Revised ESRS and new Voluntary Standard: what changes

On 21 September 2026 the Official Journal of the European Union published the revised ESRS and the new Voluntary Standard (VS) for “SMEs”. After months of drafts, proposals and “almost final” texts, we now have the official versions (with one small surprise). They should bring stability for the coming years, although there will be a transition period, questions of interpretation and decisions to take.

Delegated Regulation (EU) 2026/1563, with the revised ESRS

It amends Delegated Regulation (EU) 2023/2772 and replaces both of its annexes: Annex I with the rewritten ESRS and Annex II with acronyms and glossary. It runs to 163 pages of Official Journal, of which the articles take three.

First things first: who does it apply to?

As we already knew, the scope is set by the Omnibus Directive, not by this regulation: large EU companies with more than 1,000 employees on average and a net turnover above EUR 450 million, with an exemption for subsidiaries included in the parent’s consolidated report. The standards for third-country groups are still in draft. In Spain, until transposition is complete, companies subject to Law 11/2018 must still publish their annual non-financial information statement (EINF), although we would expect the CNMV and the ICAC (the Spanish securities and audit regulators) to recommend the new ESRS.

Simplification in numbers

The explicit objectives: fewer datapoints; quantitative data before descriptive text; a clearer line between mandatory and voluntary disclosures; clear instructions on how to apply materiality; better consistency with other EU legislation; and interoperability with global standards, essentially ISSB’s IFRS S1 and S2. The implicit objective (like it or not): deregulation.

The order of magnitude, counted on EFRAG’s draft list of datapoints: mandatory datapoints (“shall”, excluding general disclosure requirements) fall from 783 in the 2023 act to 292 in the revised one, a cut of around 63%. The Excel template is a supporting list, not a legal text, and is open for review until 23 October, so it is best treated as an approximation. The Commission’s official communication speaks of “more than 30% cost savings per company”.

Careful! A metric that disappears does not mean the topic disappears. G1-6, for example, keeps the information on payment terms, compliance and pending legal proceedings.

And careful with old texts! The Commission departed from EFRAG’s advice on thirteen matters, including materiality, fair presentation, the option to omit information, anticipated financial effects, GHG emissions and transition plans. The text we analyse here is the Commission’s.

What stays

Double materiality remains the foundation. ESRS 1 allows a top-down approach (para. 27), keeps the bottom-up approach (para. 28) and lets companies combine them. At each reporting date, the company checks whether significant changes require the assessment to be updated.
Fair presentation becomes a guiding principle: sufficiency is judged on the sustainability statement as a whole and, when applying the ESRS leaves out something material, entity-specific information is added.
The climate transition plan is a disclosure obligation. Companies must state whether their targets are science-based and compatible with 1.5°C and, if not, explain this against the reference values. A company without a plan must say so under paragraph 13 of E1-1, and indicate whether and when it intends to adopt one.
The value chain does not disappear. The cap limits what can be requested from a supplier, but the obligation to report on material IROs in the value chain remains. To cover it, estimates, sector averages and other reasonable proxies are accepted, always explaining the method and its limitations.
Scope 3 remains for significant categories. Separately, the GHG accounting boundary can follow financial control, equity share or operational control.

The transitional exemptions

These exemptions can save more work than the choice of version. ESRS 1, section 10.3, phases in obligations according to three different situations.

First-wave companies that still exceed both thresholds (para. 125): they may omit E4, S2, S3 and S4 for financial years before 2027, anticipated financial effects until 2028 (and their quantification until 2030), substances of concern until 2030 and several workforce and non-employee datapoints until 2027.
Official surprise! First-wave companies that do not exceed at least one (the “and” of the adopted text was replaced by “or” in the corrigendum of 25 August) of the two thresholds (para. 126): they may omit the requirements of all topical standards for financial years before 2027. In practice, their sustainability statement for 2026 may leave out the specific topical requirements, but must keep the summary information on material topics required by ESRS 2.
New reporters from 2027 (para. 127): they may omit E4, S2, S3 and S4 in their first two financial years, with their own deadlines for the rest.

In all cases, companies using these omissions must still disclose, under the ESRS (para. 8), whether the IROs of those topics turned out to be material in their assessment.

Dates

Article 3 has a welcome elegance: the regulation enters into force on 10 November 2026 and applies to financial years beginning on or after 1 January 2027. For this year’s financial statements, Article 2 opens three routes:

The current ESRS (the previous Annex I);
The new ESRS (the new Annex I);
Or the current ESRS with eight specific exceptions from ESRS 1, which the regulation identifies paragraph by paragraph.

In all cases, Article 2(2) requires companies to state which version they apply. Without that statement, readers of the 2026 reports cannot know what they are comparing.

Our recommendations, case by case

As a starting point, we suggest staying with the ESRS already in use for now, but there are at least four different situations:

System in place and closing well advanced. Prioritise continuity for 2026, whose report will be published in 2027, and review the reliefs available in the previous ESRS and the eight authorised exceptions. If paragraphs 125 or 126 of the revised standards look attractive, compare the savings with the cost of adopting that version.
Heavy burden or change of scope after the Omnibus. First check whether the company falls below one of the two thresholds, because paragraph 126 changes the scope of the 2026 report entirely. Then compare the cost of the transition with the real savings.
Group with obligations in several countries or with consolidation instructions. Coordinate the decision before setting the local version. A parent and a subsidiary applying different versions complicate consolidation and assurance.
Spanish company subject to Law 11/2018. Check which national contents must be kept even when using the ESRS. Transposition is still under way and the EINF is still required. We shall see what the CNMV and the ICAC say…

These are starting ideas. The decision belongs to the management committee, supported by Sustainability and Finance, because it affects the financial calendar and the costs of training, systems, preparation and assurance. Any change can have a very concrete consequence for assurance: assumptions, investment decisions and consistency with the financial statements will all have to be defended.

Delegated Regulation (EU) 2026/1560, with the Voluntary Standard (VS) for “SMEs”

The title tells the whole story: standards for voluntary use by companies protected by the value-chain cap. The standard obviously exists to protect SMEs, but not only them.

Who: companies outside the mandatory scope with no more than an average of 1,000 employees in the previous financial year. In other words, quite a few companies that are not exactly SMEs.
Structure: a basic module of eleven disclosures (B1 to B11) and a comprehensive module of nine more (C1 to C9) on strategy, climate targets and risks, human rights and governance. The comprehensive module also requires the basic one, and for companies with ten employees or fewer several core datapoints become voluntary.
Compared with the ESRS: a much narrower scope, no formal double materiality assessment and no assurance requirement, which leaves that decision to each company.
The cap: Article 3(2) limits the information that can be requested to the datapoints specified in Annex II, and recital 4 clarifies that these are only the core datapoints, in two lists: one for companies with more than ten employees and another for those with ten or fewer. Within that scope it is a right, not a matter of goodwill. The reporting company may ask for more, as long as it identifies that part as outside the cap and warns that the other company may refuse.
The small print: the cap only applies to information gathered for reporting under Directive 2013/34/EU. It does not cover what is needed to comply with other legal obligations, which is different from any request labelled as prudential or taxonomy-related. For those cases, recital 5 merely encourages banks and insurers to stick to Annex I.
The end of the VSME: Recommendation (EU) 2025/1710, the VSME that many companies were already using, ceases to have legal effect from the entry into force.

Article 4 sets entry into force three days after publication, that is, 24 September 2026. Article 3, the one with the cap, applies to financial years beginning on or after 1 January 2027: for calendar years, a little over three months away. If the cap is really respected, it will be a positive, if modest, step.

Simplification does not change the context

On the same Monday, the Potsdam Institute published the Planetary Health Check 2026: seven of the nine planetary boundaries have been crossed, and all seven are getting worse. The headline data: 426 ppm of CO₂ and warming of 0.30°C per decade between 2016 and 2025, against 0.19°C per decade in 1980-2020.

It is worth recalling what the standard says about reduction targets: they are gross. AR 12 of E1-6 prohibits counting removals, carbon credits or avoided emissions as a means of achieving them. Removals are reported separately, under E1-9. Companies that include them in their planning should review their assumptions on permanence and reversal risk, and present them separately from reductions.

We have been writing the same thing since 2014: information is there to make decisions, and deciding is the hard part. This publication completes a review cycle, but the system the framework aims to measure kept deteriorating on the same day. An impeccable report under the revised ESRS and a rising emissions curve are perfectly compatible. Simplification was necessary; the interesting question now is whether more energy will go into action.

That said, simplification is not free for those who were ahead. Companies that invested early in data systems face real adaptation costs, and there is a risk of losing comparability just when it is most needed to tell the company that performs well from the one that tells its story well. Those with better data and controls will keep their advantage, even if the market becomes less able to see it.