Highlights
Companies can now gain a clearer view of the requirements of the revised European Sustainability Reporting Standards (ESRS). After a period of uncertainty, change and recalibration, the European Commission’s final draft of the revised standards draws the Omnibus simplification process to a close.
The final drafts are very similar to the technical advice prepared by EFRAG1 and provided to the Commission in December 2025.
What's happened?
The final draft marks the latest stage of the Omnibus initiative – launched in February 2025 to simplify sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD). After a short public feedback period, the Commission will adopt the revised ESRS, which will apply to companies above the new threshold of 1,000 employees and net turnover of EUR 450m.
The Commission also released for public comment the draft Voluntary Standard for companies below this threshold. It is based on the VSME and sets a limit on the information that can be requested from small companies in the value chain of larger companies applying ESRS.
The table below summarises the main changes introduced in the final draft compared with currently effective ESRS.
| Proposals in EFRAG technical advice | Shorten and clarify the text of the standards. Introduce flexibility to reduce administrative burden. Reduce mandatory datapoints. Enhance interoperability with international standards and EU legislation. Simplify the double materiality assessment (DMA) through a more proportionate, top‑down approach. |
EU Commission final draft changes | |
| Limit excessive reporting | Require application of fair presentation to the sustainability statement as a whole, not individual datapoints. Limit reporting to information that is material for stakeholder groups rather than individual users. Allow reporting of non‑material information only when it meets specific conditions. Permit omissions in defined circumstances, including commercially sensitive information (Omnibus I Directive). |
| Other key simplifications on climate reporting | Allow a choice between financial control and operational control for determining the greenhouse gas (GHG) boundary. Require disclosure of whether climate targets are compatible with a 1.5°C pathway, not alignment of targets with the pathway. |
| Transitional relief | Leave the relief provisions introduced under the quick-fix amendments substantially unchanged. Extend these reliefs to companies starting to report in 2027. |
What's next?
Following the feedback period, the Commission intends to finalise and adopt the revised standards by mid 2026.
The standards will then be subject to scrutiny by the European Parliament and European Council for up to four months before they can be published in the Official Journal of the European Union and enter into force. As a delegated act, the standards will apply directly and will not require transposition into national law.
The Commission intends the revised standards to become mandatory for reporting periods starting in 2027, with early adoption in 2026 permitted for companies already applying ESRS.
The timeline below outlines the key milestones in the simplification process.
Actions for management
- Consider providing feedback on the standards. The feedback period closes on 3 June 2026.
- Understand the extent of the changes if your company is already reporting under the CSRD and consider whether to adopt the revised standards in 2026.
- Assess the revised standards and how they would affect your reporting strategy if your company does not currently report under the CSRD.
- Speak to your KPMG contact for further information on the proposals and visit Sustainability reporting in the EU to keep up to date with the latest news and discussion.
1 The EU’s advisory body on corporate reporting.
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