Executive Summary
More than a year after the Omnibus process began, greater clarity on the future of European sustainability reporting is finally emerging. On 3 July 2026, the European Commission adopted the revised European Sustainability Reporting Standards (ESRS) and a new Voluntary Standard for companies outside the scope of the CSRD. However, the standards are not yet legally in force. They must first pass through the scrutiny period of the European Parliament and the Council. The revised ESRS will become mandatory from the 2027 financial year, with early adoption expected to be possible for 2026. This article explains what the new standards mean for companies, what steps they should take now and how Code Gaia supports the transition within the software.
Table of content
What has the European Commission adopted?
On 3 July 2026, the European Commission adopted a revised version of the European Sustainability Reporting Standards through a delegated act. The revised standards are largely based on the technical advice published by EFRAG in December 2025.
The revised ESRS will become the official reporting standard for all companies that remain within the scope of the CSRD. They will apply to financial years beginning on or after 1 January 2027. The simplified standards significantly reduce both the number of mandatory data points and the overall complexity of sustainability reporting. According to the European Commission, the number of mandatory data points has been reduced by more than 60 per cent, while the total number of data points has been reduced by more than 70 per cent.
At the same time, the European Commission adopted a new Voluntary Standard for companies that are no longer within the scope of the CSRD. This applies in particular to companies with up to 1,000 employees that are protected by the value chain cap. The new standard builds on and replaces the role previously served by the VSME, which was originally developed for micro, small and medium-sized enterprises with up to 250 employees.
When will the new standards enter into force?
It is important to distinguish between the adoption and the entry into force of the standards. Although the European Commission has adopted both delegated acts, they are not yet legally in force. They have now been submitted to the European Parliament and the Council of the European Union for scrutiny. The initial scrutiny period lasts two months and may be extended by a further two months. Provided that neither institution objects, the delegated acts can subsequently be published in the Official Journal of the European Union and enter into force. Publication is currently expected in September 2026.
The publication in the Official Journal will mark the point at which the revised ESRS and the Voluntary Standard become legally effective.
What do the changes mean for companies reporting under the ESRS?
This section applies to companies that are required to report under the CSRD as well as companies that choose to continue reporting voluntarily in accordance with the full ESRS.
Companies that have not yet done so should begin moving away from the original 2023 ESRS and prepare their reporting processes for the revised standards. The revised ESRS will be mandatory for financial years beginning on or after 1 January 2027. However, companies will be permitted to apply them early for the 2026 financial year once the delegated act has entered into force.
Given the significant simplifications and the expected reduction in reporting effort, an early transition may be beneficial for many companies. Code Gaia therefore recommends preparing for the revised standards as soon as possible. Before switching to the revised ESRS for the 2026 financial year, companies should align the planned approach with their auditor.
What do the changes mean for voluntary reporting?
For companies outside the scope of the CSRD, the new Voluntary Standard will become the central reference framework for sustainability reporting. The standard is intended to provide companies with a proportionate and consistent way to respond to sustainability information requests from larger customers, banks and investors. Instead of completing numerous individual questionnaires, companies can use one recognised reporting framework.
An important element is the value chain cap. Companies subject to the CSRD cannot require companies in their value chains with up to 1,000 employees to provide more sustainability information than is covered by the Voluntary Standard.
This should help reduce the number and scope of individual data requests received by smaller suppliers and provide greater clarity on the information they can reasonably be expected to disclose.
How should companies proceed in the Code Gaia software?
For now, nothing changes in the reporting workflow within the Code Gaia software.
The differences between the versions currently available in the software and the standards adopted by the European Commission are relatively minor. Companies can therefore continue working on their sustainability reporting as usual. Code Gaia has already prepared the necessary updates. They will be made available once the scrutiny period has ended and the revised ESRS and the Voluntary Standard have been published in the Official Journal of the European Union.
Existing reporting content can then be migrated to the new versions directly within the software. The transition will not require companies to restart their reporting process.
What changes for the double materiality assessment?
The revised ESRS do not invalidate the Code Gaia methodology for the double materiality assessment. The revised standards introduce additional options for simplifying and streamlining the assessment process. These options have already been incorporated into the Code Gaia software. The Code Gaia white paper, The Code Gaia Approach to Double Materiality under the ESRS, will also be updated. In particular, the paragraph references will be aligned with the revised ESRS. The updated white paper will be released once the revised standards have been officially published.
What companies should do next
The simplification that many companies have been waiting for is now within reach. However, the decisive milestone is not the adoption in July but the completion of the scrutiny process and subsequent publication in the Official Journal.
Companies should use the coming weeks to:
- familiarise themselves with the revised structure of the ESRS,
- assess which changes affect their current reporting process,
- align a potential early transition with their auditor, and
- continue preparing their sustainability information in the Code Gaia software.
Code Gaia will manage the technical migration once the revised standards have officially entered into force.
