ESRS

What it is

The European Sustainability Reporting Standards (ESRS) are the mandatory reporting framework that operationalises CSRD. They define precisely what companies must disclose, covering climate, pollution, water, biodiversity, workforce conditions, human rights, and governance, and specify the format, calculation methodology, and audit trail required for each datapoint. The first set of ESRS standards (ESRS Set 1) was adopted as a Commission delegated act in July 2023 and covered the full universe of topics that could be material to a company.

A simplified version of the ESRS is now required under the Omnibus I amendment to the CSRD. The Commission must adopt this simplified delegated act by 18 September 2026. The revised standard eliminates all voluntary disclosure options and reduces the total number of required datapoints by approximately 61% relative to ESRS Set 1. The simplified ESRS will become the operative standard for the first wave of CSRD-mandatory reporters, meaning ESRS Set 1, while technically in force, will not be enforced as written for any company in the initial reporting cycle.

Who it affects

Every company subject to CSRD reporting obligations will produce reports structured under the simplified ESRS. Because all CSRD reporters are now subject to the same standard, the simplified ESRS is effectively the only operative ESRS framework for mandatory reporters. Auditors and assurance providers credentialing their practices to CSRD reporting must track the simplified standards, which will differ materially from the training and tooling built around ESRS Set 1.

The simplified ESRS will also affect the voluntary reporting market. Non-CSRD companies, including many mid-size fashion brands, that wish to produce ESG disclosures aligned with EU regulatory expectations will calibrate against the simplified standard. Financial institutions building sustainability scoring models for the fashion sector will need to recalibrate against whichever datapoints survive the simplification process, making the September 2026 delegated act a key data event for ESG analysts.

Key economic implications

The reduction in required datapoints reduces the absolute cost of compliance for in-scope companies. However, the compliance infrastructure already partially deployed by companies preparing for the original timeline represents sunk cost. Companies that invested heavily in ESRS Set 1 readiness may find that their data architecture over-captures relative to simplified requirements, generating internal pressure to justify prior investments.

The simplification also creates a divergence risk between EU ESRS and other reporting frameworks, particularly the IFRS Sustainability Disclosure Standards (ISSB), which have been adopted or are under adoption in multiple jurisdictions including the UK, Canada, and Australia. A fashion brand reporting under simplified ESRS for EU purposes while also preparing ISSB-aligned disclosures for other markets faces a dual-reporting burden with limited harmonisation benefits. This divergence increases compliance cost disproportionately for internationally listed or multi-market groups.

Third-party data providers, sustainability rating agencies, and ESG data vendors face product redesign risk as simplified ESRS changes the landscape of available corporate disclosures. For the fashion sector specifically, any simplification that removes biodiversity, water, or supply chain worker disclosures would reduce the public data available for sector-level sustainability benchmarking.

Where things stand

As of early 2026, the simplified ESRS delegated act is under preparation within the European Commission, with EFRAG providing technical input. The delegated act must be adopted by 18 September 2026. There is active debate over which datapoints will survive simplification, with industry lobbying for maximum reduction and civil society organisations arguing that core environmental and human rights disclosures must be maintained. The outcome of this negotiation will define the practical scope of EU sustainability reporting for the rest of the decade.

Official sources

• EFRAG ESRS project page — https://www.efrag.org/en/projects/esrs-mandatory-for-csrd