On September 21, 2026, the European Commission officially adopted Delegated Regulation (EU) 2026/1563, amending the current European Sustainability Reporting Standards (ESRS). This revision introduces a series of substantial simplification measures, expected to reduce corporate reporting costs by over 30%. The new regulation will enter into force on November 10, 2026, and will apply to financial years beginning on or after January 1, 2027.
Key Simplification Measures
1. Significant Reduction in Data Points
The number of mandatory data points has been reduced by over 60%, and the total number of data points by over 70%, alleviating the burden of data collection and reporting at the source.
2. Optimized Data Presentation
The standards explicitly prioritize quantitative data points and reduce requirements for lengthy narrative text, making reports more concise and objective.
3. Clarification of the "Double Materiality" Principle
Addressing pain points in applying the "Double Materiality" assessment, the revision provides clearer operational guidance to help companies more precisely define the scope of their disclosures.
4. Distinction Between Mandatory and Voluntary Disclosures
The boundary between mandatory and voluntary data points has been further clarified to prevent over-disclosure caused by ambiguity.
5. Enhanced Legislative Alignment and Global Interoperability
The revision improves alignment with other EU legislation (such as the CSDDD) and considers interoperability with global sustainability reporting standards where possible, facilitating global compliance for multinational enterprises.
6. Flexibility in GHG Accounting Boundaries
Regarding greenhouse gas emissions disclosure, the previous requirement to simultaneously apply both the "financial control" and "operational control" approaches has been removed. Companies are now free to choose between the financial control, operational control, or equity share approaches, aligning with the GHG Protocol and the IFRS Sustainability Disclosure Standards.
7. Asset Management Exemptions and Value Chain Cap
Asset managers acting solely in a fiduciary capacity, without assuming ownership risks or returns, are exempt from assessing the impacts, risks, or opportunities of their managed investments. Additionally, a "value chain cap" principle has been established, clarifying that companies subject to the CSRD cannot require entities in their value chain to disclose information beyond the scope of voluntary standards.
Transitional Arrangements
To ensure a smooth transition between the old and new standards, the regulation offers flexible options for companies in specific transitional periods. For companies whose financial years begin between January 1, 2026, and December 31, 2026, there is an option to voluntarily apply either the previous ESRS standards or the new simplified standards. Alternatively, companies may choose to continue applying the old standards while adopting certain simplification measures. To ensure transparency, companies must clearly state the version of the standards applied and their specific choices in their sustainability statement.
