The 2026 Simplified ESRS: What Changes for Financial Years Beginning on or After 1 January 2027

The simplified ESRS were adopted on 3 July 2026 as Commission Delegated Regulation (EU) 2026/1563, published on 21 September 2026, and enter into force on 10 November 2026. They replace the standards and glossary annexed to Delegated Regulation (EU) 2023/2772 and apply to financial years beginning on or after 1 January 2027. For financial years beginning in 2026, preparers may adopt them early, remain on ESRS set 1 as amended in 2025, or remain on set 1 with eight named reliefs, provided they state which version they used.

Who needs to care

The standards apply to undertakings reporting under Articles 19a and 29a of the Accounting Directive. For a UK group, that usually means EU subsidiaries or EU sub-holdings that remain in scope, and possibly the group itself where it has securities on an EU regulated market. From FY2027, an entity is in scope only if it exceeds both EUR 450 million of net turnover and 1,000 employees on average, once Member States have transposed Omnibus I, which they must do by 19 March 2027. These are EU rules; the CSRD & ESRS knowledge base does not cover UK reporting requirements.

Three routes for FY2026

The eight reliefs available under route 3 are:

• the top-down approach to the double materiality assessment (paragraph 27);
• undue cost or effort and value-chain limitation in the assessment (paragraphs 32-33);
• relief for new acquisitions and disposals (paragraphs 74-75);
• exclusion of non-significant activities from metrics (paragraph 90);
• partial reporting scope of the value chain (paragraph 91);
• joint operations (paragraph 92);
• Taxonomy disclosures in a separate appendix (paragraph 106);
• an executive summary (paragraph 110).

Why the standards were rewritten

The recitals link the rewrite to Omnibus I. The aims are to reduce datapoints, prioritise quantitative datapoints over narrative, separate mandatory from voluntary datapoints more clearly, give clear materiality instructions, align with other EU law, and support interoperability with global standards. The Commission also lists 13 areas where it departed from EFRAG's technical advice, among them aggregation and disaggregation, anticipated financial effects, greenhouse gas emissions, climate transition plans and emissions of pollutants. The texts in the base do not quantify the overall reduction in datapoints.

The changes preparers will notice first

• Materiality as a strict filter. Immaterial ESRS information must not be reported, other than clearly flagged supplementary information (paragraphs 24 and 107-109). A topic's materiality can be concluded top-down (paragraph 27).
• Group changes mid-year. Newly acquired subsidiaries may be brought into the materiality assessment and statement in the following period. Disposed subsidiaries may be removed from the start of the current period. Significant events must still be disclosed (paragraphs 74-75).
• Pragmatic metrics. Activities that are not significant drivers of a metric may be excluded (paragraph 90). Partial value-chain coverage is accepted where only part of the data is reliably available, except for gross Scope 1, 2 and 3 GHG emissions (paragraph 91). Joint operations without operational control may be excluded from E2 to E5 metrics (paragraph 92). Each use must be disclosed.
• Flexible structure. The four-part order (general, environmental, social, governance) remains the default, but another structure is allowed with a reasoned explanation (paragraph 105). Taxonomy Article 8 disclosures may go in a separate appendix and are not subject to ESRS (paragraph 106). Under set 1, they sat in the environmental part.
• Climate omission. If climate change is judged not material, the basis for that conclusion must be disclosed (ESRS 2, IRO-2, paragraph 37(b)).

Confidential information and the cost of using reliefs

Paragraph 100 of the new ESRS 1 lists what may be withheld, in line with the amended Article 19a(3) of the Accounting Directive. It covers information whose disclosure would seriously prejudice the undertaking's commercial position (in exceptional cases and under four conditions), trade secrets, classified information, and information protected by other EU or national law or for privacy and security reasons. For each datapoint omitted, the undertaking must disclose that it used the exemption, and it must reassess at every reporting date. AR 47 rules out one argument: the fact that undertakings outside the EU need not report the same information cannot justify an omission on commercial grounds.

Reliefs are not free either. Under AR 6, using the provisions on acquisitions, reliefs, undue cost or effort and omissions does not undermine fair presentation, but only if the undertaking explains the consequences and the resulting limitations so that users can understand them.

Revised phase-ins: three categories

Chapter 10 of the new ESRS 1 defines wave-one undertakings (reporting for financial years from 2024 to 2026) and other undertakings (first reporting from FY2027), "irrespective of when the relevant Member State transposes" the amended CSRD. It then sets three regimes:

The second row is relevant if an EU subsidiary remains a wave-one reporter for FY2026 because its Member State did not use the optional exemption. If it applies the simplified ESRS that year, it may omit all topical standards. It must still state whether each topic is material and, if so, give the summary information required by ESRS 2, paragraphs 8 and 9. Voluntary ESRS reporting before an entity is in scope does not start the phase-in clock (paragraph 121).

A planning checklist for the next two cycles

1. Confirm each EU entity's scope for FY2026 (national exemption or not) and FY2027 (new thresholds).
2. Choose and document the FY2026 route with your assurance provider.
3. Refresh the materiality assessment using the new method, or the route 3 reliefs.
4. Identify metrics whose definition changes, since comparatives may be omitted in the first year under the new standards (paragraph 124).
5. Rework supplier requests to fit the value-chain cap, which applies from FY2027 to undertakings with up to 1,000 employees.
6. Decide whether to add an executive summary and where to place the Taxonomy disclosures.

A useful first question for the base: "Under the simplified ESRS applicable from FY2027, can a company determine materiality using only a high-level, sector-based analysis instead of assessing every individual impact, risk and opportunity?" The answer cites Delegated Regulation (EU) 2026/1563 on EUR-Lex.

Prepared from the official texts indexed on 5 October 2026. An explanation of the rules, not advice on a particular entity's reporting.