ESRS was introduced to improve the quality and consistency of sustainability reporting, but its first iteration proved challenging for many companies. With Omnibus I now signed off, the EU is adopting simplified ESRS requirements and encouraging a more proportionate approach. This article explores what has changed and how organisations can make the most of it.

The background to ESRS simplification

In July 2023, the European Financial Reporting Advisory Group (EFRAG) launched a new framework for sustainability reporting: the European Sustainability Reporting Standards (ESRS). The standards support companies in meeting the requirements of the Corporate Sustainability Reporting Directive (CSRD) and were designed to improve the consistency and quality of environmental, social and governance (ESG) disclosures.

Two years on, the EU has agreed a package of measures to simplify how ESRS is applied in practice. In February 2026, the EU Council signed off the Omnibus I simplification package, confirming targeted updates to CSRD and ESRS. The aim is to reduce the reporting burden while maintaining decision‑useful information for investors and stakeholders.

For many organisations, particularly Wave 2 filers, these changes don’t mean starting over. Instead, it’s a chance to pause, reassess work already underway and decide how best to adopt a more proportionate, top‑down reporting approach.

So, what’s changed and what does it mean for sustainability reporting?

Why update the ESRS standards?

ESRS requirements were designed to enhance and standardise ESG disclosures. In practice, many in-scope businesses found the requirements too complex, time-consuming and expensive to implement. The level of detail expected, combined with the new systems, assurance requirements and internal resourcing needed made compliance challenging, particularly in an inflationary economic climate.

In response, the European Commission asked EFRAG to simplify the standards as part of a wider competitiveness agenda, while staying aligned with the European Green Deal. The agreed changes are intended to preserve clarity and comparability of reporting while deliberately shifting effort away from manual compliance and towards decision‑making, performance improvement and action.

A top-down approach to ESRS simplification

Omnibus I introduces a set of top‑down changes to reshape both what companies report and how they approach ESRS.

At its core, this marks a move away from exhaustive bottom‑up reporting and towards greater strategic judgement – starting with the business model, value chain and where impacts and risks genuinely sit.

The changes include:

• applying a simplified top-down approach to double materiality assessment (DMA), while keeping focus on the most significant impacts, risks and opportunities
• improving readability of sustainability statements by reducing unnecessary granularity
• reducing overlap between general and topic-specific disclosures
• making the standards easier to navigate so businesses can more clearly identify what requirements apply to them
• introducing targeted burden-reduction measures, including relief where reporting would cause excessive cost or effort
• enhancing interoperability with other standards, particularly those issued by the International Sustainability Standards Board (ISSB).

Focusing on the most relevant sustainability data

Alongside these structural changes, Omnibus I reinforces a shift towards reporting what matters most, rather than exhaustive data collection. While detailed revisions to the ESRS data points will follow through updated standards, the direction is clear: fewer mandatory disclosures, less duplication and a stronger focus on materiality.

Although the Omnibus package was politically agreed in February 2026, the detailed reductions to ESRS are still subject to final adoption by the European Commission. For now, they appear in EFRAG’s technical advice on the draft simplified standards.

The scale of change is substantial. In the draft simplified ESRS, the total number of data points falls by around 68%, from nearly 1,360 data points to 433. Mandatory data points are reduced by around 57%, from 803 to 347. All voluntary data points (“may disclose”) have been removed or moved to non-mandatory guidance.

These changes don’t remove core sustainability topics from ESRS reporting; the subject matter remains largely the same. What has changed is the level of prescription: fewer mandatory data points, less qualitative repetition and more flexibility in how companies can meet disclosure objectives.

Narrative reporting is not being removed, but it is becoming less granular and more principles based. Narrative requirements are retained where they are clearly and materially relevant, helping companies focus on meaningful explanation rather than volume.

How companies should prepare for the updated ESRS standards

With the Omnibus I agreed at the EU level, the focus now shifts to implementation. Member states will transpose the changes into national law, with revised scope and reporting timelines applying from financial years beginning in 2027 for companies that remain in scope.

What this means for Wave 2 filers preparing for CSRD

If you were preparing for your first CSRD‑aligned report when Omnibus I was agreed, this is a moment to reset your approach, not necessarily start again.

Depending on how far you’ve already progressed, this may mean:

• applying a top‑down, strategy‑led lens to your DMA, whether reviewing existing analyses or starting from scratch
• reviewing or carrying out your ESRS gap assessment against the draft simplified standards to understand where effort can be reduced or reprioritised
• investing in the right software to build an effective reporting process that is audit- and assurance-ready and efficient with internal resources, while recognising the ongoing need for robust underlying data and internal input
• reviewing your systems and data architecture to ensure they support CSRD alongside other regimes (e.g. ISSB), not just one‑off compliance.

What this means for Wave 1 filers reviewing existing reports

For organisations that have already published one or more ESRS‑aligned reports, Omnibus I offers an opportunity to simplify and sharpen future reporting.

• Consider whether a top‑down refresh of your DMA could bring greater focus and surface decision‑useful topics more clearly.
• Reduce repetition and report length by transitioning to the simplified ESRS structure once transposed into the relevant national law.
• Assess whether continuing with the original ESRS adds value, or whether the revised standards better support clarity and efficiency going forward.

Using ESRS simplification to refocus effort

Omnibus I was designed to reduce burden, but that benefit is only realised if companies change how they approach ESRS. By simplifying where possible, using automation effectively and focusing on what really matters, organisations can improve both reporting quality and efficiency.

Regulatory requirements will continue to evolve. Companies that respond early and proportionately are better placed to reduce long-term cost, improve clarity and ensure sustainability reporting delivers greater value for the business over time.

Need help interpreting what Omnibus I means for your ESRS and CSRD approach? Get in touch with us at info@flag.co.uk.