ESRS simplification: impacts on your business and next steps

For several months now, the topic of simplifying ESG reporting has often been discussed in terms of timing or scope. However, for companies, the real question is not simply “Am I still within the scope?” The real question is: what reporting framework should I maintain to continue managing my ESG challenges, meet market expectations, and remain credible in the eyes of my auditors, investors, clients, and financial partners?

In other words, simplification does not spell the end of sustainability reporting. Rather, it marks the end of an overly exhaustive approach, in favor of one that is more focused, more useful, and easier to manage.

Simplification does not alter the fundamental course

The regulatory landscape has been streamlined, but it has not lost its substance. As currently drafted, the Omnibus proposal refocuses the CSRD on the largest companies, maintains the principle of double materiality, preserves the three ESG pillars, and confirms the retention of limited assurance. The logic therefore remains the same: to publish useful, consistent, and reliable sustainability information—but with a more proportionate level of requirements.

Under the Commission’s proposal, companies with more than 1,000 employees and either more than €50 million in revenue or a balance sheet total exceeding €25 million would remain subject to reporting requirements. At the same time, the comprehensive revision of the ESRS has not yet been formally adopted: EFRAG submitted its technical opinion at the end of 2025, but the final text remains the responsibility of the European Commission.

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Phase 1: Securing reporting without starting from scratch

For companies that have already published their first sustainability report, the good news is clear: the “quick fix” means that, in 2025 and 2026, there will be no new requirements beyond those of the first reporting year. The challenge, therefore, is not to rebuild your system. The challenge is to stabilize it and then prepare strategically for the next step.

In practical terms, this involves working on five highly operational tasks: analyzing the simplified ESRS projects, incorporating the clarifications already provided, conducting a gap analysis of the quantitative data, updating the reporting protocol, and anticipating the adjustments needed for your data collection tool. This is particularly important for indicators whose definitions or calculation methods are changing, such as certain workforce indicators.

The right approach, therefore, is to shift from a focus on annual compliance to a focus on maintaining the system: what to keep, what to streamline, what to document more thoroughly, and what to prepare in my protocols and software to avoid having to start from scratch in a rush.

Wave 2: Use this time to review your DMA strategically

For companies in Wave 2, the “stop-the-clock” provision has altered the timeline, but not the need to prepare. The two-year grace period should not be viewed as a hiatus of inaction. It should be used as an opportunity to thoroughly streamline the process, particularly when a double materiality analysis has already been conducted.

The key point is this: with the simplified ESRS 1 draft, the DMA becomes easier to understand and manage. The materiality filter is strengthened, a more qualitative approach is possible, completeness is no longer sought for its own sake, and updates are no longer required annually in the absence of significant changes. In practice, this paves the way for a much more strategic review of the existing matrix.

Our recommendation is to proceed in four steps: realign the DMA with the new standards; reassess your impacts—particularly the positive impacts and potential negative impacts; group IROs by major thematic issues to facilitate management by business units; and then finalize decisions in consultation with auditors and senior management. This step is essential: poorly documented simplification creates audit risk; well-justified simplification saves time and improves clarity.

In other words, the goal isn’t to create a “streamlined” DMA. The goal is to create a more useful DMA: one that focuses more on the truly material issues, is better aligned with the business model, and is easier to translate into policies, actions, KPIs, and a roadmap.

Outside the scope of the CSRD: the VSME becomes the practical foundation

Falling outside the scope of the CSRD does not mean falling off stakeholders’ radar. On the contrary, many companies that are no longer subject to the mandatory requirements continue to receive requests for information from their customers, banks, investors, or clients. This is precisely why the VSME is gaining momentum .

At this stage, the VSME has been adopted by the European Commission as a recommendation for companies with fewer than 250 employees. At the same time, the Omnibus Package proposes that a future voluntary standard, based on the VSME, could serve as a reference for companies with up to 1,000 employees. For mid-sized companies, the most robust approach is therefore not to limit themselves to minimalist reporting, but to use the VSME as a foundation and enhance it with a genuine strategic vision, governance information, and relevant KPIs.

In practice, the right roadmap is quite similar to that of more mature initiatives: choosing the right module based on the company’s size and ambitions, identifying relevant ESG issues, structuring data collection, drafting a clear report, and gradually defining a CSR strategy guided by a few quantitative objectives. The difference lies not in the direction of the approach, but in its level of depth and formality.

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To summarize:

Stop putting it off? That would be a strategic mistake

Some companies might be tempted to conclude that, without strict regulatory requirements, it becomes possible to stop reporting altogether. In our view, this would be a misreading of the situation. The pressure isn’t going away; it’s shifting. It stems less from the regulation itself than from market demands, bank requirements, client questionnaires, the value chain, and the ability to demonstrate the robustness of an ESG trajectory.

The sustainability report is not merely a public relations exercise. It is a tool for internal organization. It helps align business units, ensure data reliability, provide management with visibility, and steer action plans. In this sense, the current trend toward simplification does not mean doing less in terms of sustainability; rather, it calls for better prioritization, better data collection, and better management.

In conclusion

The right question is no longer “How many ESRS reports should I publish?” but “What robust, proportionate, and useful framework should I maintain to manage my challenges and engage with my stakeholders?” For Phase 1, this means consolidation. For Phase 2, it means smart simplification. Outside the scope, it means establishing a credible framework based on the VSME.