The EU has finalized a major update to its sustainability reporting rules. Delegated Regulation (EU) 2026/1563 amends the original ESRS framework and introduces what's now known as the "Simplified ESRS." The regulation was published in the Official Journal on 21 September 2026, enters into force on 10 November 2026 and applies to financial years beginning on or after 1 January 2027 (Art. 3). For financial years starting between 1 January and 31 December 2026, early application is available only to undertakings already subject to the ESRS (Art. 2). Those undertakings must state in their sustainability statement which version of the ESRS they apply.
For finance teams already managing consolidation, disclosure, and compliance workloads, this update matters. It changes how much data you need to collect, how you assess materiality, and how you approach value chain reporting.
This post breaks down the key simplifications, what they mean for your finance function, and the steps you can take today to get ready.
What changed: Key simplifications in the new ESRS
The European Commission revised all twelve ESRS standards as part of its broader push to reduce administrative burden. Four changes stand out for finance teams.
Data points cut by more than 60%
The Commission reduced the total number of mandatory data points substantially, removing detailed sub-requirements that added complexity without adding decision-useful information. Many remaining data points still fall under materiality filters, so the practical reduction in reporting effort is significant.
Stronger relevance filters
Materiality now works as a general filter for everything you report. Under the revised ESRS, an undertaking must not disclose information that is not material, apart from supplementary information it clearly labels as not resulting from the materiality assessment. The standards also allow a top-down approach: you can reach conclusions at topic level based on your strategy, business model, sector and geographies, and only need a specific assessment where materiality is not evident. This helps you focus effort on the metrics that matter to your stakeholders instead of reporting everything by default.
"Fair presentation" adopted from financial reporting
The revised standards draw on a concept familiar from financial reporting rules. It now applies to the sustainability statement as a whole rather than to each individual data point, so you judge completeness on the overall picture the statement conveys, not disclosure by disclosure.
Reduced pressure on supply chain data
The Commission removed the preference for direct data collection from value chain partners. Companies can now use estimates and indirect data sources instead, which meaningfully lowers the burden of chasing data from suppliers who may not have reporting systems in place.
Benefits for finance teams
These simplifications translate into concrete operational benefits for the people responsible for compliance and reporting.
Lower compliance burden and cost
Fewer mandatory data points mean fewer systems, fewer data collection cycles, and fewer hours spent validating information that ultimately gets excluded from the final report.
Clearer focus on material ESG metrics.
Stronger relevance filters help your team prioritize the sustainability information that stakeholders actually use, rather than spreading efforts thinly across low-value data points.
Faster data collection and validation
With reduced value chain data requirements, your team can rely on estimates and indirect data where direct collection isn't practical, cutting down the back-and-forth with suppliers and subsidiaries.
More coherent, connected reporting
The fair presentation principle and the emphasis on connected information in ESRS 1 chapter 9 help finance teams present sustainability disclosures as a coherent part of the general-purpose financial report, making relationships between sustainability matters, strategy, performance, and financial information easier to understand.
Proportionality and transition mechanisms
Beyond the core simplifications, the standards build in proportionality through an undue cost or effort principle (ESRS 1 chapter 7.4): you use the reasonable and supportable information available without undue cost or effort, and you are not expected to search exhaustively. The reliefs in chapter 7.3 let you report on a partial scope where complete data is not available. A value chain cap also limits what in-scope companies can ask of protected partners in their value chain: it covers only the datapoints in the voluntary standard, Delegated Regulation (EU) 2026/1560.
The revised standards also stretch the transition periods for the disclosures finance teams tend to find hardest. Anticipated financial effects are the clearest example: the expected effects of sustainability-related risks and opportunities on your financial position, performance and cash flows. Companies whose first reporting year starts between 2024 and 2026 can leave this information out up to and including financial year 2027, and the quantitative part up to and including financial year 2029. Companies that start reporting from financial years on or after 1 January 2027 can leave it out in their first two reporting years, and the quantitative part in their first four. Qualitative information is due once the full omission ends, so the quantitative side can be built up in stages. This gives finance teams time to set up the data and the link to financial planning that quantified effects need.
Together, these mechanisms signal a shift toward principles-based reporting focused on how you manage sustainability issues, rather than a rigid checklist of disclosures.
Preparing your organization now
With mandatory application for financial years beginning on or after 1 January 2027, and early adoption for financial years starting between 1 January and 31 December 2026 limited to undertakings already subject to the ESRS, your team has a real window to prepare. Five steps will help you use that window well.
First check whether you are still in scope. Since the Omnibus I Directive (EU) 2026/470, the CSRD applies to EU companies with more than 1,000 employees and more than EUR 450 million net turnover (both thresholds must be met), and to non-EU groups with more than EUR 450 million EU turnover and an EU subsidiary or branch above EUR 200 million. Companies below the thresholds may still receive data requests from customers, banks and investors, with the voluntary standard as the reference.
Audit your current ESG data collection processes. Compare what you currently collect against the simplified requirements. You'll likely find you're gathering data points that are no longer mandatory, freeing up capacity for higher-value work.
Identify which metrics remain mandatory. Map the reduced data point set against your existing reporting structure so you know exactly what stays, what goes, and where the remaining materiality filters apply.
Assess your data infrastructure gaps. Review whether your current systems can handle the fair presentation approach, the simplified materiality assessment, and the shift toward estimates for value chain data. This is the point where many finance teams find their spreadsheet-based processes start to show their limits.
If you already report under the ESRS, choose your 2026 reporting approach. Article 2 allows undertakings already subject to the ESRS to use the existing ESRS, adopt the revised ESRS in full, or apply the existing ESRS with specified reliefs from the revised standards, including the top-down approach to materiality, undue cost or effort and value chain limits in the materiality assessment, new acquisitions and disposals, metrics for non-significant activities, partial value chain scope, joint operations, the taxonomy appendix, and the executive summary.
Get ready for 2027 with less manual effort
The simplified ESRS makes sustainability reporting considerably more manageable for finance teams. Fewer data points, stronger materiality filters, and more flexible value chain reporting all point in the same direction: less time spent on manual data wrangling and more time for analysis, which serves as the basis for decision-making.
The simplified ESRS significantly reduces the reporting burden for finance teams. Fewer data points, stronger materiality filters, and more flexible value chain requirements converge on a single outcome: less time lost to manual data collection, more time gained for the analysis that actually drives decisions.
Lucanet's ESG Reporting solution supports compliance with the new 2027 requirements, helping your team collect, validate, and report sustainability data alongside your existing financial processes.
See how Lucanet's ESG Reporting solution helps you meet the simplified ESRS requirements with less manual effort.
