Two delegated regulations introducing significant changes to the European sustainability reporting framework were recently published in the Official Journal of the European Union. The new provisions aim to simplify reporting requirements, reduce administrative burdens, and ensure that the requirements applicable to companies are proportionate.
New voluntary standards for SMEs and companies with fewer than 1,000 employees
Delegated Regulation (EU) 2026/1560 of July 3, 2026, establishes voluntary European sustainability reporting standards for companies with no more than 1,000 employees.
The main objective of this regulation is to facilitate the disclosure of environmental, social, and governance (ESG) information to customers, business partners, financial institutions, and investors, allowing companies to demonstrate their sustainability performance without being subject to the more stringent obligations applicable to large organizations.
One of the key new features introduced is the concept of a “value chain cap,” which limits the ability of large companies to request excessive or disproportionate sustainability information from their smaller suppliers, thereby providing greater protection for small and medium-sized enterprises.
The regulation takes effect on October 24, 2026.
ESRS are being revised to reduce the complexity of reporting
Delegated Regulation (EU) 2026/1563 of July 3, 2026, was also published; it amends Delegated Regulation (EU) 2023/2772 and significantly revises the European Sustainability Reporting Standards (ESRS).
The main objective of the revision is to simplify the reporting process by reducing the volume of information required from companies, prioritizing quantitative indicators, and enhancing interoperability with international sustainability standards.
With this update, the European Commission aims to improve the clarity and comparability of the disclosed information, while reducing the costs and administrative burden associated with complying with reporting obligations.
The new ESRS standards will generally apply to financial years beginning on or after January 1, 2027, with provisions for early adoption and transitional arrangements.
The regulation enters into force on November 10, 2026.
Impact on Businesses
The publication of these regulations marks another step in the evolution of the European sustainability framework, seeking to balance market transparency needs with companies’ ability to meet reporting requirements.
Organizations should closely monitor these changes, assessing their impact on their internal processes for collecting, managing, and disclosing ESG information, as well as the opportunities presented by the new voluntary reporting standards.