A cover note from the EU Council, dated 9 July 2026, transmits two Commission delegated acts that revise and simplify sustainability reporting standards under the Corporate Sustainability Reporting Directive (CSRD). The first act amends the European Sustainability Reporting Standard (ESRS) for large companies still within CSRD scope—those with over 1,000 employees and more than EUR 450 million turnover. The second establishes a new Voluntary Sustainability Reporting Standard (VS) for smaller firms in the value chains of reporting entities, serving as a 'value chain cap' that limits data requests to what the VS requires. The documents, effective from 18 March 2026, aim to cut compliance costs while preserving core sustainability reporting objectives.
The revised ESRS is projected to reduce reporting costs by an estimated EUR 3.7 billion cumulatively over 2027-2031, or EUR 4.7 billion including trickle-down effects, according to a Cost-Benefit Analysis by an external contractor for the European Financial Reporting Advisory Group (EFRAG). EFRAG delivered draft revised ESRS to the Commission by November 2025, following a public consultation from late July to late September 2025. The revision responds to the Omnibus I Directive (EU) 2026/470, in force from 18 March 2026, which narrowed CSRD scope by about 85% and mandated the ESRS revision within six months.
The new VS is based on the VSME standard and protects undertakings with up to 1,000 employees in the value chain from providing information beyond what the VS requires. Notably, the value chain cap uses a single employee-based criterion (up to 1,000 employees), not the two-criteria CSRD scope (1,000 employees and EUR 450 million turnover). Undertakings with over 1,000 employees but below EUR 450 million turnover fall outside both the CSRD scope and the value chain cap protection.
Impact on stakeholders The revised ESRS reduces the reporting burden for large companies still in CSRD scope, cutting costs by billions of euros. Smaller firms in value chains benefit from the voluntary standard, which shields them from excessive data requests. However, undertakings with over 1,000 employees but below the turnover threshold may face uncertainty as they are not covered by either the mandatory or voluntary standards. EU regulatory bodies and national authorities will need to adapt oversight to the new dual-standard framework.
Institutional follow-up The Commission adopted the delegated acts on 18 March 2026, and the Council's cover note formalises their transmission. The European Parliament and Council now have the standard scrutiny period to review the acts before they enter into force.