ICSRG | Bulletin | May 2026

MESSAGE FROM ICSRG TEAM

The recent conclusion of the EU’s Omnibus I process means we are now close to seeing the major pieces of the sustainability reporting and due diligence framework in the EU fall into place. In June 2026 we expect the EC to formally adopt the suite of revised European Sustainability Reporting Standards (ESRS). While few changes are expected to the draft simplified ESRS submitted to the EC by EFRAG last December the ISSB has ‘ruffled a few feathers’ by saying that sustainability reports prepared using ESRS will be accepted as ISSB compliant provided that financially material information is not obscured by other disclosures. Some view this as an attempt by the ISSB to convince the EC to allow ISSB standards to be used in place of ESRS. We believe the EC should ensure that double materiality, with equal weight afforded financial and impact materiality, is preserved.

Reporting by Out-of-Scope EU Companies
Omnibus I it leaves all companies employing less than 1,000 out of scope. We hope that EU companies, investors, employees and citizens will drive voluntary sustainability reporting and assurance by these companies. The EC has indicated it will make just a few tweaks to EFRAG’s Voluntary Sustainability Reporting Standard for non-listed Micro, Small, and Medium-sized Enterprises (VSME) and adopt this as the Voluntary Standard (VS) for use by all companies employing fewer than 1,000 at the same time as the draft simplified ESRS in June 2026. This means companies employing up to 1,000 people will have the option to use either the VS or the recently simplified ESRS, whichever the most suitable. 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 states that the EC will assess whether to extend the scope of the reporting requirements. We hope to see mandatory reporting, with limited assurance, extended to all companies with 250-1,000 employees from 2030 onwards.

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 that the IFRS Foundation ought to focus on the adoption and implementation of its present suite of standards. We accept the wish to avoid disruption to this process by developing a practice statement rather than a standard for nature-related disclosures. We also 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, its financial reporting standard for non-publicly accountable entities.

EU Omnibus I

Introduction

On 26 February 2026, exactly one year since the Commission presented its proposal, the EU published the final legal text in the Official Journal of the revised CSRD and CSDDD (or CS3D). The key changes are summarized in the European Council’s press release. Accountancy Europe has also issued two factual analyses of the Omnibus Directive amending the CSRD and CSDDD that provide an overview of the key changes to sustainability reporting and assurance as well as due diligence requirements. 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 understand and implement the EU’s sustainability legislation, Frank Bold has the Business Knowledge and Implementation Centre.

ESRS Developments

EFRAG Sustainability Reporting Board (SRB) Chair
On 13 April 2026 EFRAG’s General Assembly confirmed Kerstin Lopatta as the new chair of its Sustainability Reporting Board (SRB). Lopatta has extensive experience in auditing, consulting, academia, and four years as Vice-Chair. Her priority is to ensure that the ESRS deliver meaningful, decision-useful information while supporting companies in their implementation journey. Read more here.

Draft Simplified ESRS
Next month, six months since the suite of draft simplified ESRS were received from EFRAG, the EC is expected to formally adopt this suite of standards by delegated act. The full set of the draft simplified ESRS can be found here, at a glance factsheet here, the Basis for Conclusions here, and cost-benefit analysis (CBA) here. The Basis for Conclusions explains how the feedback from the public consultation has shaped the amendments. The CBA estimates that the draft simplified ESRS will cut reporting costs by 44% compared to the original ESRS. Competitiveness effects, however, are assessed as neutral.
EFRAG has also launched the ESRS Knowledge Hub to help users navigate the ESRS, including the VSME, and implementation materials developed by EFRAG. With a free Knowledge Hub account – register here - users can navigate the full EFRAG Technical Advice in a user-friendly format as well as see how the revised standards compare with the 2023 ESRS. Once adopted by the Commission as a delegated act, the final simplified ESRS will also be available in an interactive format.
The EC, specifically DG FISMA, is now conducting its due diligence. While it seems unlikely the EC will reduce data points even more, the EC is expected to make targeted adjustments in response to concerns expressed by the European Central Bank (ECB), European Securities Markets Authority (ESMA), and Platform for Sustainable Finance (PSF) about the additional reliefs introduced by EFRAG.
While few changes are expected to the draft simplified ESRS submitted to the EC by EFRAG last December the ISSB has ‘ruffled a few feathers’ by saying that sustainability reports prepared using ESRS will be accepted as ISSB compliant provided financially material information is not obscured by other disclosures. This would potentially give the European standards direct full ISSB adopter status - in other words, removing the interoperability mechanism altogether. As Corporate Disclosures reports some believe this as an attempt to convince the EC to allow ISSB standards to be used in place of ESRS. Any day now the EC is expected to release a public consultation on its proposed simplified ESRS with a 'non-obscuring criterion' expected to be included.
The EC must adopt the amended ESRS by way of a delegating act by mid-2026. Once the EC submits the final text, the Parliament cannot amend individual provisions; it can only object to the whole delegated act. If neither the Parliament nor the Council objects during the scrutiny period, the delegated act automatically enters into force.

ESRS Datapoints
Sustainability Reporting Navigator, a team of German academics, have updated their ESRS Revision Impact Analysis to reflect the draft simplified ESRS handed to the EC. They find a 51% reduction in the overall number of mandatory data points with qualitative data points reduced by 58% compared to a 30% reduction for quantitative data points. Some 41% of the data points in the revised ESRS are legacy data points while the remaining 59% are new or amended data points. Read the analysis here. The team have duly updated their ESRS revised datapoint list and provide the Excel sheet for free here and is editable.

CSRD Reporting Practices
German researchers have studied the first 100 2nd year CSRD reports for FY2025 and have identified three early patterns: reports are getting (a little) shorter; reports are becoming more streamlined with less redundancy and duplication; and many reports have been significantly restructured. Slides with the full analysis can be accessed in this LinkedIn post.

Sustainability Reporting Standards for SMEs
Since the European Commission officially adopted EFRAG’s VSME as a Recommendation in late July 2025 EFRAG has been busy mobilizing implementation support (access the Commission’s press release, Q&A, and the recommendation here and the standard, explainer videos, digital templates, and guidance on EFRAG’s website here.
The findings from EFRAG’s first VSME Market Acceptance Report has prompted EFRAG to consider developing further practical guidance on specific disclosures, initiating a collection of practical examples of completed VSME reports to gather best practices, continuing work on the VSME Digital Template, and further mapping digital tools and platforms. EFRAG has already started collecting examples of sustainability reports prepared using the standard. Non-listed SMEs have been invited to share their reports so as to help EFRAG identify emerging practices and good examples to support other SMEs starting their sustainability journey. Insights will feed into the VSME Ecosystem 2026 initiative, with findings to be published in Autumn 2026. Submission deadlines are 31 May or 31 July 2026.
On 24 April 2026 EFRAG released a new educational video now to help SMEs understand the different functionalities of the VSME section of the Knowledge Hub. Watch now this this educational video translated into 16 EU languages.

Omnibus VSME
The Omnibus outcome has resulted in a significantly reduced CSRD scope. The Omnibus text states that the VSME is designed to both enable voluntary sustainability reporting by companies with fewer than 1,000 employees or annual turnover less than €450million and limit the information that can be required from those companies in value chains. The EC has indicated it will simply tweak the VSME and rename it the Voluntary Standard (VS). PwC Ireland has published this article that includes a high-level comparison of the VSME and simplified ESRS.
Revised Article 29e envisages the launch of a dedicated portal that will include new templates and guidance suited to larger entities. The EC must adopt the delegated act establishing the voluntary standard within four months of the Omnibus directive entering into force, that is by mid-2026, in concert with the adoption of the simplified ESRS. Many are questioning how the VS will be suited to companies employing up to 1,000 as the VSME was developed for much smaller companies. And many are urging these companies to use the simplified ESRS. For instance, six major organizations in Poland have recommended that large companies which are outside the scope of the revised CSRD report according to the simplified ESRS instead of the VS.
EFRAG finds limited interest for a voluntary template for SMEs and startups on the European Single Access Point (ESAP). Over 100 potential users have been consulted on the potential uptake of a voluntary template for SMEs and startups on the ESAP. Stakeholders can provide feedback to the report until 27 May 2026 via a comment letter or an interview. Read more here

EFRAG VSME Report
EFRAG has published its first Sustainability Report, covering 2025, prepared under the VSME. The report has been prepared using the VSME Digital Template and Converter.
Research on SME Sustainability Reporting
The Special Issue, "Advancing Sustainability Reporting in SMEs: Challenges and Opportunities in the Modern Landscape," of the Journal of Global Responsibility is now available here.

EFRAG Work Program 2026
On 24 April 2024 EFRAG submitted its sustainability reporting work programme 2026 to the EC. The key priorities are: development of N-ESRS for non-EU groups, with technical advice expected by early 2027, after the publication of an Exposure Draft for public consultation planned from July 2026 for 100 days; continuation of the SME ecosystem, including support for voluntary reporting and capacity building; implementation support, driven by stakeholder needs and an upcoming agenda consultation; advancing interoperability with international standards (ISSB, GRI, GHG Protocol) to reduce fragmentation; and accelerating digitalization, notably through XBRL taxonomy updates and the ESRS Knowledge Hub.

Connectivity Discussion Paper
In late 2025 EFRAG released its Discussion Paper on Connectivity of Financial and Sustainability Reporting. Comments are due by 30 June 2026. Read more here.

EFRAG Updates
The March 2026 EFRAG Update report – summarizing recent public technical discussions and decisions taken, open consultations, future events, and vacancies – is here. The related sustainability and financial reporting podcast episodes are available on the EFRAG Spotify and YouTube channels.

Climate Action Reporting
EFRAG is consulting on its Draft Comment Letter on the Greenhouse Gas Protocol (GHG Protocol)’s Actions and Market Instruments Phase 1 White Paper. This initiative addresses how companies account for the real-world impacts of climate actions beyond traditional Scope 1, 2 and 3 emissions and introduces a potential multi-statement reporting approach. EFRAG invites stakeholders to share their views via this consultation survey by 16 May 2026): feedback will inform EFRAG’s response.

Guidance
In April 2026 ACCA released guidance on using estimates, third-party data and proxy data in sustainability reporting. This Corporate Disclosures article takes a closer look.

Meantime, Accountancy Europe has launched a SME sustainability hub — a practical resource designed to support SMEs on their sustainability journey. The hub provides useful insights, guidance and tools to help businesses act in a way that is manageable and relevant to their needs. Explore the hub here.

Global Developments in Sustainability Finance, Governance and Reporting

ISSB Update
This ISSB Update summarises the April 2026 International Sustainability Standards Board (ISSB) meeting. Listen to ISSB Chair and Vice-Chair share key takeaways from the ISSB April board week in this podcast including: the proposed way forward for nature-related disclosures; the recent meeting of the Transition Implementation Group on IFRS S1 and IFRS S2; and the consultation on the ISSB’s proposed amendments to three SASB Standards.

SASB Standards
The ISSB’s public consultation on proposed amendments to three SASB Standards - Agricultural Products; Meat, Poultry & Dairy; and Electric Utilities & Power Generators - and consequential amendments to the industry-based Guidance on Implementing IFRS S2 closes on 24 July 2026.

ISSB Adoption
The Jurisdictional Readiness Assessment Guide and associated tool are now available to support jurisdictions in assessing how prepared their markets are for the adoption or other use of ISSB Standards. As explained here the guide provides practical examples drawn from the experiences of some of the nearly 40 jurisdictions around the world that have already taken steps to adopt or otherwise use ISSB Standards. This webpage hosts a list of ongoing and completed jurisdictional consultations on sustainability-related disclosures. On 30 April 2026 there was three open sustainability disclosure consultations – Switzerland, Nepal and Bangladesh.

ISSB Nature-Related Disclosures
At its April 2026 meeting the ISSB decided that requirements for nature-related disclosures will initially come in the form of an IFRS Practice Statement (PS). The ISSB’s existing Standards already require companies to provide material information about all sustainability-related risks and opportunities, including nature-related risks and opportunities that could reasonably be expected to affect a company’s prospects. The PS would complement IFRS S1 and IFRS S2, without changing the requirements in the Standards. When a company needs to provide information about nature-related risks and opportunities in accordance with IFRS S1, the PS would explain how to do this. This form of standard-setting therefore minimises disruption, which is particularly important because companies and jurisdictions are in the process of implementing and adopting the ISSB Standards. Hear ISSB Vice-Chair share highlights from the board’s April meeting: access the meeting recording and papers: https://lnkd.in/e5wYWYcz and read the press release here.
In this LinkedIn post ISSB Chair explains that the Board opted for a PS for five reasons: a PS follows full due process, including public consultation via an exposure draft (ED), which the ISSB is targeting for the biodiversity COP in October; the ED will also ask stakeholders whether a different standard-setting approach would be preferable; once issued, companies using the PS will achieve outcomes equivalent to applying a Standard; jurisdictions which are ready to act can adopt it immediately; and when conditions allow, the PS can be converted into a formal ISSB standard, subject to public consultation.
This Corporate Disclosures article examines the decision. Many are disappointed. On the eve of the decision global leaders across finance, science and conservation called, by way of this open letter, for a dedicated standard on nature.

ISSB Implementation Support
All ISSB support materials for IFRS Sustainability Disclosure Standards are hosted here including a growing raft of educational materials. Most recently, on 13 April 2026, the ISSB held the 13th episode ‘Integrated reporting and the implementation of the ISSB Standards’ of the webinar series ‘Perspectives on Sustainability Disclosure’. Recordings of all 13 webinars are here.
This IFAC article looks at Thailand’s adoption of IFRS S1 and S2 and stresses the importance of high-quality implementation if the goal of globally consistent and comparable information for investors about sustainability-related risks and opportunities is to be achieved.

Public Sector Standards
Following the release of IPSASB SRS 1, Climate-related Disclosures, the first-ever public sector sustainability reporting standard earlier this year, IPSASB has 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. In its strategy and work plan consultation, which closes on 4 May 2026, staff recommended that IPSASB develop this standard. Read more here.

GRI Developments
The Global Reporting Initiative (GRI) is updating existing standards related to pollution. The public comment period on three exposure drafts (EDs) is open until 8 June 2026.
In this Corporate Disclosures article Carol Adams, retiring chair of the GRI’s Global Sustainability Standards Board (GSSB) discusses the ISSB and how she sees the future of corporate reporting.

GRI is expanding its presence in Latin America with the launch of a new program in Argentina to enable SMEs to access the strategic benefits of sustainability reporting. The ‘Enhancing Sustainability Reporting for SMEs’ initiative builds on GRI’s successful approaches already implemented in Colombia and Peru.

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 landmark standards aimed at advancing 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, with early adoption encouraged. Translations of ISSA 5000 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 Q2 2026 the IAASB plans to publish an FAQ on materiality. The IAASB invites stakeholders to submit implementation questions or matters for the IAASB’s consideration here.
On 1 April 2026 ACCA and CAANZ published the second in a series of guidance papers on sustainability assurance. While the first paper focused on materiality this second looks at estimates and forward-looking information. The publication illustrates the requirements of ISSA 5000 through a case study on emissions estimates and net zero targets as this Corporate Disclosures article explains.

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.

IAASB and IESBA Survey
The IAASB and IESBA’s joint global stakeholder survey, marking the beginning of work toward their respective Strategies and Work Plans (SWPs) for 2028–2031, closes on 15 May 2026.

European Union
While the revised CSRD maintains the limited assurance requirement and maintains the EC’s delegated power to adopt a limited assurance standard, it has removed the 2026 deadline for adopting a standard. Instead, 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.

US Developments
In the coming few years the states of California and New York plan to introduce assurance on emissions disclosures starting with limited assurance on direct emissions. Accordingly, the AICPA’s Auditing Standards Board is proposing updates to its attestation standards. View the exposure draft (ED) here.

UPCOMING EVENTS

5 May: Corporate Disclosures Webinar, Beyond Compliance: Using CbCR to Strengthen Stakeholder Communication
6 May: IFAC-IPSASB, From Principles to Practice: The 2026 Framework for Good Governance in the Public Sector, Online
10 May: BusinessEurope, "From Rules to Reality: Driving CSDDD Implementation”, Brussels

18 May: Sustainability Standards Conference 2026, Frankfurt, Germany
20 May: Good Governance Academy, ‘International Anti-Corruption Court Colloquium, Online
8 June: 25 Years of EFRAG: Leading the Next Era of Corporate Reporting. Hybrid
7 July: Corporate Disclosures, ‘Climate Risk in Financial Reporting Forum 2026’, London
17-20 November: World Congress of Accountants (WCOA) 2026, Seoul, South Korea
4-5 December: Review of Accounting Studies & IASB Conference, University of British Columbia, Canada

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