On 3 July 2026, the European Commission adopted revised European Sustainability Reporting Standards (ESRS) and a new voluntary reporting standard for smaller companies (VSME). The documents set out how companies should report on environmental, social and governance matters, providing investors and other market participants with information relevant to assessing sustainability-related risks.
The revised ESRS are intended to be easier to apply. The number of mandatory data points has been reduced by more than 60%, while the total number of data points has been cut by more than 70%. According to the Commission, this is expected to reduce reporting costs per company by more than 30%.
The voluntary reporting standard is intended for smaller companies that are not subject to the obligations arising from the CSRD but may nevertheless be asked to provide sustainability-related data by larger business partners and financial institutions. A “value chain cap” mechanism has been introduced to protect smaller entities within the value chain from requests for information that go beyond the scope of the standard.
Both delegated acts will now be submitted to the European Parliament and the Council of the European Union. They will enter into force after a two-month scrutiny period, which may be extended by a further two months.
European Commission communication on the revised ESRS and VSME
