ESRS Simplification: impacts on your company and next steps

For several months, the topic of ESRS simplification has often been approached from the perspective of the timeline or scope. However, for companies, the real question is not just "am I still in scope?". The real question is: what reporting system should I maintain to continue managing my ESG issues, meet market expectations, and remain credible with my auditors, investors, clients, and financial partners?

In other words, simplification does not signal the end of sustainability reporting. It rather marks the end of an overly exhaustive approach, in favor of a more targeted, useful, and manageable approach.

Simplification does not change the fundamental direction

The regulatory landscape has been lightened, but it has not been emptied of its substance. As per the public texts, the Omnibus project refocuses the CSRD on the most significant companies, maintains the principle of double materiality, retains the three ESG pillars, and confirms the continuation of limited assurance. The logic therefore remains the same: to publish useful, consistent, and reliable sustainability information — but with a better-proportioned level of requirement.

In the Commission's proposal, companies with more than 1,000 employees exceeding either €50 million in turnover or €25 million in total balance sheet would remain subject to reporting obligations. In parallel, the full revision of the ESRS has not yet been formally adopted: EFRAG submitted its technical opinion at the end of 2025, but the final text is still up to the European Commission.

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Wave 1: Securing reporting without starting from scratch

For companies that have already published a first sustainability statement, the good news is clear: the quick fix means no new obligations will be added in 2025 and 2026 compared to the first reporting period. The challenge is therefore not to rebuild your system. The challenge is to stabilize it, then intelligently prepare for the next step.

Specifically, this involves working on five very operational areas: analyzing the simplified ESRS drafts, integrating already known clarifications, conducting a gap analysis on quantitative data, updating the reporting protocol, and anticipating the adaptations to be made to your data collection tool. This is particularly important for indicators that change definition or calculation method, for example, for certain workforce indicators.

The right approach is therefore to shift from an annual compliance mindset to a system maintenance mindset: what to keep, what to streamline, what to document better, and what to prepare in my protocol and software to avoid an urgent overhaul.

Wave 2: Use the extended deadline to intelligently review your DMA

For Wave 2 companies, the "stop-the-clock" has changed the timeline, but not the need to prepare. The two-year delay should not be seen as a period of inaction. It should be used as an opportunity to thoroughly simplify the process, especially when a double materiality assessment has already been conducted.

The key point is this: with the simplified ESRS 1 draft, the DMA becomes clearer and more manageable. The materiality filter is strengthened, a more qualitative approach is possible, exhaustiveness is no longer sought for its own sake, and updates are no longer intended to be annual 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 work in four stages: realign the DMA with the new standards, re-evaluate your impacts — particularly potential positive and negative impacts —, group the IROs by major thematic issues to facilitate management by business units, then secure decisions with auditors and management. This step is crucial: poorly documented simplification creates audit risk; well-justified simplification saves time and improves clarity.

In other words, it's not about redoing a "lighter" DMA. It's about redoing a more useful DMA: one that is more focused on truly material issues, better linked to the business model, and easier to then translate into policies, actions, KPIs, and a roadmap.

Outside CSRD scope: VSME becomes the practical foundation

Being outside the CSRD scope does not mean being off stakeholders' radar. On the contrary, many companies no longer subject to the mandatory framework continue to receive information requests from their clients, banks, investors, or principals. This is precisely what explains the rise of the VSME.

At this stage, the VSME has been adopted by the European Commission as a recommendation for companies with fewer than 250 employees. In parallel, 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 oneself to minimalist reporting, but to use the VSME as a basis and enrich it with a true strategic vision, governance information, and relevant KPIs.

In practice, the right roadmap remains quite similar to that of more mature frameworks: choose the right module according to size and ambitions, identify relevant ESG issues, structure data collection, write a clear report, and gradually define a CSR strategy driven by a few quantitative objectives. The difference is not the direction of the approach; it's its level of depth and formality.

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To recap:

Stop reporting? That would be a strategic mistake.

Some companies might be tempted to conclude that, without strict regulatory obligations, it becomes possible to stop all reporting. In our view, this would be a misinterpretation of the situation. The pressure doesn't disappear; it shifts. It comes less from the text 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 just a communication exercise. It's an internal structuring tool. It helps align business functions, ensure data reliability, provide visibility to management, and drive action plans. In this sense, the current simplification does not encourage less sustainability; it encourages better prioritization, better data collection, and better management.

In conclusion

The right question is no longer "how many ESRS do I need to publish?", but "what robust, proportionate, and useful framework should I retain to manage my priorities and engage with my stakeholders?". For wave 1, this means consolidating. For wave 2, intelligently simplifying. Beyond the scope, structuring a credible framework around the VSME.