The ESRS Got Simpler But Your Reporting Problem Did Not

What changed

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The original ESRS contained around 1,000 datapoints. The simplified version reduces mandatory data points by over 60% and total datapoints by over 70%, leaving roughly 320 mandatory datapoints. Most voluntary disclosure requirements have been removed. The standards are expected to apply from the financial year 2027.

The scope threshold has also changed. Under the Omnibus I Directive, which entered into force on 18 March 2026, companies below 1,000 employees or €450 million in net turnover are no longer subject to mandatory CSRD reporting. Many wave 2 and wave 3 companies have exhaled.

There is also a new protection for smaller companies in supply chains. CSRD in-scope companies cannot require value chain partners with 1,000 employees or fewer to provide information beyond what is set out in the voluntary standard. This is called the value chain cap. It directly affects how large companies can collect Scope 3 data from their suppliers.

The feedback window that opened yesterday runs until 3 June 2026. After that, the delegated act goes through a 2+2 month scrutiny period by Parliament and Council before entering into force.

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What did not change

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Double materiality is still mandatory. This is the requirement that companies assess both how their business affects the environment and society, and how sustainability risks affect the business financially. It remains the foundation of everything reported under CSRD.

Limited assurance is still mandatory. Your sustainability data will still be audited, even if at a lighter standard than financial accounts.

Digital tagging via XBRL is still required for machine readability and comparability.

And here is the part most finance teams have not dealt with yet: the datapoints that remain are the ones that require the most rigorous underlying data. Emissions, energy, water, waste, workforce, governance. These are not narrative disclosures you can draft from memory. They require structured, traceable, audit-ready data that lives in a system, not a spreadsheet.

The simplification removed the easy parts. What is left requires clear data structures and a solid audit trails harder.

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The materiality shift nobody is talking about

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Under the original ESRS, the double materiality assessment process was highly prescriptive. Companies worked through granular topic lists, scored impacts, risks and opportunities bottom-up, and documented each step extensively. Under the simplified ESRS, that process becomes lighter and more strategic. The topic list has been shortened, the deepest sub-topic level removed, and a top-down approach is now explicitly supported. The assessment carries more weight, not less. But with significantly less scaffolding around it. 

This sounds like flexibility. For a CFO, it is a different kind of liability.

If your double materiality assessment is wrong, or poorly documented, the problem is no longer "we missed a datapoint." It is "we made a judgment call and it was wrong." Auditors and investors will scrutinize those judgment calls. Companies that did not invest in a rigorous, defensible materiality process are now more exposed, not less.

The standard shifted the accountability from the regulator's checklist to the company's own assessment. That is a meaningful transfer of risk.

Carbon pricing is also moving in one direction: up. The emissions data that sits at the core of ESRS reporting is the same data that feeds decarbonization business cases, SBTi targets, and internal carbon pricing models. Getting it wrong in your sustainability report creates inconsistencies across everything else.

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How can a climate management software support you

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First, do not dismantle your existing reporting infrastructure on the assumption that simplification means you need less. What you built for wave 1 or in preparation for wave 2 is still the foundation. The question is whether it is structured around the right mandatory data points.

Second, revisit your double materiality assessment against the simplified ESRS. The revised standards make a top-down approach materially more practical starting from business model and strategy to arrive at topic-level materiality, with a reduced documentation burden compared to exhaustive IRO-level scoring. The topic list itself has also been modified, with several topics merged or removed and the deepest sub-topic level dropped. If your DMA was built bottom-up against the original list, it likely needs realignment and may benefit from being re-anchored in a top-down narrative for the audit trail.

Third, confirm your data flows for the emissions data points specifically. Scope 1, Scope 2 and material Scope 3 categories remain central. If those numbers are still being assembled manually each year, the audit-readiness requirement will create problems. Note that the value chain cap now limits what Scope 3 data you can formally request from smaller suppliers. If your Scope 3 strategy relies on pushing data requests down the supply chain, align your supplier questionnaires to the voluntary VSME standard that defines the cap, and move anything beyond that to a collaborative basis: incentives, joint decarbonization programs, or preferred-supplier criteria.

Cozero helps companies structure exactly this: audit-ready emissions data, CSRD-aligned reporting, and Scope 3 coverage that holds up under scrutiny. See how it works: cozero.io

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Sources

European Commission, "Commission seeks feedback on revised sustainability reporting standards", May 6, 2026. finance.ec.europa.eu/news/commission-seeks-feedback-revised-sustainability-reporting-standards-2026-05-06_en

EFRAG, "Technical advice on simplified ESRS", December 3, 2025. efrag.org/en/draft-simplified-esrs

Omnibus I Directive (EU) 2026/470, adopted February 24, 2026, entered into force March 18, 2026. eur-lex.europa.eu/eli/dir/2026/470/oj/eng

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