ESRS Standards Explained: CSRD Disclosure Rules 2026

ESRS Standards Explained: What Companies Must Disclose Under CSRD

On 3 July 2026, the European Commission adopted the final delegated act containing the revised European Sustainability Reporting Standards, known as ESRS (2026). For chief sustainability officers, sustainability managers, and general counsel at companies in scope for the EU Corporate Sustainability Reporting Directive (CSRD), the EU's mandatory sustainability reporting law, this closes a year of uncertainty and locks the rules that govern reporting for financial years beginning on or after 1 January 2027.

Sources: PwC in-brief, Mayer Brown

The headline is not that reporting became easy. It became sharper. The revised standards cut mandatory datapoints by more than 60 percent, yet the core obligation stays intact: a double materiality assessment backed by audit-ready data. Spectreco, an ESG technology and advisory firm with offices in Atlanta, Lisbon, Dubai, Muscat, and Lahore, works with in-scope groups to turn that obligation into a defensible reporting architecture rather than a spreadsheet scramble.

This guide covers the ESRS standards explained for CSRD disclosure requirements in 2026: all 12 standards, which ones are mandatory after the Omnibus simplification, what ESRS E1 on climate now requires, and how the standards align with the ISSB's IFRS S2.

What Are the ESRS Standards?

The European Sustainability Reporting Standards (ESRS) are the mandatory disclosure standards companies use to report under the CSRD. There are 12: two cross-cutting standards that apply to every reporter, and ten topical standards across environment, social, and governance, applied where material.

The standards were first adopted in July 2023 as Commission Delegated Regulation (EU) 2023/2772. The 2026 revision amends that regulation. It keeps the same architecture but reduces the volume of required data, and all 12 standards survived the rewrite.

Sources: Trayak, PwC

Which ESRS Standards Are Mandatory After the Omnibus?

After the Omnibus simplification, only ESRS 1 and ESRS 2 apply to every reporter without exception. The ten topical standards, ESRS E1 through G1, apply only where a double materiality assessment identifies the topic as material. ESRS E1 on climate is material for almost every large company.

This is the structural rule that trips up first-time reporters. ESRS 1 and ESRS 2 are the mandatory rails. Everything else is materiality-gated.

Double materiality means assessing two directions: how sustainability matters affect the company's financial position (financial materiality), and how the company affects people and the environment (impact materiality). A topic is material if either direction is significant. Spectreco's Double Materiality Assessment for CSRD guide walks through the process step by step.

The 2026 revision changed how you run that assessment, not whether you run it:

• Mandatory datapoints cut by 61 percent, from roughly 1,073 to about 320 where topics are material.

• Total datapoints, including voluntary ones, cut by more than 70 percent, with all voluntary datapoints removed.

• A top-down materiality approach that starts from the business model instead of working bottom-up through every datapoint.

• ESRS 2's old minimum disclosure requirements replaced by lighter general disclosure requirements.

• Reporting costs expected to fall by more than 30 percent per company.

Sources: Latham & Watkins, Trayak, Mayer Brown, European Commission

The reprieve is real, but it is a reprieve on volume, not on rigor. Every remaining datapoint still goes to limited assurance.

What Does ESRS E1 Require?

ESRS E1 (Climate Change) requires companies to disclose their climate transition plan, gross Scope 1, 2, and 3 greenhouse gas emissions, climate-related targets, energy consumption, and the anticipated financial effects of physical and transition risks. Emissions must be reported gross, with no netting against carbon credits or removals.

ESRS E1 is the standard almost every in-scope company must apply, and the most technically demanding. It is organised into three areas: strategy, impacts and risks, and metrics and targets.

Transition plan and targets

Disclosure Requirement E1-1 asks for a climate transition plan compatible with limiting global warming to 1.5°C. This is more than a net-zero pledge. It is a roadmap with milestones, capital allocation, and governance. E1-4 requires time-bound GHG reduction targets, disclosed as gross targets that exclude removals, carbon credits, and avoided emissions.

Sources: EFRAG ESRS E1, Senken

Emissions across all three scopes

E1-6 is the data backbone: gross Scope 1 (direct emissions), Scope 2 (purchased electricity, heat, steam, and cooling), and Scope 3 (all other value chain emissions), plus total GHG emissions, calculated under the GHG Protocol, the global standard for measuring emissions. Scope 2 must be shown on both a location-based and a market-based method. For most companies, Scope 3 is the largest and hardest category to collect.

Sources: EFRAG ESRS E1, ClimateSeed, Normative

GHG boundary flexibility

The 2026 revision lets companies choose either the financial control or the operational control approach when setting the GHG reporting boundary. This aligns ESRS more closely with global practice and cuts friction for groups already reporting under other standards.

Sources: Mayer Brown

Anticipated financial effects

E1-9 requires disclosure of the anticipated financial effects of material physical risks, such as flooding, and transition risks, such as carbon pricing. This is where climate reporting connects directly to the financial statements. Spectreco's coverage of the 2027 IFRS S2 Scope 3 and GHG reliefs tracks how the global baseline is moving on the same issues.

How ESRS Aligns With ISSB IFRS S2

Companies with global operations rarely report under a single framework. The most common overlap is between ESRS and the ISSB's IFRS S2 (Climate-related Disclosures), the global baseline issued in June 2023 and adopted in 21 jurisdictions as of 1 January 2026.

Sources: S&P Global

The IFRS Foundation and EFRAG published joint interoperability guidance on 2 May 2024. It maps ESRS E1 against IFRS S2 and shows where a company can report once and satisfy both.

Sources: IFRS Foundation, EY

In practice, a company that applies ESRS E1 properly produces IFRS S2-aligned climate disclosures as a subset. The gap to close is impact materiality and the broader topical standards, not the climate metrics themselves.

Sources: Socious, S&P Global

How to Prepare for ESRS (2026) Reporting

Five steps close the distance between the revised standards and an assurance-ready first report:

1. Confirm scope. Check whether you exceed both thresholds: more than 1,000 employees and more than EUR 450 million net turnover. Below both, you may be out of scope from FY2027.

2. Run a top-down double materiality assessment. Start from your business model to decide which topical standards apply.

3. Build the ESRS E1 data model first. Scope 1 and 2 are the foundation; extend to Scope 3 across the value chain.

4. Map to IFRS S2. If you report in other jurisdictions, reconcile ESRS and ISSB requirements once rather than twice.

5. Make every datapoint assurance-ready. Trace each figure to its source before limited assurance.

Spectreco's Virtual Sustainability Office and AI cloud-native platform run this end to end, and the Compliance, Reporting and Disclosures advisory team designs the reporting architecture around it.

Frequently Asked Questions (FAQs)

For the cross-border view, see Spectreco's guide on AASB S2, TCFD and CSRD for Australian companies with global operations, and, for value chain exposure into the EU, Pakistan textiles and EU CBAM.

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Get CSRD-Ready Before FY2027

The revised ESRS apply from 1 January 2027, with voluntary early adoption available from FY2026. That leaves a narrow window to build a materiality assessment and an E1 data model that survive assurance. Book a Spectreco CSRD readiness assessment to map your scope, run your double materiality assessment, and stand up an audit-ready ESRS reporting architecture.

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