EU Overhauls Sustainability Reporting Standards to Simplify Compliance by 2026

The European Commission is set to revise the first set of European Sustainability Reporting Standards (ESRS) with a Delegated Act expected by mid-2026. The move follows recommendations from the Platform on Sustainable Finance, which aims to simplify reporting and improve alignment across EU regulations. Companies and investors will soon face more integrated requirements, particularly around taxonomy alignment and transition planning.

Preparations for the ESRS changes began earlier this year. On July 11, 2025, the Commission adopted a 'Quick Fix' Delegated Act to give Wave-1 companies flexibility in their 2025-2026 reporting. This was published on November 10, 2025, as part of the Omnibus I package. Meanwhile, a public consultation ran from July 31 to September 29, 2025, before EFRAG submitted revised ESRS drafts and technical recommendations on December 2, 2025.

The Platform on Sustainable Finance has highlighted key issues in the current system. A major concern is the fragmentation between ESRS disclosures and the EU Taxonomy Regulation, which creates overlapping reporting demands. To address this, the Platform recommends a joint mapping exercise so companies can use a single set of datapoints for both frameworks.

Further proposals include developing a voluntary standardised template for transition plans within ESRS reporting. The Platform also calls for deeper integration of taxonomy metrics into corporate transition planning disclosures. Additionally, it suggests harmonising ESRS with the Sustainable Finance Disclosure Regulation and the Benchmark Regulation to strengthen the EU's sustainable finance ecosystem.

The outcome of the Commission's Delegated Act will determine how effective Europe's sustainability reporting framework becomes. It will also influence the credibility of the EU's sustainable finance agenda in global markets. Companies and investors must now prepare for stricter, more integrated reporting rules under the Corporate Sustainability Reporting Directive (CSRD).