ESRS amendments – European Commission would like to hear your views

EFRAG’s technical advice would have required entities to apply the financial control approach to determine the organisational boundary for GHG emissions disclosures, and to apply operational control if financial control did not sufficiently portray emissions from operated assets.

The EC’s draft delegated act removes that requirement and instead allows entities to choose among financial control, operational control, and equity share, bringing the revised ESRS into closer alignment with the flexibility provided by the Greenhouse Gas Protocol and the IFRS Sustainability Disclosure Standards.

The proposed text requires undertakings that report on transition plans with targets that are not compatible with a 1.5C to be transparent about this.

The proposed text clarifies which information a reporting entity is permitted to require from entities in its value chain. The supplementary Q&A document also explains how the voluntary reporting standard would function as part of the value chain cap.

Value-chain reporting can be where CSRD programmes become most resource-intensive, requiring supplier engagement, contract changes, data platforms and internal controls that extend beyond the internal reporting perimeter. Clearer limits can help businesses design proportionate data requests, reduce friction with SMEs in the supply chain, and focus effort on information that is genuinely needed for material disclosures.

The proposed text makes the objective more explicit: an undertaking is not expected to meet the specific information needs of each individual user. Instead, the standards are intended to ensure reporting that is decision-useful for users.

The draft introduces a clearer definition of an “informed assessment”. It also specifies that undertakings “shall not” report information that is not material (except in certain clearly defined circumstances), rather than the prior wording which noted that an undertaking “is not required to” report information that is not material.

Lastly, a new provision emphasises that the “top-down” approach to the materiality assessment allows the undertaking to avoid unnecessary work and in general to avoid assessing the materiality of every individual impact, risk or opportunity.

The proposed text clarifies that fair presentation applies to the overall sustainability statement, and not to each individual datapoint. It also states more clearly that the application of ESRS results in fair presentation. The EC notes that the materiality and materiality assessment modifications will also facilitate the application of the principle of fair presentation.

This should help reporting teams focus on the quality and balance of the overall narrative and metrics set - rather than trying to “prove” fair presentation line-by-line across every datapoint.

The proposed text introduces greater discretion regarding the need to consider specific geographical contexts when carrying out the materiality assessment. It also clarifies an important point: the level of disaggregation used for the materiality assessment does not imply that information must be reported at that same level.

The proposed text integrates new provisions derived from the Omnibus I Directive allowing undertakings to omit certain information in certain circumstances, including information that could be seriously prejudicial to the commercial position of the undertaking.

This provides a clearer basis to manage genuinely sensitive disclosures, while still maintaining discipline around what can and cannot be omitted.

The draft clarifies that reporting anticipated financial effects is likely to involve estimates, and that these can be updated in future as new information becomes available—without the update being treated as a reporting “error”. It also clarifies that the same omission provisions (including information that could be seriously prejudicial to the commercial position) apply to reporting on anticipated financial effects.

The text clarifies that only “substantiated” instances are to be reported, noting that not all instances are necessarily substantiated. It also refers to “ongoing” judicial and non‑judicial proceedings, rather than proceedings that have been “initiated”.

This clarification should help teams align disclosures to cases with a clearer evidential basis, while improving consistency in how proceedings are tracked and described.

For those first required to report for financial years beginning on or after 1 January 2027, the draft delegated act proposes phase-in provisions covering the same disclosure requirements as those provided to “wave one” entities for the first one to three years of reporting.

The EC notes that transitional provisions for wave one entities that remain in scope are largely unchanged from EFRAG’s technical advice, with one additional phase-in provision for entities that are users of articles containing substances of very high concern (SVHC).

Phase-ins can change the shape of a CSRD programme. They allow teams to prioritise foundational governance, data and controls - then expand coverage in later years - without losing momentum or credibility. Organisations that benefit most will be those that treat phase-ins as a sequencing tool, not a reason to delay building core reporting capability.

Other areas where the EC highlighted changes from the technical advice include limits on disclosures related to microplastics and technical modifications regarding due diligence to ensure better alignment with the CSDDD.

Refer to the EC explanatory memorandum for further detail on the above and the full list of key changes. 

Further information on the original changes from EFRAG’s technical advice can be found in our prior article here.