EU regulators express their views on revised ESRS under CSRD

In December 2025, EFRAG published revised European Sustainability Reporting Standards (ESRS) following the European Commission's “Omnibus I” simplification initiative. 

As required by the Corporate Sustainability Reporting Directive (CSRD), the European Commission requested opinions on EFRAG's revised ESRS from three key European Union financial regulators: the European Central Bank (ECB), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA). 

In February 2026, the ECB, EIOPA and ESMA published their respective opinions.

The three regulators share a core concern that the package of permanent reliefs, phase-ins and exemptions in the revised ESRS risks undermining the availability of key quantitative data. They also highlight that several reliefs go beyond, or deviate from, the IFRS/ISSB framework, creating interoperability gaps.

Reliefs: key common concerns

• Interoperability with IFRS/ISSB: All three regulators are concerned that the “undue cost or effort” relief has been expanded beyond its scope under IFRS sustainability standards to cover all metrics rather than just specific areas. This harms interoperability with international standards and potentially discourages companies from improving their data collection efforts over time.

• Data hierarchy removal: The ECB and EIOPA both criticised the decision to place directly collected data on equal footing with estimates, arguing this removes incentives for companies to improve data quality and runs contrary to the CSRD objective of creating a high-quality data ecosystem.

• Anticipated financial effects: EIOPA and ESMA raised concerns about reliefs allowing companies to omit quantitative information on anticipated financial effects, with EIOPA noting this could undermine advances in projecting climate change’s financial impact, and ESMA stressing that such information is among the most relevant for investors.

• Time limits needed: All three regulators recommended introducing time limits (typically three years, ending in financial year 2029) for certain permanent reliefs to ensure they serve as transitional measures rather than creating indefinite data gaps.

• Fair presentation concerns: The ECB and ESMA both questioned whether the extensive use of reliefs could undermine fair presentation requirements, with ESMA noting that a tension may arise if reliefs are so pervasive they affect fundamental qualitative characteristics of reported information.

ECB

Beyond the shared concerns, the ECB comments included the following:

• Assets and products definitions: The ECB expressed concern that the revised standards restrict “assets” to “own physical assets” and “products” to “physical goods”, which would exclude financial assets on banks' balance sheets and real estate held as collateral, precisely the assets most relevant for climate risk assessment in the banking sector.

• GHG emission reduction targets: The ECB opposed exempting financial institutions from providing transparency on absolute greenhouse gas emission reduction targets alongside intensity targets, arguing this could create systemic greenwashing risk and result in underestimation of risks by investors.

• SFDR coordination: The ECB recommended developing sectoral guidance for the financial sector that should compensate for the deletion of company-level data points that were specifically tailored to the financial sector and are proposed to be deleted from the Sustainable Finance Disclosure Regulation (SFDR) as part of its simplification.

EIOPA

EIOPA provided further observations focused on insurance and pensions, such as:

• Solvency II consistency: EIOPA recommended clarifying that financial materiality assessments by insurance undertakings under ESRS should leverage and be consistent with Solvency II risk assessment processes, rather than the other way round, to avoid discrepancies with prudential risk management requirements.

• Risk management disclosures: EIOPA expressed concern that requirements on risk management and internal controls over sustainability reporting do not provide sufficient detail about key elements such as main risks identified and mitigation strategies, which are essential for insurance undertakings and pension funds to assess investee companies’ governance practices.

• Principal adverse impacts data: EIOPA recommended that the voluntary standards should retain disclosures on principal adverse impacts, as most financial market participants will fall outside mandatory ESRS scope following the revised CSRD, yet still need this data for product disclosures under SFDR.

ESMA

ESMA raised additional points from a securities markets perspective which included the following: 

• Voluntary adoption safeguards: ESMA warned that the scope revisions will result in many large listed issuers reporting voluntarily, and without appropriate safeguards there may be increased greenwashing risk from selective or partial use of ESRS by voluntary adopters in ways that could mislead investors.

• Actions and financial resources: ESMA strongly criticised provisions allowing undertakings to limit disclosure of significant financial resources allocated to actions to “announced” measures only, arguing this allows companies to conceal actions addressing material impacts, risks and opportunities when not already made public.

• Clarity on climate transition plans: ESMA recommended clarifying what “compatibility with limiting global warming to 1.5°C” means and how this concept should be understood when used in relation to strategy, business model and GHG reduction targets, noting that current drafting creates ambiguity about the ambition level required for transition plans. It suggested that EFRAG publish implementation guidance on transition plan disclosures. EFRAG was working on this guidance, but this work was suspended in light of the Omnibus I negotiations.

Next steps

The Council is expected to give its final approval to the Omnibus I Directive on 24 February 2026, after which the text should be published in the Official Journal of the European Union. 

The Commission then intends to open a public consultation on the revised ESRS in April 2026, with a view to formally adopting the new standards by the end of June 2026. 

It is not clear whether, or to what extent, the Commission will take into account the recommendations from the European regulators on the revised ESRS.

For more information on the:

• revised ESRS, read our previous blog post; and 

• Omnibus I changes to the CSRD, listen to our  webinar  and read our blog post.