Preparing for the Amended ESRS: Key Considerations While Awaiting Final Adoption

ESRS simplification increases discretion, requiring careful judgement to preserve the substance and decision‑usefulness of sustainability information.

As the European Commission moves towards the final adoption of the amended European Sustainability Reporting Standards (ESRS) – expected by mid-2026, following EFRAG’s delivery of its revised technical advice in early December 2025 – companies are advised to exercise caution in adjusting their reporting practices prematurely. While the anticipated simplifications promise meaningful reductions in administrative burden, this transition period requires careful judgement. Organisations should ensure to balance simplification with the need for robust, decision-useful sustainability data.

What’s Changing Under the Amended ESRS?

Market Context: Benefits Acknowledged, but Practical Risks Identified

Market participants and stakeholders have largely welcomed the Commission’s and EFRAG’s efforts to streamline the ESRS. The revised drafts introduce significant reductions in mandatory datapoints and a more pragmatic approach to double materiality and general disclosures.

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However, the extent of simplification – particularly in areas such as climate (ESRS E1) and biodiversity (ESRS E4) – introduces concerns about potentially narrowing the scope and depth of information that investors and financial institutions rely upon. These topics remain central to understanding transition, physical, and nature related risks, and therefore require continued robustness and consistency in reporting.

More broadly, the move toward simplification places greater emphasis on organisational mindset. While the amended ESRS reduce prescriptiveness, they also increase the role of judgement – distinguishing approaches oriented primarily toward compliance from those that continue to treat sustainability reporting as a strategic, decision‑support exercise.

ECB Perspective: Safeguarding Transparency and Comparability

The European Central Bank’s Staff Opinion (February 2026) provides a notably cautionary viewpoint. While acknowledging the merits of reducing administrative burden, the ECB warns that several features of the amended ESRS may materially undermine transparency, comparability, and the usefulness of sustainability information for market participants. It highlights three principal shortcomings:

• • Extensive permanent reliefs, exemptions, and phase in measures: According to the ECB, these provisions “significantly reduce transparency for investors and other market participants, as well as negatively affecting the overall availability and comparability of financial risk relevant
  • Weakened disclosures on climate and biodiversity: The removal of important datapoints reduces analytical value in assessing transition risks, physical climate risks, and nature related financial exposures. These areas remain critical for investors and supervisors.
  • Reduced interoperability with ISSB/IFRS standards: The introduction of EU specific reliefs – beyond those found in international standards – risks increasing divergence between EU and global reporting frameworks, thereby hindering comparability.

How Companies Should Approach the Transition: Maintaining Reporting Quality During Transition

An important focus for organisations is how simplification is interpreted in practice, and how reporting choices continue to support clarity, robustness, and decision‑useful outcomes. Key considerations include:

• • Maintaining continuity of critical datapoints, particularly those relating to climate strategy, GHG emissions, biodiversity impacts, and governance – even if such disclosures may later become less prescriptive.
  • Preserving year on year comparability, as consistency in trend analysis remains a priority for investors.
  • Anticipating increased expectations from financial institutions, which now integrate sustainability metrics into credit assessments, risk scoring, and due diligence processes.
  • Preparing for hybrid disclosure strategies, combining amended ESRS with selected elements of the current ESRS in areas where stakeholders require additional information.
  • Strengthening internal materiality assessment processes, ensuring clear documentation of decisions – particularly where reliefs or simplifications are used – in line with supervisory expectations.

As organisations look ahead to the Commission’s final adoption of the amended ESRS, a balanced approach is likely to involve preparing for simplification while safeguarding the quality, integrity, and completeness of information on material sustainability matters.

How ISS‑Corporate Supports ESRS Transition Needs

Our ISS-Corporate reporting software supports multiple pathways, enabling organisations to navigate the transition with confidence.

Supported Reporting Pathways: CSRD-linked

Supported Reporting Pathways: Other Frameworks

Cross Framework Flexibility

For every reporting pathway, users can add supplementary datapoints from alternative frameworks to enhance coverage of priority issues (e.g., ESRS / IFRS S2 datapoints to enhance voluntary disclosures aligned with VSME).

Data-Powered Materiality Assessment

We enable organisations to conduct materiality assessments in a resource efficient manner through data-powered insights. Prioritisation informed by curated industry and peer data helps streamline decision-making and ensure that material impacts, risks, and opportunities are identified with precision and consistency.

Strategic Support

We provide tailored assistance in developing a reporting roadmap aligned to your organisation’s maturity, regulatory context, and stakeholder expectations – whether preparing for amended ESRS, maintaining continuity with current ESRS, or enhancing alignment with global standards.