From New Rules to Next Steps: The 2026 ESG Checklist After 2025’s Big Changes
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From New Rules to Next Steps: The 2026 ESG Checklist After 2025’s Big Changes
The “Shift” - From voluntary to unavoidable: why ESG now affects everyone
If you thought sustainability reporting only applied to large, listed companies, 2025 proved otherwise. 2025 marks a significant turning point in the sustainability reporting landscape: reporting stopped being optional for anyone who wants to stay in business in Europe. It is the year when the first wave of companies subject to the Corporate Sustainability Reporting Directive (CSRD) published their ESG-compliant reports based on 2024 data. This milestone signals a shift from largely voluntary sustainability disclosure to a regulated and central component of corporate reporting in Europe.
While CSRD applies directly to large companies, its influence extends further. Through supply chains, financing requirements, and commercial contracts, sustainability data requests increasingly reach companies outside the CSRD scope. In practice, this means that many businesses are being asked to provide ESG information even when the law does not explicitly require it.
This dynamic is often referred to as the trickle-down effect.
In practice, this means one thing: you may not be legally required to report – but you are increasingly expected to.
This growing demand for information has supported the introduction of the Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) (see more here), designed to offer a streamlined and proportionate framework for organisations that are not directly covered by CSRD.
From voluntary to unavoidable: The “trickle-down-effect" in action
While CSRD applies directly to large companies, its indirect impact is already being felt across value chains.
According to research by Green Pulse Research 77% of companies have already been asked to provide sustainability-related information. Among those, 95% say the requests primarily come from customers.
Requests are also coming from banks, investors, owners, suppliers and public authorities. Together, these pressures are reshaping how sustainability information flows through the market.
The implication is clear:
sustainability reporting is fast becoming a basic condition for doing business, increasingly comparable in importance to traditional financial reporting.
Simplification – From complexity to proportionality
Alongside the expansion of sustainability reporting expectations, 2025 has also brought a major regulatory counter-movement: simplification.
The European Commission’s Simplification Omnibus Package was introduced to reduce reporting burden and compliance costs linked to CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD). The goal is to maintain the core objectives of the EU Green Deal while making reporting more manageable through greater proportionality. After extensive debate and negotiations, EU institutions reached political agreement on the package in December 2025. While the formal adoption process is still under way, the direction is now clear:
- Fewer companies will fall within mandatory scope
- Reporting standards will be leaner
- Obligations will be more proportionate
- Sustainability reporting will remain firmly embedded in EU policy
In short, the rules are being refined.
What actually changed (and who it affects)
As part of the simplification agenda, several important updates have emerged across sustainability reporting rules. The table below tracks the key changes and developments across Omnibus I, from the initial proposals to the latest agreement.
| Commission proposal (26 February) | Council position (21 June) | Parliament position (13 November) | Final agreement (9 December) | |
|---|---|---|---|---|
| CSRD (Scope) | CSRD would apply only to undertakings with more than 1,000 employees and either turnover above EUR 50 million or a balance sheet above EUR 25 million. | Added a net turnover threshold of EUR 450 million alongside the 1,000-employee criterion. | Adopted a stricter scope: above 1,750 employees and EUR 450 million turnover. | EU companies fall within CSRD scope if they have more than 1,000 employees and annual net turnover above EUR 450 million. |
| CSDDD (Scope, timeline, climate transition plan) | The Commission did not propose scope changes. | Supports keeping the threshold of 5,000 employees and EUR 1.5 billion turnover. Proposes postponing implementation to July 2029. | Supports keeping the threshold of 5,000 employees and EUR 1.5 billion turnover. Aligns with the “stop-the-clock” proposal: obligations start in July 2028. Proposes removing the mandatory climate transition plan requirement entirely. | EU companies fall within scope if they have more than 5,000 employees and annual net turnover above EUR 1.5 billion. CSDDD transposition is postponed by one additional year. Companies must comply by July 2029. The requirement to produce a climate transition plan has been removed entirely. |
| VSME: A Voluntary Standard for Entities Outside CSRD Scope and Value Chain Cap | Proposes adopting a voluntary reporting standard via delegated act for entities outside CSRD scope, based on the VSME. Introduces a “value-chain cap” limiting information requests from CSRD reporters to what is set out in the VSME standard. | Proposes that CSRD reporters (companies above 1,000 employees and EUR 450 million turnover) may not request information beyond what is included in the VSME from entities outside CSRD scope. | Companies outside the CSRD scope would be protected from excessive data requests. CSRD reporters would not be allowed to request information beyond what is included in the voluntary standards. | Companies with fewer than 1,000 employees would be able to refuse to report information beyond what is set out in the voluntary standards. |
ESRS: Simplifying the Reporting Standards
All EU institutions agree that reporting standards must be simplified. Updated European Sustainability Reporting Standards (ESRS), submitted by EFRAG in December, include:
- 61% reduction in mandatory datapoints, while maintaining core EU Green Deal objectives.
- A more streamlined approach to double materiality.
- Better alignment with international frameworks to reduce overlap.
What this means for your business
The shifting sustainability reporting landscape does not affect all companies in the same way, follow our guide below to find your way:
- Determine your reporting position and choose the appropriate standard
Companies should confirm whether they fall within the final CSRD scope. Those outside scope should assess whether the VSME standard provides a practical and efficient way to respond to ESG requests from customers, banks and partners.
- Assess internal capacity and resource needs
Simplification does not remove the need for data. Companies still need to understand:
- What sustainability information they already have
- What is missing
- Which systems and processes are needed to ensure consistency and quality
- Begin preparing early, even with basic information
Early preparation reduces future pressure. Collecting and structuring even a limited set of core sustainability data today makes future reporting significantly easier.
- Integrate sustainability reporting into business strategy.
Sustainability reporting is moving from a compliance activity to a central component of business planning, risk management, and stakeholder communications. Treating reporting as a strategic tool rather than a compliance requirement will help companies anticipate market expectations, strengthen operations, and build long-term resilience.
What to do now – practical next steps
To support preparation for the year ahead, the checklist below outlines practical steps for companies to consider.
With 2026 approaching, early preparation remains important. If you would like to explore how digital tools can help organise sustainability data, align with reporting requirements, and streamline your reporting process, feel free to get in touch with us.
