Compliance Corner – European Sustainability Reporting (ESR) Standards Simplified
Compliance Corner – European Sustainability Reporting (ESR) Standards Simplified
OGE – January 2026
Compliance Corner – Insights at the intersection of procurement, policy & sustainability
European Sustainability Reporting (ESR) Standards Simplified
Written by:
Benjamin Clough, Sustainability & Policy Analyst
What’s happening?
The European Financial Reporting Advisory Group (EFRAG) has published a draft of simplified European Sustainability Reporting Standards (ESRS LSME) under the Corporate Sustainability Reporting Directive (CSRD).
These new standards are designed specifically for small and medium-sized enterprises (SMEs) that are listed on EU markets, with the goal of making sustainability reporting more achievable and proportionate for smaller organisations.
What’s different?
The ESRS LSME proposal introduces:
• Simplified frameworks to reduce the legal and administrative burden on listed SMEs.
• Flexibility in reporting timelines and topics, allowing smaller firms to align gradually with larger entities’ expectations.
• A continued focus on material sustainability risks, opportunities, and impacts, maintaining data quality and transparency while easing complexity.
EFRAG is also developing a voluntary sustainability reporting standard for non-listed SMEs, aimed at supporting value chain transparency and helping companies prepare for future regulatory requirements.
What this could mean for you?
- For SMEs, these proposed standards represent a more practical pathway to compliance with the CSRD.
- They maintain alignment with the EU’s sustainability objectives while making reporting more accessible, relevant and scalable.
- This balance could strengthen both transparency and feasibility, allowing smaller businesses to demonstrate sustainability performance without the same resource pressures faced by large corporations.
What’s next?
The draft standards are currently open for public consultation, with final adoption expected mid-2026.
SMEs and supply chain partners should start considering how these proposed changes could shape data collection, reporting systems and supplier transparency over the next 18 months.
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