The European Commission (“Commission”) has launched a four-week feedback period — open until June 3, 2026 — on a draft delegated act to revise the European Sustainability Reporting Standards (“ESRS 2.0”). Ultimately, EU companies in scope of the EU’s Corporate Sustainability Reporting Directive (“CSRD”) will have to draft their annual sustainability statements in accordance with the ESRS 2.0. Non-EU ultimate parent companies may also use the ESRS 2.0 to publish one globally consolidated CSRD sustainability statement.
The Commission’s publication of its draft delegated act marks a critical step toward the final adoption of the ESRS 2.0, and toward more certainty around companies’ (reduced) sustainability reporting obligations. Notably, the Commission has closely followed the European Financial Reporting Advisory Group’s (“EFRAG”) draft standards, which proposed removing 489 previously mandatory datapoints, removing all voluntary datapoints, and introduced further targeted simplifications, while preserving the CSRD’s distinct double materiality framework.
For further context, the ESRS 2.0 revisions are part of the European Commission’s Omnibus I package that also revised the primary legislation of the CSRD (and the Corporate Sustainability Due Diligence Directive (“CSDDD”)) to reduce reporting burdens for in‑scope companies (see more on the Omnibus I outcome here). In December 2025, acting on a formal Commission request, EFRAG delivered detailed technical advice to the Commission in the form of fully formed draft standards (as it did previously for the original ESRS (“ESRS 1.0”)).
Once the Commission adopts the final delegated act, which is expected in June or July, the draft act will be subject to a scrutiny period by the European Parliament and Council of the European Union of at most four months. Assuming, as we expect, that the ESRS 2.0 pass this scrutiny, the ESRS 2.0 will be published in the Official Journal of the EU and enter into force. They will apply to CSRD reporting for financial years starting on or after January 1, 2027 — including reporting by so-called “Wave 2” companies. Of note, the Commission’s draft ESRS 2.0 would also give the option to existing Wave 1 companies to use the ESRS 2.0 for the financial years starting on or after January 1, 2026 — i.e., the current reporting period on which companies will report in 2027 when the ESRS 2.0 are final.
This post highlights the Commission’s key changes to EFRAG’s technical advice and sets out the expected adoption timeline for the final standards.
The Commission’s press release emphasizes that the draft delegated act largely builds on EFRAG’s technical advice, whilst proposing several targeted adjustments aimed at easing the reporting burden “without undermining the CSRD’s policy objectives.”
We highlight the following proposed changes:
- Double Materiality Assessment (“DMA”) (ESRS 1, 3.1): The draft ESRS 2.0 confirm that the CSRD’s double materiality framework remains intact. Although there were some signals that the Commission’s draft might require companies to separate disclosures relating to financial materiality from disclosures relating to impact materiality, this split has not been incorporated in the draft ESRS 2.0. At the same time, the draft adds and clarifies the following points about the DMA:
- “Top-down’’ approach: The draft emphasizes that the newly introduced “top-down” approach to the DMA allows companies to avoid assessing the materiality of each individual impact, risk, or opportunity. As a result, a company may generally base its DMA on an analysis of the company’s strategy and business model, including its sectors of operation, geographies, and the key features of its upstream and downstream value chain. A company will only need to conduct a more granular assessment where such an assessment could “reasonably be expected” to lead to a different materiality conclusion for a topic or sub‑topic.
- Information that is not material: The draft specifies that companies “shall not” disclose information that is not material pursuant to the ESRS 2.0 unless it is otherwise required by law, or in line with generally accepted reporting standards or frameworks. EFRAG’s draft stated merely that companies are “not required to” disclose other information. This new prohibition raises the question to what extent (or in what form) voluntary sustainability reporting, such as case studies or narrative descriptions of a company’s sustainability initiatives, will coexist with regulated CSRD reporting.
- Interoperability with the International Sustainability Standards Board’s (“ISSB”) standards (ESRS 1): While the Commission reiterates that the ESRS should take account of interoperability with international standards “to the greatest extent possible,” the draft delegated act does not introduce a mechanism for simultaneous compliance or equivalence with the ISSB standards. Thus, groups subject to both frameworks may still face parallel reporting requirements.
- Fair presentation (ESRS 1, 2): The draft clarifies the “fair presentation” standard for the quality of information, namely that fair presentation is assessed with respect to the sustainability statement as a whole, rather than each individual disclosure in isolation. It further emphasizes that a company’s use of the ESRS’ permissible omissions provisions and reliefs (see bullets below) is not detrimental to fair presentation. Ultimately, it makes clear that applying the ESRS 2.0’s approach to materiality, along with entity‑specific disclosures where needed, will result in a sustainability statement that achieves fair presentation.
- Level at which the DMA takes place (ESRS 1, 3.3): As was the case under the ESRS 1.0, the Commission maintains that for a company reporting at the consolidated group level, the company shall also carry out the DMA at the consolidated group level. The disclosure of sustainability information is still subject to potential disaggregation at the level of topic, sector, subsidiary, geography, or asset.
- Omission of information (ESRS 1, 7.7): The draft introduces new and more detailed provisions that allow companies, subject to certain conditions, to omit specific ESRS‑required disclosures, including where disclosing information could be “seriously prejudicial” to the company’s commercial position. While the ESRS 1.0 already permitted omission of certain sensitive information or trade secrets, the draft expands and formalizes these protections, including by introducing a broader commercial prejudice exemption and express carve-outs for trade secrets within the meaning of the EU Trade Secrets Directive, “classified information” under the EU’s EDIRPA Regulation, and other information that must be protected to comply with privacy or security law obligations under EU or national law.
- Reasonable and supportable information that is available without undue cost or effort (ESRS 1, 7.4): The Commission’s draft retains EFRAG’s approach allowing companies to rely only on “all reasonable and supportable information” that is available “without undue cost or effort” when identifying impacts, risks, and opportunities, determining the scope of the value chain, preparing metrics, and reporting current and anticipated financial effects. This important general relief is not time-bound and would apply generally across ESRS reporting, giving companies additional flexibility where collecting certain information would otherwise prove disproportionately burdensome.
- Expanded transitional provisions and phase‑ins (ESRS 1, 10): The draft introduces a general (“blanket”) value chain relief: for the first three financial years in which a company is subject to CSRD sustainability reporting, where not all necessary value chain information is available, the company must explain the efforts made to obtain the information, why it could not obtain it, and its plan to obtain it going forward. Second, the draft sets out a specific list of phase‑ins/omissions for certain disclosure requirements, with different timelines for “Wave 1” companies and other first‑time reporters.
- Climate transition plans (ESRS E1-1): The draft still requires a company to disclose whether it has a climate transition plan, and if so, to disclose detailed information about that plan. This is notable not least because the Omnibus I revisions deleted the CSDDD obligation for companies to adopt a climate transition plan. Nonetheless, many companies may still have climate targets that qualify as a transition plan under the ESRS 2.0 and that thus trigger reporting obligations under CSRD. The ESRS 2.0 retain the definition of a climate transition plan from the ESRS 1.0. Further, the draft ESRS 2.0 add that where a company has a transition plan that is not aligned with limiting global warming to 1.5°C, it must disclose this explicitly, including by explaining how its targets compare to relevant benchmarks and how future developments have been taken into account.
- Flexible greenhouse gas emissions boundaries (ESRS E1-8): EFRAG’s technical advice effectively mandated a dual-boundary approach to calculating greenhouse gas emissions, requiring companies to calculate emissions under both operational and financial control boundaries. The Commission removes this requirement, restoring flexibility for companies to choose either operational control or financial control as their organizational boundary, consistent with the GHG Protocol and ISSB standards.
- Only primary microplastics (ESRS E2-4): EFRAG’s technical advice introduced a “secondary microplastics” datapoint, which companies had flagged was a new, substantive obligation that created a significant additional administrative burden. The Commission’s draft limits the disclosure requirement to primary microplastics “for reasons of feasibility and proportionality.”
- Biodiversity and ecosystems (ESRS E4-5): The draft clarifies that companies are not necessarily expected to provide an exhaustive list of all individual sites interacting with biodiversity-sensitive areas and may instead aggregate information by relevant groups of sites or areas, provided the aggregation does not obscure material information.
- Human rights incidents and incidents of discrimination (ESRS S1-16 & S2-3): The draft makes clear that only “substantiated” instances of human rights or discrimination incidents must be reported, defined as instances supported by objective, factual, and verifiable information. The draft also notes that not all recorded incidents or ongoing judicial and non-judicial proceedings qualify as substantiated instances.
- Increased linguistic alignment with the CSDDD: The draft ESRS 2.0 include some linguistic modifications to increase alignment with the language used in the CSDDD, although the draft also makes clear that the draft ESRS 2.0 provisions are without prejudice to those of the CSDDD. Key linguistic and substantive differences between the laws still remain, including the CSDDD’s “chain of activities” versus the CSRD’s “value chain.”
The Commission aims to formally adopt the delegated act with the final version of ESRS 2.0 in late June or early July 2026. This timeline is largely driven by the subsequent scrutiny period of up to four months by the Parliament and the Council, which must be concluded before the standards are published in the Official Journal of the EU and take full effect for the financial years beginning on/after January 1, 2027. For two months and ten days after publication in the Official Journal, companies in scope of the CSRD would also be able to challenge the Delegated Regulation containing the ESRS 2.0 before the EU’s General Court (see Covington’s Court of Justice of the European Union litigation team here).
It is unlikely that the basic structure and direction of the ESRS 2.0 will still change fundamentally in the aftermath of the public consultation. The current draft is likely here to stay, and businesses are now beginning to plan for their CSRD reporting with a reasonable degree of certainty around the final text. That said, submitting targeted interventions in the public consultation on specific provisions could still influence the final standards.
A separate public consultation on the Non-EU Sustainability Reporting Standards (“NESRS”) — the reporting standards applicable to third-country companies in scope of the CSRD that are not choosing to use the ESRS 2.0 for global consolidated reporting — is expected around July 2026, with the Commission targeting adoption of the delegated act containing the NESRS in 2027. According to EFRAG, the NESRS will be based on a simplified version of the ESRS 2.0 tailored to non-EU undertakings.
If you have any questions concerning the material discussed in this alert, please contact the members of our Corporate Sustainability practice.
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