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ICSRG Bulletin
August 2026
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Latest news on sustainability reporting and governance in Europe and beyond |
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MESSAGE FROM ICSRG TEAM
ESRS
Last month the EC formally adopted the suite of revised European Sustainability Reporting Standards (ESRS) by way of a delegated act (DA). The revised ESRS is very similar to the draft simplified ESRS submitted to the EC by EFRAG last December. We welcome the revised ESRS and urge member states to adopt them as soon as possible.
Reporting by Smaller EU Companies
In concert with the adoption of the revised ESRS, the EC also adopted a voluntary standard (VS) for smaller companies out of scope of the ESRS by way of a DA. The VS is based on and very similar to EFRAG’s Voluntary Sustainability Reporting Standard for non-listed Micro, Small, and Medium-sized Enterprises (VSME). The VS will also serve as the ’value chain cap’, preventing CSRD in-scope companies from requiring more information from value-chain partners with 1,000 employees or fewer than what the VS covers.
We hope that EU companies, investors, employees and citizens will drive voluntary sustainability reporting and assurance by companies with 1,000 employees or fewer. These companies will have the option to use either the VS or revised ESRS. We suggest that smaller, simpler entities from lower risk sectors should be encouraged to use the VS while larger, more complex entities from higher risk sectors should be encouraged to use the simplified ESRS.
We welcome the review clause in the revised CSRD that says the EC will reconsider the scope of the reporting requirements. We hope to see mandatory reporting, with limited assurance, extended to all companies with 250 or more employees from 2030.
ESRS-40a
In response to a request from the European Commission (EC), EFRAG developed the ESRS for certain non-EU Undertakings (ESRS-40a) Exposure Draft. ESRS-40a is now open for public consultation. We welcome this ED but urge the EC to require the global approach in the interests of establishing a level playing field between EU and non-EU companies.
Assurance
We welcome the decision to adopt a sustainability assurance standard by 1 July 2027. We support the timely global adoption and implementation of the ISSA 5000 and IESSA. Global standard setters should closely monitor the impact on value chain reporting and assurance and, where that impact is deemed disproportionate, modify the standards with timely limited scope amendments.
Global SME Sustainability Reporting
We believe the IFRS Foundation should develop an IFRS sustainability disclosure standard for non-listed SMEs (or non-publicly accountable entities) so they might respond to requests for sustainability information from larger companies and finance providers. This standard could be based on the EU’s VS and would be a sister standard to the IFRS for SMEs.
Paul Thompson and Nikola Stajic |
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| Overview |
Global Trends
In late June 2026 the Global Reporting Initiative (GRI) published perhaps the largest-ever survey of sustainability reporting. GRI’s report finds that their standards are the most widely used sustainability disclosure standards: GRI reporters account for 62% of global market capitalization. The report also finds that Asia and the Global South are becoming new centers of gravity for impact disclosure. The State of Sustainability Reporting: Global Trends in the GRI Standards 2025 examines published reports from almost 15,000 listed companies across 132 jurisdictions.
Europe
On 26 February 2026 the EU published the final legal text in the Official Journal of the revised CSRD and CSDDD (or CS3D) known as Omnibus I. The key changes are summarized in the European Council’s press release. Transposition started in late March 2026. Member States have 12 months to implement the CSRD amendments, while changes to the CSDDD must be applied by 26 July 2028. To help businesses implement the legislation see Frank Bold’s Business Knowledge and Implementation Centre which includes this legal briefing on the new restrictions on information requests to business suppliers following the Omnibus 1 revisions to the CSRD and CSDDD and explains the practical implications for companies. |
| ESRS Developments |
EFRAG State of Play 2026
On 1 July 2026 EFRAG published the 2026 edition of the State of Play Report, providing an evidence-based assessment of sustainability reporting practice over 900 assured 2025 sustainability statements prepared under ESRS. In this podcast, Kerstin Lopatta, Chair of the EFRAG Sustainability Reporting Board, joins Jannik Leiendecker, Partner & Associate Director at Boston Consulting Group (BCG), to unpack the report's most important findings, discuss emerging reporting trends, and explain what they mean for preparers, investors and other stakeholders. One of the key findings is that the most declared material topics are the same as in the previous year- namely E1 Climate Change, S1 Own Workforce and G1 Business Conduct – and that identified material topics inched up from 6.3 to 6.6 per company.
Revised ESRS and Voluntary Sustainability Reporting Standard (VS)
On 3 July 2026, much sooner than expected, the EC published delegated acts (DA) on revised ESRS and Voluntary Sustainability Reporting Standard (VS). The revised standards simplify and streamline sustainability reporting requirements and will apply to financial years beginning on or after 1 January 2027, with early adoption for financial year 2026 permitted once the delegated act enters into force. EFRAG has hosted all the related documents here.
The publication follows the EC’s request for technical advice from EFRAG on the revision of the ESRS. EFRAG submitted its technical advice in December 2025, after which the EC published a draft DA for public consultation in May 2026.
At the same time, the EC also adopted and published a DA establishing a VS. The VS will support companies outside mandatory CSRD reporting and establishes a ’value chain cap’, preventing CSRD in-scope companies from requiring more information from value-chain partners with 1,000 employees or fewer than what the voluntary standard covers. The VS is very similar to the VSME which it supersedes.
Both DAs have now been transmitted to the European Parliament and the Council of the European Union for scrutiny in accordance with the legislative process. They have an initial two-month scrutiny period during which either institution may object (this is rare!). If not rejected, the DAs will enter into force after publication in the Official Journal of the EU, likely in September 2026.
Read a full analysis of the publication of the revised ESRS and VS by Frank Bold here. Some, like Frank Bold, believe the VS is ill-suited to companies employing up to 1,000 since the VSME on which it is based was developed for much smaller companies. Accordingly, they recommend that large companies outside the scope of the revised CSRD should report using the revised ESRS rather than the VS.
Guidance on ESRS
Late last year EFRAG launched the ESRS Knowledge Hub to help users navigate the ESRS, including the VSME, and implementation materials developed by EFRAG - register here. The 2026 Revised ESRS text and Voluntary Standard (VS) are now available on the EFRAG ESRS Knowledge Hub as explained here. The new interactive document set includes: all revised topical ESRS standards as well as the VS; an interactive glossary and list of defined terms; links to the corresponding paragraphs in the 2023 ESRS, accessible through the interactive sidebar to facilitate navigation between both versions; a version switch feature, allowing users to view the evolution of the text compared with the 2025 Simplified ESRS delivered by EFRAG to the EC on 30 November 2025; and detailed amendment logs available through the interactive sidebar of each standard as part of the 2023 ESRS.
Guidance on VS
EFRAG has developed a considerable amount of materials supporting implementation of its VSME and duly housed it in the SME Ecosystem of its Knowledge Hub as this educational video explains. As the VS supersedes the VSME the VSME material is expected to be tweaked to support the VS. The EC plans to launch a dedicated portal that will include new templates and guidance suited to larger entities that are eligible to use the VS.
European Sustainability Reporting Standards for Certain non-EU Undertakings (ESRS-40a)
The CSRD introduces sustainability reporting requirements for certain non-EU undertakings with significant activities in the EU. Under Article 40a of the Accounting Directive, the EC is required to adopt dedicated ESRS for these undertakings. Following a request from the EC, EFRAG developed the ESRS for certain non-EU Undertakings (ESRS-40a) Exposure Draft. ESRS-40a (previously referred to as Non-EU ESRS (N-ESRS) or ESRS for Third Countries (ESRS-TC)) is now open for public consultation until 31 October 2026. The feedback received will contribute to the finalization of EFRAG's technical advice to the EC. Reporting in accordance with ESRS-40a will be mandatory for financial years starting on or after 1 January 2028.
The suite of ESRS-40a comprise 12 standards, 2 cross-cutting and 10 topical standards, mirroring the ESRS structure. The standards focus only on impacts and as such do not include anticipated financial effects. Fair presentation remains the overall reporting objective, but the focus is only on material impacts and how they are managed. Definition of users, upstream and downstream value chain, incorporation by reference, and transitional provisions are the same as or aligned with ESRS. The ESRS-40a offers two reporting options, a global approach and a mixed approach. When EFRAG's SRB approved the ED in early July it raised concerns over the limited scope of the disclosure requirements under the proposed 'mixed approach' and as such prefers the global approach.
Following the Omnibus amendments, Article 40a applies to non-EU undertakings that: generate more than EUR 450 million net turnover in the EU during each of the last two consecutive financial years; and either have an EU branch generating more than EUR 200 million or are the ultimate parent of EU subsidiaries generating more than EUR 200 million. The largest share of the estimated 1,200 companies (down from around 10,000 pre-Omnibus) within scope of the ESRS-40a come from the US, followed by the UK, Switzerland and Japan and are some of the world’s largest multinational groups.
From the EU’s perspective, the ESRS-40a is about creating a level playing field. If large non-EU groups generate significant revenues in the EU, they should be subject to sustainability reporting expectations comparable to those applied to EU companies. But outside Europe many may see the ESRS-40a more as the EU extending its regulatory expectations beyond its borders.
To support stakeholders during the consultation, EFRAG has published the presentation, recording, and FAQs (see bottom of this webpage) from the webinar held to introduce the ESRS-40a. Interestingly the ED provides much flexibility in how to structure the sustainability report.
EFRAG’s 2026 Conference
EFRAG has published the summary report of its conference “25 Years of EFRAG: Leading the Next Era of Corporate Reporting”, which took place on 8 June 2026 in Brussels. The conference examined EFRAG’s evolution and the future of corporate reporting in Europe. Access all conference material here.
EFRAG’s Future Activities
In this LinkedIn Pulse article Chiara Del Prete, EFRAG SR Technical Expert Group (TEG) Chair looks at what’s next after the Omnibus and considers the opportunities and challenges of ESRS and voluntary reporting. Back in April 2026 EFRAG published its sustainability reporting work programme 2026.
Connectivity Discussion Paper
On 30 June 2026 the comment period for EFRAG’s Discussion Paper on Connectivity of Financial and Sustainability Reporting closed. In this LinkedIn Pulse article EFRAG’s Senior Technical Manager Dr. Liad Ortar examines whether the goal should be complementarity rather than connectivity.
EFRAG Updates
The sustainability and financial reporting podcast episodes for July 2026 are available on the EFRAG Spotify and YouTube channels. The June 2026 EFRAG Update report – summarizing recent public technical discussions and decisions taken, open consultations, future events, etc. – is here.
Other ESRS Guidance
Sustainability Reporting Navigator (SRN) have updated their ESRS Revision Impact Analysis to reflect the draft simplified ESRS handed to the EC in December 2025. SRN have duly updated their ESRS revised datapoint list and provide the editable Excel sheet for free here. SRN are expected to update their datapoint list once the draft simplified ESRS become a delegated act. The academics behind the SRN have announced that their paper, “Assessing corporate sustainability with large language models: evidence from Europe” has now been published open access in Nature Communications. Both the data and the code are publicly available.
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| Global Developments in Sustainability Finance, Governance and Reporting |
IFAC State of Play Report
An updated report from IFAC shows that the global sustainability reporting ecosystem is becoming less fragmented as more of the world’s largest companies begin to adopt or form plans to use the ISSB standards and ESRSs. The report, The State of Play: Sustainability Disclosure and Assurance (Six-Year Trends and Analysis, 2019-2024), is the sixth annual benchmark of sustainability reporting and assurance practices of global companies in G20 jurisdictions. A third of companies with sustainability information disclosures in 2024 referenced the use or future use of ISSB standards, compared to only 16 percent that did so the previous year. Similarly, 20 percent of companies that disclosed sustainability information in 2024 said they have used, or plan to use, the ESRS.
In the LinkedIn Pulse article ”Sustainability Disclosure and Assurance in Europe: Six Years of Progress, One Inflection Point” leading European countries are shown to be leading the way in the extent of sustainability reporting and assurance.
ISSB Update
This ISSB Update summarises the July 2026 International Sustainability Standards Board (ISSB) meeting. You can also listen to ISSB Chair and Vice-Chair in the latest episode of the ISSB podcast discuss the use of both ISSB Standards and ESRS, the likely benefits of the ISSB's forthcoming nature-related disclosure proposals and the ISSB’s permission to ballot, and the next phase of enhancements to the SASB Standards.
SASB Standards
The ISSB’s public consultation on proposed amendments to three SASB Standards closed on 24 July 2026. EFRAG submitted this comment letter. In which it expresses support for the enhancement of the SASB Standards and calls for greater consistency, reduced complexity, and enhanced interoperability across sustainability reporting standards.
ISSB Adoption
This webpage hosts a list of ongoing and completed jurisdictional consultations on sustainability-related disclosures. On 31 July 2026 there were three open sustainability disclosure consultations – Singapore, New Zealand, and the EU. This Corporate Disclosures article takes a closer look at Singapore’s consultation: under the proposal, mandatory reporting under SFRS S2 will be phased in for listed and large companies in Singapore. However, SFRS S1 will remain voluntary for the foreseeable future.
The Jurisdictional Readiness Assessment Guide and associated tool supports jurisdictions in assessing how prepared their markets are for the adoption or other use of ISSB Standards: the guide provides practical examples drawn from the experiences of some of the 40 or so jurisdictions that have already taken steps to adopt or otherwise use ISSB Standards.
ISSB Implementation Support
All ISSB support materials for IFRS Sustainability Disclosure Standards are hosted here. Most recently the IFRS Foundation launched a new webpage hosting implementation questions submitted to the Transition Implementation Group (TIG) on IFRS S1 and IFRS S2 that can be answered by applying the words in IFRS S1 and S2. This helps stakeholders access and apply the guidance more easily.
In June 2026 the IFRS Foundation launched the ISSB Training Partner Programme. Organisations keen to become an ISSB Training Partner can register their interest, while those seeking to participate in ISSB Disclosure Training can find a training partner.
In this latest Q2 2026 episode of the Implementation Insights podcast, ISSB Vice Chair Sue Lloyd leads a discussion on the latest resources available to support companies applying ISSB Standards.
ISSB Nature-Related Disclosures
Since the ISSB decided at its April 2026 meeting that requirements for nature-related disclosures will initially come in the form of an IFRS Practice Statement (PS) the Board has been making significant progress developing the PS and is on track for a public consultation via an exposure draft (ED), for the biodiversity COP in October 2026. The ISSB Vice-Chair shared insights on the project during her address to the IFRS Foundation Conference in late June 2026. Until such time as the PS is finalized the TNFD recommendations will remain in force.
IFRS Sustainability Disclosure Taxonomy
On 29 July 2026 the ISSB published IFRS Sustainability Disclosure Taxonomy—Proposed Update 1 Amendments to Greenhouse Gas Emissions Disclosures. This proposal considers updates to the IFRS Sustainability Disclosure Taxonomy (ISSB Taxonomy) reflecting Amendments to Greenhouse Gas Emissions Disclosures, which made targeted amendments to IFRS S2 Climate-related Disclosures in December 2025. The deadline for comments is 28 September 2026.
Taskforce on Inequality and Social-Related Financial Disclosures (TISFD)
Just as the TCFD did for climate and the TNFD did for nature, so the TISFD is aiming to establish a standardised framework for reporting on companies' people-related impacts, dependencies, risks and opportunities. On 26 May 2026 the TISFD Framework (Beta Version 0.1) was released: the public consultation closed on 31 July 2026. The final framework is expected by the end of 2027. This Corporate Disclosures article explains that the core set of metrics that will anchor the framework is expected by the end of 2026.
Public Sector Standards
Earlier this year IPSASB released IPSASB SRS 1, Climate-related Disclosures, the first-ever public sector sustainability reporting standard earlier this year. IPSASB has now turned its attention to the development of a public sector equivalent to the ISSB’s IFRS S1, a general sustainability-related disclosure standard that sets out general principles for sustainability disclosures in the public sector. IPSASB plans to issue a final standard before the end of 2026. At its June 2026 meeting IPSASB discussed two of the standard's four disclosure pillars - strategy and metrics & targets.
OECD Due Diligence Report
On 30 June 2026 the OECD published its 2026 Responsible Business Outlook. Based on findings from 10,000 large listed companies this report shows a wide due diligence implementation gap. Globally, 45% of firms have due diligence policies and management systems, but just 25% identify impacts and only 20% then also address these impacts. This Corporate Disclosures article takes a closer look.
Taskforce on Nature-related Financial Disclosures (TNFD)
On 31 July 2026 the comment period closed on the TNFD’s discussion paper outlining potential refinements to the TNFD risk assessment and scenario analysis guidance, aiming to support more effective, consistent and comparable nature-related risk assessments.
Eurosif Sustainable Finance
On 3 August 2026 the European Sustainable Investment Forum (Eurosif) published summaries of the files it’s working on, including most of key EU sustainable finance files, explaining what they cover, why they matter, who they apply to, as well as the latest developments and Eurosif’s analysis. The files include Sustainable Finance Disclosure Regulation (SFDR), CSRD and ESRS, and CSDDD.
US Developments
Corporate Disclosures reports that on 27 July 2026 the California Air Resources Board (CARB) launched a fresh consultation on draft regulations for establishing mandatory direct GHG emissions disclosures under SB 253 and set out its proposals for implementing Scope 3 reporting requirements.
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| Global Developments in Sustainability Assurance |
ISSA 5000
Over a year ago the IAASB and the IESBA launched their joint effort to support effective implementation of their standards aimed at building trust and transparency in sustainability reporting and assurance. The International Standard on Sustainability Assurance (ISSA 5000) General Requirements for Sustainability Assurance Engagements becomes effective for periods starting on or after 15 December 2026. Early adoption is encouraged and translations are available here.
ISSA Adoption and Implementation Support
There is a growing momentum around the world as jurisdictions continue to adopt ISSA 5000. Some jurisdictions are making sustainability assurance mandatory while others are taking a voluntary approach. This IAASB webpage includes ‘ISSA 5000 Jurisdictional Adoption’ (see under ‘Additional Information’).
Access published adoption and implementation resources on the dedicated ISSA 5000 web page. In late June 2026 the IAASB released a Frequently Asked Questions (FAQ) on the application of materiality in sustainability assurance engagements that are intended to promote consistent understanding and effective application of the concept under ISSA 5000.
The ICAEW and the World Business Council for Sustainability Development (WBCSD) have published a guide to assurance on sustainability information. This guide supports organisations through their entire assurance journey, from understanding what assurance is, to preparing for it, selecting a practitioner and interpreting the results.
IESSA
In concert with the IAASB, the IESBA launched its new International Ethics Standards for Sustainability Assurance (IESSA) and other new sustainability-related provisions establish a strong ethical foundation for sustainability reporting and assurance engagements. These standards will become effective for sustainability assurance engagements on sustainability information for periods starting on or after 15 December 2026, with early adoption encouraged.
The IESBA continues to expand IESSA Implementation Resources. IESBA has established a feedback mechanism to gather implementation insights. This online submission form will collect insights from practitioners, firms, and other stakeholders on the application of the IESSA and related ethics standards in sustainability assurance engagements. IESBA welcomes input here. Read more about IESSA here.
European Union
The revised CSRD maintains the limited assurance requirement and maintains the EC’s delegated power to adopt a limited assurance standard. The EC will adopt a sustainability assurance standard by 1 July 2027. To protect SMEs, it proposes requiring assurance providers to respect the obligation that companies should not request information from value chain companies with fewer than 1,000 employees beyond what is included in the VS. In January 2026 the EC sent an updated request to the Committee of European Auditing Oversight Bodies (CEAOB), asking it to develop EU-specific add-ons and possible carve-outs to ISSA 5000 for limited assurance on sustainability reporting by 30 September 2026. Meantime assurance providers can consult these CEAOB guidelines and illustrative examples of limited assurance reports - unmodified report and modified report – published by the ECG.
Research on Sustainability Assurance
According to a literature review of sustainability assurance, What do we know about sustainability reporting assurance quality? published in the British Accounting Review in July 2026, practice, quality and clarity of sustainability reporting assurance vary significantly. The assurance of sustainability and CSR reporting has emerged as an important mechanism for enhancing the credibility and reliability of non-financial disclosures. This paper synthesizes the historical development of sustainability assurance, outlines its core objectives, evaluates existing evidence on assurance quality, and identifies key gaps and avenues for future research.
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