On July 3, the European Commission adopted the revised European Sustainability Reporting Standards (ESRS), implementing the sustainability reporting simplification measures contemplated by the EU Omnibus package. Among other changes, the revised standards reduce mandatory datapoints, clarify the application of materiality, simplify the structure and presentation of the standards, and seek to improve interoperability with global sustainability reporting standards while reducing compliance burdens for reporting companies. The revised ESRS generally will apply beginning with financial year 2027, although companies may elect to apply them beginning with financial year 2026. The delegated regulation is now subject to the customary two-month scrutiny period by the European Parliament and Council (which may be extended by an additional two months), after which it is expected to be published in the Official Journal and enter into force if no objections are raised.
Notably, the Commission revised paragraph 105 of ESRS 1 (p27) to provide companies with greater flexibility in organizing their sustainability statements. While the standards continue to provide a default four-part structure, companies may now adopt an alternative structure if they provide a reasoned explanation and comply with the remaining presentation requirements. This change is responsive, in part, to the Society's and the National Association of Manufacturers' (NAM) recent joint position paper (reported on here) recommending greater presentation flexibility to reduce unnecessary restructuring and duplication for multinational reporting groups subject to multiple sustainability reporting frameworks.
See these posts from Jones Day and Mayer Brown and these articles from Edie, ESG Dive, ESG Today, and Responsible Investor.
This post first appeared in the weekly Society Alert!