The Revised ESRS (Mandatory Standards)

These standards update the requirements for companies subject to the Corporate Sustainability Reporting Directive (CSRD).

• Massive Burden Reduction: The draft reduces mandatory data points (quantitative or narrative data elements of which the Disclosure Requirements are composed) by more than 60%. The new guidelines prioritize quantitative data points.
• Top-Down Approach to Materiality: Companies can conclude on the materiality or immateriality of an issue based on a high-level analysis of their strategy and business model, avoiding the unnecessary work of assessing each individual impact, risk or opportunity if its relevance is not evident.
• New Technical Flexibilities: Flexibility is introduced for companies to choose between the financial or operational control approach when defining their GHG emissions reporting limits.
• Omission of Sensitive Information: Following the Omnibus I package, it is permitted to omit information that could seriously harm the company’s commercial position or that constitutes a trade secret.

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The Voluntary Standard (VSME)

It is designed for companies with up to 1,000 employees that are not legally required to report.

• Proportional Modular Structure:
  • Basic Module: Minimum requirements, focused mainly on microenterprises.
  • Comprehensive Module: This module is specifically designed to meet the data demands of business partners, banks and investors. It adds additional data points to those already established in the basic level and its use is entirely voluntary.
• Data Categorization: Each data item is categorized as “required”, “required if applicable”, “voluntary” or “sector consideration”. The term “required” indicates the minimum content you must include for your report to be considered valid under this framework.

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The “Value Chain Boundary”.

This is the most relevant innovation to protect SMEs from the so-called “cascade effect”.

• Legal Shield: Large companies under the CSRD are prohibited from requiring more information from their value chain partners (1,000 employees or less) than is set out as “required” in the voluntary standard.
• Extra protection for Micro-Enterprises: To ensure proportionality, the Commission has created two levels of protection within the same limit. For Micro Enterprises, the “cap” on what their customers can demand from them has been lowered even further. Data that are required from a medium-sized SME (such as total water consumption or detailed waste management) are marked as “voluntary for microenterprises”.
• Right of Refusal: Small businesses have a statutory right of refusal to provide any data that exceeds this limit.
• Duty to Inform: If a large company requests information that exceeds the limit, it must clearly indicate that the request exceeds the legal limit and inform the small company of its right not to provide it.

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Transversal and Technical Changes

The revisions introduce specific adjustments to thematic metrics and implementation timelines:

• Emissions and Contamination Metrics: The reporting of microplastics is limited to primary (manufactured or intentionally used) microplastics only. As for pollutants, the decision as to which are materials will now depend on a management analysis based on the specific sector and activity.
• Human Rights: It is clarified that only “substantiated” incidents (evidenced by objective and verifiable information) should be reported and the reference to “initiated” processes is changed to “ongoing” processes.
• Transitional Provisions: Grace periods (phase-in phases) are established depending on the size of the company. For example, “1st wave” companies may omit data on biodiversity or workers in the value chain until fiscal year 2027.
• Temporary Application: These revised standards will be mandatory as of fiscal year 2027, although companies may choose to voluntarily apply them as early as fiscal year 2026 to benefit from the simplification.