before any of the detail.

ESRS vs CSRD: What Is the Difference?

This is the single most common point of confusion, and it has a one-line answer: the CSRD is the law that says you must report; ESRS is the standard that says what to report. One creates the obligation, the other fills it with content. You comply with the CSRD by applying ESRS.

The Twelve Standards, and How They Fit Together

The architecture survived the rewrite intact. Two cross-cutting standards apply to every reporting undertaking; ten topical standards apply only where a materiality assessment concludes they should.

Working out which of the twelve applies to you is the entire purpose of the double materiality assessment, and it is why two organisations in the same sector can produce sustainability statements of very different lengths without either being non-compliant. The mechanics of that assessment — the four steps, the scoring, the thresholds — are set out in our companion guide to double materiality.

One structural change deserves flagging here. Under the 2023 text, the topic list at Application Requirement 16 was the mandated starting point for the assessment. Under the revised text it becomes Appendix A, and its use is no longer required. The sub-sub-topic layer has been removed entirely, with some former sub-sub-topics promoted to sub-topics. If your assessment methodology hard-codes AR 16 as its universe of topics — and most first-cycle methodologies did — that dependency is now optional rather than prescribed, and the burden of justifying your topic universe shifts onto you.

ESRS 2026: What Changed

The Commission adopted the revised standards on 3 July 2026, closing a process that began with the Omnibus proposal in February 2025. The reductions are substantial, and they are structural rather than cosmetic.

Why 70% fewer datapoints does not mean 70% less work

This is the most consequential misreading of the rewrite, and it is worth stating plainly: the datapoints that were removed are disproportionately the cheap ones.

What remains concentrated in the surviving portion is the climate inventory, the transition plan, workforce and governance disclosures, taxonomy ratios and the materiality narrative — precisely the areas that consume the most time, require the most cross-functional coordination, and are hardest to assure. A company that budgeted its reporting programme on headcount-hours will not see those hours fall by 70%. It will see the volume of boilerplate fall sharply while the analytically demanding work stays where it was.

There is a second-order effect worth planning for. The revision leans harder on fair presentation and entity-specific disclosure, which means fewer prescribed boxes and more judgement about what is material and relevant. Judgement is cheaper to write and more expensive to defend. Teams that treated Set 1 as a checklist will find the revised standards require a documented rationale where the checklist used to supply one.

ESRS E1 — The Standard You Cannot Quietly Omit

Every topical standard applies only where material. E1, covering climate change, carries an additional condition that sets it apart from the other nine — and this is one of the few places where the revision changed the answer rather than the wording.

We flag this because the “documented forward-looking analysis” framing has been reproduced widely, including in an earlier version of this guide, as though it described the state of the law going forward. It describes Set 1. If you are planning against the revised standards, plan against the revised text.

The practical consequence is unchanged in substance: E1 is the de facto baseline for almost every in-scope undertaking, because building a defensible justification for omission is frequently harder than reporting. Among first-wave reporters, climate came out material for nearly all of them — in ESMA’s review of 91 sustainability statements, for every single one.

The climate standard also expanded rather than contracted. It moves from nine disclosure requirements to eleven, reorganised into three sub-sections — strategy, impact and risk, and metrics and targets. The additions reflect where regulators concluded the first reporting cycle had been weakest.

One detail in that table is easy to skim past and expensive to get wrong. GHG reduction targets must be gross — removals, carbon credits and avoided emissions cannot count toward them. An organisation whose net-zero pathway relies on offsets will find that the offsets are disclosed, but do not reduce the target denominator. If your carbon accounting platform reports a single net figure to the board, that number is not the number E1 asks for.

Transitional reliefs that expire

The 2025 “quick fix” delegated regulation introduced phase-ins that remain available for eligible reporters. Undertakings with 750 employees or fewer may omit Scope 3 and total GHG emissions in their first year. For the anticipated financial effects disclosure, first-wave reporters saw requirements originally due in 2025 and 2026 pushed to financial year 2027, and qualitative-only reporting is permitted for a period where quantitative data is impracticable. The revised standards add a further two-year grace period on some transition risk and opportunity information for companies starting to report from FY2027, extending to four years for certain quantitative information.

These are temporary by design. A reporting programme built around them needs a dated plan for what replaces them — and the plan should name the year, not the intention.

Who Still Has to Report

This is where the Omnibus changed the picture most sharply, and it is a separate question from what the standards contain. The thresholds come from Directive (EU) 2026/470, published in the Official Journal on 26 February 2026 and in force since 18 March 2026.

The change is often described as a simplification. In scope terms it is closer to a removal: the previous employee threshold was 250, and raising it to 1,000 while adding a cumulative turnover test cut the reporting population from an original figure near 50,000 undertakings to roughly 5,000 — a reduction the Commission itself has put at around 80%.

When ESRS Applies — The Dates That Actually Bind

Three different clocks run in parallel here, and conflating them is the source of most scheduling errors.

For financial year 2026 there are three legitimate positions, and choosing between them is a real decision rather than a formality: continue applying Set 1; early-apply the revised standards in full; or apply Set 1 while taking specified reliefs introduced by the amending act. Whichever route you take, the report must state which version of the standards it applies.

What Did Not Change — And Why It Matters More Than the Cuts

Most coverage of the Omnibus leads with the reductions. For anyone building or maintaining a reporting programme, what survived intact is the more consequential fact.

Double materiality remains the foundation. Undertakings still assess in both directions: how sustainability matters affect the business financially, and how the business affects people and the environment. This was the most contested element of the CSRD and the one many expected to be softened or made optional. It was neither. Our companion guide sets out how the assessment actually works, including what a regulator found when it read 91 of them.

The four-step assessment process and the EFRAG IG 1 methodology are unchanged. Work already completed against ESRS Set 1 is not wasted — the framework it was built on is the framework that continues. What changed is the amount of evidence the steps require, not the steps themselves.

The IRO logic survives. Impacts, risks and opportunities remain the unit of analysis, and ESRS 2 IRO-1 and IRO-2 remain the disclosure vehicles regardless of what the assessment concludes.

One addition rather than a subtraction: the revised ESRS 1 asks undertakings to consider annually whether significant changes — to activities, structure, business relationships, methodology or the external environment — would alter their materiality conclusions. The assessment is not a four-yearly project with a refresh cycle bolted on. It is a standing obligation to notice when your own answer has gone stale.

The practical consequence is a mismatch worth planning around. The simplification is real at the level of disclosure volume and largely absent at the level of analytical effort. You will write less. You will not think less.

The Value Chain Cap and the Voluntary Standard

One provision deserves attention from anyone who has ever sent a sustainability questionnaire to a supplier, because it changes what may lawfully be requested.

An undertaking in scope of the CSRD cannot require a value chain partner with 1,000 employees or fewer to provide more sustainability information than the voluntary reporting standard covers. The Commission adopted that voluntary standard as a separate delegated act on 3 July 2026, alongside the revised ESRS, with its own reduced datapoint set. The cap applies from financial year 2026.

Undertakings with ten employees or fewer receive additional relief, with certain harder environmental disclosures sitting above the cap entirely. For companies building supplier programmes, the design question is no longer how much you can ask for but how much value you can extract from a fixed, standardised answer — which is a different procurement conversation and, in practice, a different software requirement. Our supply chain ESG category covers platforms built around that constraint.

Assurance, Tagging and What Auditors Actually Test

The sustainability statement is subject to limited assurance by an independent third party. The reasonable-assurance upgrade that the original directive anticipated has been removed, and that removal changes what the engagement looks like in practice.

Limited assurance produces a negative-form conclusion: the practitioner states that nothing has come to their attention suggesting the statement is materially misstated. Reasonable assurance produces a positive opinion, requires substantially more testing, and costs considerably more. The distinction is not a technicality — it determines how much evidence a reporting team must be able to produce on demand.

In the first reporting cycle, assurance providers concentrated on three areas that a limited engagement can still probe hard: whether materiality thresholds were set explicitly and before scoring rather than inferred afterwards, whether value chain coverage was genuinely assessed or quietly scoped out, and whether the numbers in the statement reconcile to a documented source. Teams that could not evidence those three things found limited assurance considerably less comfortable than the word “limited” implies.

Separately from the assurance question, the sustainability statement sits inside the management report and is digitally tagged, which means the disclosures are machine-readable and comparable across filers by construction. That has a consequence people underestimate: an inconsistency between your tagged figures and your narrative is visible to anyone with a parser, permanently, without anyone reading your report.

ESRS vs GRI, ISSB, SFDR and the EU Taxonomy

Beyond the CSRD, four other frameworks get used interchangeably with ESRS in vendor material, and they are not interchangeable. The distinctions decide which obligations are yours and which are somebody else’s.

The interoperability work in the revision is worth reading as a signal rather than a courtesy. Adding ISSB and GRI as named guidance sources reduces the argument for maintaining three parallel reporting exercises, and it strengthens the case for a data layer that serves all of them from one set of numbers. If you report under more than one framework today, the question to put to your platform is whether it maps once and outputs three times, or whether it re-collects. Our guide to EU Taxonomy software covers the adjacent obligation in detail.

Who Writes These Standards, and Why That Explains the Rewrite

EFRAG drafts the technical content. The Commission adopts it as law. That division of labour explains a great deal about how the 2026 revision unfolded, and why the final text is not identical to the expert advice behind it.

The Commission’s own description of its departures from EFRAG’s advice was that it made targeted adjustments to ease the reporting burden further without undermining the directive’s objectives. For anyone tracking this closely, the practical lesson is to read the adopted act rather than EFRAG’s December advice. Summaries published between December 2025 and July 2026 describe a text that was subsequently changed — and a good number of them are still circulating, undated, at the top of search results.

What the Revision Changes About Software

Reporting platforms were built for Set 1, and Set 1 rewarded a particular architecture: exhaustive datapoint coverage, prescribed templates, checklist completion tracking. The revised standards reward something else.

Three shifts matter when you next evaluate a platform. Fewer mandatory datapoints and more entity-specific judgement means audit trail beats coverage — the question is no longer whether the tool holds all 1,144 fields but whether it can show who decided a topic was immaterial, on what evidence, and when. The annual reconsideration requirement means the materiality assessment is a living record rather than an annual document, so version history and change logging move from nice-to-have to load-bearing. And the value chain cap means supplier questionnaires need a ceiling built in, not a warning in the documentation.

We cover the platforms in this space in the ESG & Sustainability section, the collection layer in ESG data management, with scoring set out in our Evaluation Framework™.

Six Things People Get Wrong About ESRS

What to Do Now

1. If you are in scope under the new thresholds, the obligation is not in doubt and the first mandatory year is FY2027. The open question is whether to early-adopt for FY2026, which becomes available once the act is in force.
2. Pick your FY2026 route and write it down. Full application of the revised standards, continued application of Set 1, or Set 1 with specified reliefs. Whichever you choose, state it in the report.
3. If you have dropped out of scope — and most previously in-scope undertakings have — confirm your Member State’s position on the 2025–2026 exemption before you stop reporting. It is a national question, not an EU one.
4. If you supply a large reporting company, know the cap exists, that declining an over-broad request is a statutory right rather than a negotiating position, and that emissions metrics are the exception.
5. Put a calendar entry on the Official Journal. The single fact that will date every plan built this summer is the day the delegated act is published.

Sources & Verification

Every regulatory claim and every figure in this guide traces to one of the following. Where a number is a practitioner count rather than an official publication, or where sources disagree, the row says so — and so does the sentence in the body.

Frequently Asked Questions

What is ESRS?

ESRS stands for the European Sustainability Reporting Standards: the twelve standards that define what a company in scope of the EU’s Corporate Sustainability Reporting Directive must disclose about its environmental, social and governance performance. They are EU law, adopted as a Commission delegated regulation, and they bind directly without national transposition.

Is ESRS the same as CSRD?

No. The CSRD is the directive that creates the obligation to report and defines who owes it. ESRS is the set of standards defining what the report must contain. You comply with the CSRD by applying ESRS. The two were amended by separate instruments on separate timetables in 2026, which is why the scope change took legal effect months before the revised standards were even adopted.

What are the 12 ESRS?

Two cross-cutting standards that apply to every reporter — ESRS 1 (general requirements) and ESRS 2 (general disclosures) — plus ten topical standards that apply where material: E1 climate change, E2 pollution, E3 water and marine resources, E4 biodiversity and ecosystems, E5 resource use and circular economy, S1 own workforce, S2 workers in the value chain, S3 affected communities, S4 consumers and end-users, and G1 business conduct.

Who must comply with ESRS?

After Omnibus I, EU undertakings with more than 1,000 employees and more than €450m net turnover — both thresholds, cumulatively. Listed SMEs were removed from mandatory scope entirely. Third-country groups are captured where the parent generates more than €450m of net turnover in the EU and has an EU subsidiary or branch above €200m. The reporting population fell from an original figure near 50,000 undertakings to roughly 5,000.

What is ESRS E1?

The climate change standard, and the most demanding in the framework: transition plan aligned to 1.5°C, gross Scope 1, 2 and 3 emissions, energy consumption and mix, scenario analysis, resilience, internal carbon pricing, removals and credits disclosed separately, and the anticipated financial effects of physical and transition risk. It is also the only topical standard whose omission must be justified in public rather than simply recorded. The revision took it from nine disclosure requirements to eleven, reorganised into three sub-sections.

What changed in ESRS in 2026?

Mandatory datapoints fell by over 60% and total datapoints by over 70%, since every voluntary datapoint was removed. The sector-standard mandate was deleted, the planned reasonable-assurance upgrade was dropped, the AR 16 topic list became an optional Appendix A, the sub-sub-topic layer disappeared, and references to ISSB and GRI were added as guidance sources. Double materiality was not touched. The Commission expects reporting costs to fall by more than 30% per company.

Are ESRS mandatory?

Yes for undertakings in scope of the CSRD, and voluntary for everyone else. The first mandatory financial year under the revised standards is the one beginning on or after 1 January 2027, with statements published in 2028. Early application for financial year 2026 is voluntary and becomes available once the revised act is in force.

Are the revised ESRS in force yet?

Not as at 23 August 2026. The Commission adopted them on 3 July 2026 and they sit within the scrutiny period before the Parliament and the Council — two months minimum, extendable to four. Until that clears and the act appears in the Official Journal, ESRS Set 1 as adopted in 2023 remains the legally operative text.

About This Guide

Written and maintained by the AiGreenTools Editorial Team, which covers ESG, QHSE and industrial software for buyers running procurement and compliance programmes. This guide is a regulatory reference, not legal advice; for a filing decision, confirm the current status of the delegated act with your assurance provider or counsel.

Where to Go Next

The mechanics of the assessment that decides which of the twelve standards applies to you are set out in our companion guide to double materiality, which covers the four steps, the scoring approaches and what a European regulator found when it read 91 real assessments. For the directive rather than the standards, read What is CSRD?. If your next question is about tooling, start with the ESG & Sustainability hub and narrow from there: CSRD & ESRS reporting for statement production, ESG data management for the collection layer, and EU Taxonomy & SFDR for the adjacent financial disclosures. Climate obligations under E1 run through carbon accounting, climate risk and net zero planning; supplier programmes constrained by the value chain cap run through supply chain ESG. For a worked example, see our review of Greenly, and for the adjacent regulation our guide to EU Taxonomy software. Primary sources: the Commission’s adoption announcement, the EFRAG publication, the Council statement, and the consolidated ESRS Set 1 text.