European sustainability reporting: less complex, but no less relevant

The Omnibus directives and the “stop-the-clock” period are significantly reshaping the sustainability reporting landscape. The Omnibus package has eased the requirements, both in terms of the companies within scope and the mandatory reporting standards.

The “stop-the-clock” period gave many companies additional preparation time. As that period gradually draws to a close, it is time to refocus on what the reformed CSRD and simplified ESRS mean in practice. Companies that are no longer required to report will also continue to face sustainability-related questions from customers, banks and other stakeholders.

Who is still required to report?

The reformed CSRD focuses the reporting obligation on the largest companies. As a general rule, EU companies and groups must exceed both of the following thresholds:

• more than 1,000 employees;
• more than EUR 450 million in annual net turnover.

For groups, the assessment is generally performed on a consolidated basis. Separate rules apply to non-EU groups. An up-to-date scope assessment therefore remains essential, taking account of size, group structure and the applicable transitional provisions.

Simplified ESRS: officially adopted in July 2026

On 3 July 2026, the European Commission adopted the revised ESRS. Following the scrutiny period by the European Parliament and the Council and publication in the Official Journal, they will become mandatory for reporting periods beginning on or after 1 January 2027. The simplification is substantial: fewer mandatory data points, less overlap and greater proportionality.

More information and the interactive standards: EFRAG ESRS Knowledge Hub

Compliance and storytelling can work better together

The simplification offers more than a reduced reporting burden. It also creates room to make the sustainability report more readable and relevant. A report does not need to be a succession of technical disclosures. With a clear narrative, focused key messages and a transparent link to strategy and performance, it can both meet the requirements and engage stakeholders in the sustainability story.

This does require choices: which matters are genuinely material, which information is useful to readers and how can the quality of the underlying data remain demonstrable? The new ESRS enable that focus, but they do not remove the need for a robust process.

What about reporting for the 2026 financial year?
For companies reporting on 2026, the transitional arrangements provide three options:

• continue applying the existing ESRS;
• fully adopt the revised ESRS early;
• apply the existing ESRS with eight specific reliefs from the revised standards.

The most appropriate choice depends on the maturity of the current reporting process, the data already collected and the desired degree of simplification. A targeted impact assessment prevents existing efforts from being lost and supports a timely transition.

Outside the CSRD scope does not mean out of the picture

Companies that are no longer within the mandatory CSRD scope will continue to receive sustainability-related questions. Large customers, financial institutions and investors need information for their own reporting and decision-making. This cascading effect across the value chain will therefore remain.

Companies outside the mandatory CSRD scope, particularly those with fewer than 1,000 employees, may still be subject to sustainability-related information requests from CSRD-reporting stakeholders.

A voluntary standard helps companies respond to stakeholder questions more efficiently, structure their sustainability narrative clearly and prepare for future information needs. The legislation encourages the use of these voluntary standards as a basis for information that can be shared with stakeholders in a proportionate manner.

What does this mean for your organisation?

First, reassess your scope and timeline. Then determine which reporting standard is the best fit, which transitional option for 2026 is feasible and what information stakeholders expect beyond the statutory requirements. In this way, sustainability reporting becomes more than a compliance exercise: it becomes a practical tool for dialogue, decision-making and trust.

How Grant Thornton can help

Grant Thornton supports organisations with scope assessments, choosing between the existing and revised ESRS, applying the transitional arrangements and developing a readable, well-substantiated sustainability report. Together, we identify the right balance between compliance, efficiency and storytelling.

In a future article, we will explore the different voluntary reporting standards in greater depth and explain how they can help organisations substantiate their sustainability narrative, respond to value-chain requests and prepare pragmatically for future expectations.