The EU completes the first phase of the sustainability reporting reform

The EU completes the first phase of the sustainability reporting reform

From the Omnibus I Directive to the revised ESRS: how the European sustainability framework is evolving

On 26 February 2026, the European Union took the first step towards simplifying the regulatory framework for sustainability with the adoption of Directive (EU) 2026/470 (“Omnibus I”), which aims to reduce the administrative burden on companies and boost European competitiveness.

Key measures include:

– narrowing the scope of the Corporate Sustainability Reporting Directive (CSRD), focusing obligations on larger companies;

– simplifying the CSRD;

– reducing reporting obligations within the value chain;

– mandating the European Commission to review and simplify the European Sustainability Reporting Standards (ESRS).

The next phase: revision of the ESRS

Following this mandate, on 3 July 2026 the European Commission adopted the Delegated Regulation revising the ESRS.

Although the text must still undergo scrutiny by the European Parliament and the Council before its final publication in the Official Journal of the European Union, it already provides an insight into the future direction of European sustainability reporting.

The main changes are:

– Simplification and reduction of certain disclosure requirements (datapoints);

– Elimination of duplication and improved clarity of the standards;

– Greater emphasis on dual materiality;

– Reinforcement of the principle that only material information should be disclosed;

– Greater flexibility for the value chain and new transitional mechanisms (phase-ins and reliefs);

– Improved interoperability with other international standards.

Higher quality and less volume of information

Beyond the reduction in requirements, the reform represents a change of approach.

The new model shifts the focus of reporting from formal compliance towards professional judgement, materiality, proportionality, and the faithful presentation of information.

Consequently, companies will need to devote more effort to justifying their double materiality analyses, documenting the criteria used and ensuring the quality and traceability of the disclosed information.

New voluntary standard (VSRS)

Alongside the revised ESRS, the European Commission has approved the new Voluntary Sustainability Reporting Standard (VSRS).

This standard will serve as the benchmark for companies voluntarily reporting sustainability information and is particularly relevant within value chains, as it establishes a limit (value chain cap) on the information that companies subject to the CSRD may request from their suppliers.

Next steps

The revised ESRS and VSRS will come into force once the European scrutiny procedure has been completed and they have been published in the Official Journal of the European Union.

They are scheduled to apply to financial years beginning on or after 1 January 2027, with the option of early adoption for financial years beginning in 2026.

Our assessment

The amendments approved in July do not alter the objective set by the Omnibus I Directive, but rather develop it from a technical perspective. The reform maintains the ambition of the European sustainability model, whilst championing more efficient reporting, focused on truly relevant information and underpinned by a robust analysis of double materiality, data quality and professional judgement.

Developments at the European level are ongoing. However, their effective implementation in Spain remains pending the corresponding transposition into national law.