The EU has published its draft revised ESRS for consultation, and double materiality stays

On 6 May 2026, the European Commission published new draft texts of the revised European Sustainability Reporting Standards and a new voluntary standard for companies outside CSRD scope, opening a public consultation until 3 June 2026.

The most significant aspect of the draft is what it does not contain. Reports in recent months had suggested the Commission was considering closer alignment with ISSB standards, which would have shifted the ESRS away from its double materiality approach. The published draft does not do this. Double materiality, requiring companies to report both on sustainability risks to their financial position and on their impacts on the environment and society, remains fully intact.

The Commission introduced a small number of targeted modifications to EFRAG’s December 2025 technical advice. Companies now have flexibility in determining GHG inventory boundaries, using either a financial control or an operational control approach, which aligns the ESRS more closely with the GHG Protocol. A second modification introduces a new transparency requirement for companies reporting transition plans with targets not aligned with 1.5°C scenarios.

The voluntary standard published alongside the revised ESRS is based on the VSME. Changes from the VSME baseline have been kept to a minimum. Companies with 10 or fewer employees can treat certain environmental disclosures as voluntary under the value chain cap.

The consultation closed on 3 June. The Commission will adopt the delegated acts as soon as possible after that, followed by a two-month Parliamentary and Council scrutiny period before the texts enter into force.

“Companies that built their materiality assessments around both financial and impact perspectives are already working in the right direction.”

– Jatin Budhraja, Sustainability Advisory Director