Last updated: May 29, 2026. The European Sustainability Reporting Standards (ESRS) are the detailed reporting standards used by companies that are in scope of the EU Corporate Sustainability Reporting Directive (CSRD). They explain what sustainability information must be included in the management report, how double materiality should be applied, and how companies should disclose impacts, risks, opportunities, policies, actions, targets, and metrics.
Short answer: ESRS reporting is mandatory for companies that are in scope of CSRD, but the scope of CSRD has changed substantially. The 2025 Stop-the-Clock Directive delayed reporting for later waves, and Directive (EU) 2026/470 narrowed the mandatory reporting population. At the same time, the European Commission is revising the ESRS themselves. As of late May 2026, revised ESRS and a voluntary standard for smaller companies are in public feedback, with feedback open until June 3, 2026.
What are the ESRS?
The ESRS are the EU's sustainability reporting standards. The European Commission adopted the first set of ESRS in July 2023 through Commission Delegated Regulation (EU) 2023/2772. Companies subject to CSRD use the ESRS to prepare a sustainability statement within the management report.
The ESRS are intended to make sustainability reporting more consistent, comparable, and useful. They are built around double materiality, which means companies look at both sides of sustainability relevance:
- Impact materiality: how the company affects people and the environment.
- Financial materiality: how sustainability matters affect the company's development, performance, position, cash flows, access to finance, or cost of capital.
This is what makes ESRS reporting different from a general sustainability narrative. A company needs to identify material sustainability matters, explain governance and strategy, disclose relevant metrics and targets, and keep enough evidence behind the report for internal review and assurance.
The ESRS structure
The first set of ESRS contains two cross-cutting standards and ten topical standards.
ESRS 1: General Requirements
ESRS 1 explains the architecture of the standards. It covers the reporting principles, double materiality, value chain, time horizons, due diligence links, reporting boundaries, estimation, presentation, and how sustainability information should be prepared.
In practice, ESRS 1 is where a company works out the logic of its report: what is material, what is in scope, what information is entity-specific, what can be estimated, what evidence exists, and how the sustainability statement connects to the rest of the management report.
ESRS 2: General Disclosures
ESRS 2 sets out general disclosures that apply across sustainability topics. It covers governance, strategy, impact/risk/opportunity management, and metrics and targets. It is the backbone of the sustainability statement because it explains how the company manages sustainability matters rather than only listing topic metrics.
For many first-time reporters, ESRS 2 is where the biggest process gap appears. The company may have emissions data, policies, or initiatives, but not yet have a clear description of board oversight, management responsibilities, risk processes, stakeholder input, materiality decisions, or controls.
Topical standards
The ten topical ESRS cover environmental, social, and governance matters:
- ESRS E1 Climate Change;
- ESRS E2 Pollution;
- ESRS E3 Water and Marine Resources;
- ESRS E4 Biodiversity and Ecosystems;
- ESRS E5 Resource Use and Circular Economy;
- ESRS S1 Own Workforce;
- ESRS S2 Workers in the Value Chain;
- ESRS S3 Affected Communities;
- ESRS S4 Consumers and End-users; and
- ESRS G1 Business Conduct.
These topical standards should not be treated as generic optional reading. They are applied through materiality. If a topic is material, the relevant disclosure requirements and datapoints need to be considered. If a topic is not material, the company should still be able to explain the assessment behind that conclusion, particularly for topics investors, customers, regulators, or assurance providers are likely to question.
What changed under Stop-the-Clock and Omnibus I?
The ESRS guide has to be read together with the updated CSRD timeline and scope. Two recent EU changes matter most:
- Directive (EU) 2025/794, the Stop-the-Clock Directive, postponed reporting for wave 2 and wave 3 companies by two years.
- Directive (EU) 2026/470, the Omnibus I substantive directive, narrowed the mandatory sustainability reporting scope and required a major simplification of the ESRS.
Under Directive (EU) 2026/470, the main EU undertaking and group thresholds now focus on undertakings or groups that exceed EUR 450 million in net turnover and an average of 1,000 employees during the financial year. The directive also changed the third-country reporting architecture, including an EU turnover threshold above EUR 450 million and an EU subsidiary or branch threshold above EUR 200 million.
This means many companies that had been preparing under the original CSRD wave assumptions should reassess their scope position before continuing with a full ESRS implementation project.
The ESRS are being revised
EFRAG submitted technical advice on draft simplified ESRS to the European Commission in December 2025. The proposal reduces mandatory datapoints by 61%, deletes voluntary disclosures, simplifies the materiality assessment, introduces more flexibility in value-chain information, and keeps closer alignment with international standards where possible.
On May 6, 2026, the European Commission launched public feedback on draft final versions of revised ESRS and a voluntary reporting standard for smaller companies. The Commission said the draft revised ESRS reduce mandatory datapoints by more than 60%, total datapoints by more than 70%, and reporting costs per company by more than 30%. The Commission plans to adopt the delegated acts after feedback and then send them to the European Parliament and Council for scrutiny.
For companies preparing now, the practical point is simple: do not ignore ESRS readiness, but do not blindly implement every old 2023 datapoint as if nothing has changed. The right approach is to understand the current adopted ESRS, track the revised standards, and prioritize the areas that will still matter under either version: materiality, climate data, governance, risk processes, policies, actions, targets, and evidence.
Sector-specific standards are no longer the near-term focus
Under the original CSRD architecture, sector-specific ESRS were expected later. Directive (EU) 2026/470 removes the immediate empowerment to adopt sector-specific reporting standards. The focus has shifted from expanding the ESRS framework to simplifying the existing cross-sector standards.
That does not mean sector context is irrelevant. A bank, manufacturer, logistics provider, software company, food business, or energy-intensive company will still face different material topics and data challenges. But companies should not plan around a near-term sector-specific ESRS rulebook. They should use sector context to support a better materiality assessment and more specific disclosures.
What smaller companies and suppliers should know
Many smaller companies are no longer directly in mandatory CSRD scope after the Omnibus changes. However, they may still receive sustainability data requests from larger customers, lenders, investors, or procurement teams.
The EU is also moving toward a value-chain cap. The Commission's May 2026 materials explain that CSRD in-scope companies cannot require value-chain partners with 1,000 employees or fewer to provide information beyond the voluntary standard for smaller companies. This matters for suppliers because it gives a more proportionate reference point for customer data requests.
In practice, suppliers may still be asked for focused information such as Scope 1, Scope 2, and relevant Scope 3 emissions, workforce policies, responsible sourcing evidence, human-rights processes, or product/service-level information. A supplier does not always need a full ESRS report. It may need a concise, evidence-backed response that matches the customer request.
How companies should prepare
A practical ESRS readiness project should start with scope and decision-making, not with a long reporting template. Useful steps include:
- Confirm whether the company or group is directly in scope under the latest CSRD thresholds and local transposition rules.
- Identify whether the request is legal reporting, customer reporting, investor reporting, lender reporting, or voluntary readiness.
- Map the entities, locations, business units, products, services, and value-chain relationships that could affect the reporting boundary.
- Run a proportionate double materiality assessment with clear evidence for judgments.
- Build a gap analysis against ESRS 2 and the likely material topical standards.
- Calculate Scope 1, Scope 2, and relevant Scope 3 greenhouse gas emissions where climate is material or customer requests require it.
- Document data sources, owners, assumptions, estimation methods, and review controls.
- Prepare governance, risk-management, policy, action, target, and metric disclosures in a way that can be reviewed and refreshed.
- Track the revised ESRS delegated act before finalizing a full reporting build.
For emissions-heavy requirements, Keslio can support GHG emissions calculations. For broader reporting projects, Keslio can support sustainability reporting and communications. If the trigger is a customer questionnaire or buyer request rather than a legal filing, Keslio can also support supplier request support.
Common mistakes to avoid
- Using the original CSRD wave thresholds without checking the Stop-the-Clock and Omnibus I changes.
- Assuming every company with EU customers must prepare a full ESRS sustainability statement.
- Calling the topical standards optional; they are materiality-based.
- Building a reporting template before confirming the material topics and evidence base.
- Collecting excessive value-chain data from smaller suppliers without checking proportionality and the value-chain cap.
- Treating the revised ESRS as already adopted before the delegated-act process is complete.
- Writing broad sustainability claims without documented metrics, methods, and ownership.
- Leaving assurance readiness until the report is already drafted.
Where ESRS fits in a practical sustainability program
ESRS reporting can look like a compliance exercise, but the useful work is operational. It forces a company to understand its material impacts, climate risks, workforce issues, governance processes, value-chain dependencies, and data controls. Done well, it can improve decision-making and make customer, investor, and lender conversations easier.
Done badly, it becomes a rushed disclosure project that produces long text but weak evidence. The most efficient path is to build a reporting base that can be reused: materiality logic, data owners, calculation files, policies, evidence folders, and a clear explanation of what has changed year to year.
Need help applying the ESRS?
If your team is trying to understand whether ESRS applies, how the revised standards affect your roadmap, or how to respond to an ESRS-linked customer request, Keslio can help turn the requirements into a practical workplan, data request list, emissions calculation, and reporting evidence pack.
