New EU Sustainability Reporting Standards: What Global Companies Need to Know?

When the EU introduced the CSRD and its detailed ESRS framework, the goal was clear: drive transparency and standardize sustainability reporting across Europe. Companies above certain size thresholds would have to disclose ESG risks, impacts, and strategies in unprecedented detail. This double materiality approach meant reporting not just how sustainability issues affect a company, but also how the company’s activities affect people and planet. It was a bold leap beyond the old Non-Financial Reporting Directive (NFRD).

However, as 2024 approached (when the first CSRD reports were due for some firms), many businesses and even regulators started feeling that the EU’s sustainability reporting ambition was turning into information overload. Thousands of data points, sprawling reports, and a scramble for supply-chain metrics signaled a looming compliance crunch. EU officials took notice. By early 2025, there was a growing consensus that the rules needed fine-tuning to avoid overburdening companies without sacrificing ESG goals.

 

The Latest ESRS Updates at a Glance

 

In February 2025, the European Commission hit the pause button and proposed an “Omnibus” reform package to simplify sustainability reporting. Here are the key changes and what they mean:

 

Narrower Scope – Only the Biggest Companies In Scope: The EU is refocusing the CSRD on the largest players. Under the proposals, only companies with more than 1,000 employees (and meeting large company financial thresholds) would be mandatorily covered. This is a significant jump from the original scope (which included many with >250 employees). In fact, raising the bar to 1,000+ employees (plus revenue/asset criteria) could exclude around 80% of firms that were previously going to fall under the CSRD. In short, many mid-sized companies and listed SMEs across Europe may breathe a sigh of relief as they drop out of mandatory reporting – at least for now.

 

Extended Deadlines: Even for companies that remain in scope, the deadlines have been pushed out. The EU recognized that the rollout was aggressive. Now, the second wave of companies that would have reported in 2026 for FY2025 will likely start in 2028, and the third wave (including listed SMEs) moves from 2027 to 2029. Essentially, most companies get an extra two years to prepare under the new plan. (Notably, the first wave – Europe’s very largest firms already reporting in 2025 – stays on schedule, and the separate timeline for non-EU parent companies’ reports remains in place.

 

Simplified Standards – 50% Fewer Disclosures: Perhaps the biggest relief is qualitative as the reporting will be simpler and more focused. The body that drafts the standards, EFRAG, has pledged to cut mandatory ESRS data points by over 50%. Companies were staring at hundreds of quantitative metrics and narrative disclosures; now more than half of those are slated for removal or optional treatment. The European Commission explicitly instructed that sustainability reports should concentrate on material issues and not force companies into a “checklist” mentality. Many low-impact or duplicate disclosures will be trimmed. For example, companies won’t need to repeat the same policies in multiple sections that was a common complaint with the initial ESRS drafts. The double materiality principle remains (so climate and social impacts aren’t off the hook), but firms will have clearer criteria to decide what’s relevant enough to report and can skip immaterial topics.

 

Flexibility and Storytelling in Reports: In the original ESRS framework, companies worried they’d have to follow a rigid template. The update brings a more storytelling-friendly approach: firms will be allowed to restructure their reports to improve readability. Expect executive summaries up front (covering the big ESG issues, strategy, and key metrics in a concise way), with dense data tables relegated to annexes. Companies can integrate disclosures in a way that fits their business, as long as they cover the required content. Crucially, no more copy-paste duplication – if a piece of information (say, a human rights policy) applies to multiple topics, you state it once, not ten times over.

 

Value Chain Data Relief: One of the toughest original requirements was gathering detailed ESG data from every link in a company’s global supply chain. Small suppliers in India or Brazil were suddenly being asked to fill out lengthy questionnaires to feed into an EU customer’s report. The new reforms acknowledge this pain point. Large companies can no longer force small suppliers (under 1,000 employees) to provide exhaustive ESG data as part of CSRD reporting. Instead, companies are encouraged to use estimates, industry averages, or other reasonable methods for those smaller partners. The old two-step rule (“ask for direct data, then use estimates if missing”) is replaced with a common-sense approach: if getting exact data isn’t feasible, estimates are acceptable from the start.

 

No New Sector-Specific Standards (For Now): Originally, the EU planned bespoke sustainability standards for different industries (banks, oil & gas, agriculture, etc.). That’s on ice. The sector-specific ESRS have been paused and dropped from the near-term roadmap. Regulators decided it’s better to get one streamlined set of rules working for everyone than to introduce more complexity. So, a mining company and a tech company will largely use the same core ESRS framework – but with the flexibility to emphasize what matters for their sector.

 

Assurance and Other Tweaks: The EU had envisioned moving from limited assurance on sustainability data (basically, a light audit) to reasonable assurance (a full audit) over time. That transition is now delayed as companies will stick to limited assurance until at least 2026, with further decisions down the line. While not directly an ESRS change, this delay goes hand-in-hand with simplifying reporting: regulators don’t want to pile on an audit burden while companies are still getting comfortable with what to report.

 

Read More: Key Takeaways from Recent Major ESG Events: What You Missed and Why It Matters

 

Why This Matters Beyond the EU

 

These updates aren’t just EU-centric housekeeping – they carry big implications for global companies, including those headquartered in the US, Asia, or elsewhere with business in Europe. If you’re an ESG professional at a non-EU firm, here’s why you should care:

 

Many Non-EU Companies Are (Still) Caught by CSRD. The CSRD was always meant to cast a wider net beyond EU borders. If you have a significant presence in Europe, for instance, a large subsidiary or substantial sales, you could fall under the reporting requirements. Originally, non-EU companies with €150 million in EU revenues and at least a branch or large subsidiary in the EU were to report sustainability data at the group level.

 Now, the EU is proposing to raise that threshold to €450 million in EU turnover, drastically shrinking the pool of foreign companies that must report. For example, an American tech giant with €500 million in European sales and a big EU branch would still be on the hook; a mid-sized Canadian manufacturer with €200 million in EU revenue might be off the list if the threshold triples. This is a relief for some, but be cautious – these are proposals, not final law yet. And if your company is close to the line, it may only be a matter of time (or further expansions in regulations) before you’re included.

 

Wave 4 – Mark Your Calendar: Non-EU companies that do meet the criteria will eventually enter reporting in the “fourth wave” in 2029 (covering FY2028 data). That might seem far off, but the work needed to compile group-wide ESG data is significant. Global firms like Coca-Cola, Toyota, or Tata Steel (just to pick examples) are already assessing how to collect consistent sustainability information across all their operations to satisfy EU demands. The recent changes mean they have more time and a simpler rulebook, but not an exemption. Notably, if you’re a non-EU parent with EU subsidiaries already reporting in earlier waves, you’ll effectively get a preview, those units will report locally under ESRS and you’ll need to harmonize that with your eventual group report.

 

Supply Chain Pressure (Slightly) Eased But Still There: Thousands of non-EU companies are part of EU firms’ supply chains. Under CSRD, an EU company must include key sustainability impacts from its “value chain,” which means you, as a supplier, might be asked to share data. The good news: the reforms prohibit EU firms from passing the full burden onto small suppliers and allow estimates instead. The bad news: if you’re a larger supplier (say a big apparel factory in Bangladesh or an electronics components maker in China), your European customers will still expect accurate ESG metrics from you. In fact, with more lead time now, big EU manufacturers and retailers may double down on integrating supplier data collection but focusing on their top suppliers. So, global suppliers should use this grace period to upgrade their ESG data capabilities. The key difference after the ESRS update is that small shops get a pass, while significant suppliers need to be ready.

 

Global Alignment – A Step Closer: One silver lining for global companies is that the ESRS revisions improve alignment with other frameworks. The EU’s standards will play nicer with the ISSB’s IFRS S1 and S2 (the new international sustainability standards). They also remain compatible with GRI and TCFD principles. This means if you’re already reporting under a global framework (or planning to), you won’t have to start from scratch for Europe. In fact, the EU is actively working on interoperability guidance to map ESRS to ISSB and other standards.

 

No Free Pass on ESG Performance: Importantly, none of these changes signals the EU is backtracking on sustainability outcomes. The climate targets, human rights expectations, and governance standards are unchanged, it’s the reporting mechanics that are being streamlined. Global investors and stakeholders will continue to demand high ESG performance. Non-EU companies might find the form of reporting easier, but the norm of disclosing impacts and improvements is here to stay.

 

Actionable Insights: Preparing for the New ESRS Regime

 

For ESG professionals worldwide, the updated ESRS is a moving target but not an unmanageable one. Here’s how you can respond proactively:

1. Check Your Status Under the New Rules: Re-evaluate whether your company (or any subsidiary) falls under the CSRD scope after the proposed changes. Do you exceed 1,000 employees in the EU or €450M EU revenue? If yes, you’re likely in scope, i.e. the obligation to report sustainability data at some level will find its way to you. If not, consider if you have other exposure (e.g. being listed on an EU exchange). And even if you’re comfortably out of scope, identify if you are a key supplier to EU companies who are in scope – those relationships can pull you into the reporting ecosystem indirectly.

2. Take Advantage of the Time (Don’t Wait): If your mandatory reporting is delayed by two years, use it wisely. Start collecting data and build robust internal processes now, rather than scrambling later. The simplification means you can focus on quality over quantity, for instance, strengthen your carbon accounting for material emissions sources instead of chasing every possible data point.

3. Revisit Materiality & Streamline Your Approach: The coming ESRS 2.0 will emphasize a top-down materiality assessment. Begin transitioning your mindset now. Identify the handful of ESG topics that truly move the needle for your business and stakeholders. Prioritize those in your data collection and target-setting. Simultaneously, sketch an outline of what a focused sustainability report looks like for you: perhaps a strong narrative up front, and detailed stats in the back.

4. Engage with the Evolving Standards: Keep a close watch on the ESRS revision process through 2025. The exposure draft of revised ESRS is expected by end of July 2025, with a public consultation in Aug–Sep 2025. Plan to participate or at least follow the consultation. Providing feedback can ensure industry-specific challenges are heard (many non-EU companies, from U.S. tech to Asian manufacturing, will surely weigh in).

5. Prepare Your Supply Chain (Smartly): If you’re an EU company, map out which suppliers are critical and above the 1,000-employee threshold – those are the ones you might still need detailed data from. For global companies, open dialogue with your major EU customers or suppliers about how to handle ESG data requests in light of the new rules. Leverage the relief measures: for small suppliers, decide what estimated data or benchmarks you can use to fill gaps instead of micromanaging their sustainability stats. Conversely, if you are a supplier to an EU firm and you’re of significant size, use the current time to implement or improve your own ESG data systems.

6. Watch for the SME Standard and Other Guidance: The EU is also working on a Voluntary Sustainability Reporting Standard for SMEs (VSME) to allow smaller companies to disclose ESG info in a lighter way. If you are a smaller company or rely on small suppliers, keep an eye out for this by end of 2025. It could be a useful tool or at least a reference for scaled-down reporting. reporting is entering relatively uncharted territory, and collaboration beats going it alone.

7. Align Globally and Don’t Lose Sight of Purpose: Finally, ensure your ESG reporting efforts serve a purpose beyond compliance. Use globally recognized frameworks (like GRI or SASB or the new ISSB standards) as a bridge to the ESRS, this not only future-proofs your reporting for other jurisdictions but also caters to international investors. With ESRS aligning more to global norms, a unified strategy is easier. And remember, the ultimate aim of these reports is to drive improvement. Set targets (for climate, diversity, supply chain ethics, etc.) that are ambitious yet achievable, and show progress.

 

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