Overview
The European Sustainability Reporting Standards (ESRS) are the EU’s mandatory ESG reporting standards for companies within CSRD scope. ESRS is the main EU reporting language for sustainability disclosure, while the Omnibus 1 simplification process reduces the datapoint burden and streamlines application without removing the underlying ESRS framework.
If your company is in scope, ESRS is not optional. Before selecting or configuring any ESG Standards Frameworks, it is essential to understand which ESG factors are material to your business. See our M Materiality guide at the end of this document to understand the process required to accomplish this.
What ESRS Is
ESRS sits under CSRD and defines how in-scope EU (and some non-EU) companies disclose sustainability information in a comparable, auditable format. It replaced the older NFRD-era reporting logic by expanding scope, structure, and disclosure depth, while preserving the goal of consistent non-financial data reporting.
In practice, ESRS covers cross-cutting and topical sustainability disclosures, including climate, pollution, water, biodiversity, workforce, affected communities, consumers, and business conduct.
NFRD, ESRS, And Legacy Data
Discontinued in 2024, the NFRD is the legacy predecessor to CSRD based reporting. ESRS is the current standards layer, but NFRD-era disclosures remain useful as historical baselines and carry-forward references when you prepare later reporting cycles.
In the GAIQ™ platform, legacy datasets can be retained as accessible archives and imported into future reporting cycles, so prior-year narratives, metrics, and evidence remain available without rebuilding your history from scratch. That supports continuity across reporting years and reduces duplicate work when frameworks change.
Why ESRS Exists
ESRS exists to make sustainability information decisions useful, comparable, and assurance-ready for regulators, investors, and other stakeholders. It solves the “many frameworks, many formats” problem by creating one EU-aligned structure for double materiality, governance, strategy, metrics, and targets.
Companies use ESRS when they are in-scope for CSRD reporting, and they also use it voluntarily when they want a European aligned disclosure backbone that supports investor scrutiny and supply chain requests.
Who Must Comply
Mandatory ESRS applies to companies in CSRD scope, concentrated after Omnibus 1 on the largest EU and non-EU groups. Smaller entities may still be asked for limited value chain information, but the new value chain cap restricts what larger reporters can request from smaller partners.
For smaller companies, VSME is the lighter voluntary alternative; for in-scope companies, ESRS remains the mandatory framework.
Where ESRS Is Used
ESRS is used primarily in the EU and is the core sustainability reporting framework for CSRD reporters. Within a company, it applies to sustainability reporting, finance-led disclosure processes, governance review, risk management, internal controls, and assurance preparation.
It also becomes a supplier and customer data reference point, because ESRS reporters often need ESG inputs from across the value chain.
When ESRS Applies
The current ESRS regime remains the legal reporting baseline until the revised Omnibus 1 standards become legally effective. Once finalised, the revised standards are expected to apply for financial years beginning on or after 1 January 2027, subject to final adoption.
Because timing is legally driven, companies should treat current requirements as operative until the new rules are in force.
Unique ESRS Requirements
ESRS requires double materiality assessment, governance disclosures, and assurance-ready reporting. Reporting is designed for machine-readable workflows and, where applicable, digital filing and iXBRL/XHTML-style submission requirements.
Third-party limited assurance remains central for in-scope reporters, so data lineage, controls, and review discipline matter from the start.
ESRS vs Reduced ESRS Omnibus 1
The original ESRS framework was broader and more prescriptive, with a much larger datapoint set and more narrative burden. The reduced Omnibus 1 ESRS keeps the same framework logic but simplifies disclosures, removes many datapoints, and reduces implementation friction while preserving comparability and assurance.
It is not a different framework; it is a streamlined legal version of the same ESRS reporting model.
ESRS vs VSME
VSME is a voluntary standard designed for smaller companies, not the mandatory CSRD larger entities. ESRS is heavier, broader, and mandatory for in-scope companies, while VSME is lighter and intended to help smaller businesses respond to customer requests and build readiness.
If your company is in CSRD scope, ESRS is the required framework; if you are below scope and want a structured disclosure baseline, VSME is usually the better fit.
Data Retention And Archives
Your ESG reporting records should be retained for multiple years to support legal, audit, and assurance needs. The GAIQ™ platform preserves published reports and supporting records as accessible archives, and legacy data can be carried forward or imported from previous reporting cycles so that your reporting history remains usable.
This means you do not have to rebuild prior reporting cycles manually when frameworks evolve or when you move from NFRD-era disclosures into ESRS reporting.
The FY2026 Compliance Trap
If your fiscal year begins before revised ESRS become legally effective, you report under the standards that are legally in force at the start of that year. That can create an expensive timing problem: companies may need to build systems for the current ESRS baseline first, then reconfigure again once the simplified Omnibus 1 version becomes binding.
This is not poor planning; it is the consequence of legal timing. Final drafts and consultation outputs do not create legal obligations until the Commission’s adoption process is complete and the new standards take effect.
How The GAIQ™ AI-Driven Platform Makes ESRS Reporting Simpler
The GAIQ™ platform preloads the relevant ESG Standards Frameworks based on your initial DMA results, so your team starts with the correct ESRS scope already configured. The platform helps map data to material ESRS datapoints, track mandatory versus voluntary items, and keep reporting aligned with what is currently in scope for your business.
The GAIQ™ platform also reduces duplicate work by linking the same underlying ESG data to multiple disclosures and displaying the selected or assigned frameworks in the app header and D Data pages for visibility.
Next Steps For Your Team
Use ESRS as the mandatory reporting baseline if you are in CSRD scope. Use VSME if you are below scope and want a lighter structured standard. In both cases, GAIQ™ can preserve legacy data, carry forward prior-year reporting cycles, and reduce rebuild cost when the standards change.
Adopt AI technology to automate data collection, mapping, and reporting workflows, which can significantly reduce the time and effort required for ESG reporting.
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Executive Summary
ESRS is the EU’s mandatory sustainability reporting standard for in-scope companies. The Omnibus 1 changes simplify the datapoint burden, but they do not remove the need for disciplined governance, materiality, data controls, and sign-off.
For executives, the issue is not only whether the company reports, but whether it can produce decision-useful, assurance-ready disclosures that withstand scrutiny.