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ICSRG Bulletin
June 2026
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Latest news on sustainability reporting and governance in Europe and beyond |
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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 July 2026 we expect the EC to formally adopt the suite of revised European Sustainability Reporting Standards (ESRS) by way of a delegated act. The revised ESRS are expected to be very similar to the draft simplified ESRS submitted to the EC by EFRAG last December.
Reporting by Out-of-Scope EU Companies
The EC is proposing a voluntary standard (VS) for these companies based on EFRAG’s Voluntary Sustainability Reporting Standard for non-listed Micro, Small, and Medium-sized Enterprises (VSME).and is expected to formally adopt the VS by way a delegated act in July 2026, at the same time as the revised ESRS. 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 voluntary standard 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 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.
Paul Thompson and Nikola Stajic
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| Overview |
Omnibus I
On 26 February 2026 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.
Global Trends
This Reuters article takes a big picture look at recent trends and explains that, despite some setbacks such as in the US and EU, there is increasing adoption and implementation of corporate sustainability due diligence, reporting, and assurance.
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| ESRS Developments |
Revised ESRS
In early July 2026 the EC is expected to issue revised European Sustainability Reporting Standards (ESRS) as a Delegated Act (DA) based on the suite of draft simplified ESRS developed by EFRAG. The EC is close to completing its due diligence. On 5 May 2026, the EC launched a one-month public consultation on the revised ESRS with a 3 June 2026 deadline for feedback. Share your views here.
The Belgian Institute of Auditors has published a table one comparing the EC consultation draft of the revised simplified ESRS with the draft the EC received from EFRAG in December 2025 - see here. The changes made are largely ones of clarification rather than substance. At the same time the EC opened a consultation on a voluntary sustainability reporting standard for smaller companies (VS) (discussed below): the EC must also adopt the VS by way of a DA at the same time as the DA for the revised ESRS. Once the EC submits the final text of the DA, the Parliament cannot amend individual provisions; it can only object to the whole DA. If neither the Parliament nor the Council objects during the scrutiny period, the DA automatically enters into force.
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. 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.
Sustainability Reporting Navigator (SRN) have updated their ESRS Revision Impact Analysis to reflect the draft simplified ESRS handed to the EC in December 2026. SRN 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. SRN have duly updated their ESRS revised datapoint list and provide the editable Excel sheet for free here.
CSRD Reporting Practices
The European Contact Group (ECG) and Accountancy Europe convened the fourth CSRD Practice Forum in Brussels to exchange views on the second year of CSRD implementation and to look ahead to the next phase of change. The Forum offered a timely platform for open discussion on what is working in practice, what challenges persist, and what continues to evolve, with a shared emphasis on collaboration and mutual learning across the CSRD ecosystem. Read the event recap here.
VSME
The European Investment Fund (EIF), a part of the European Central Bank (ECB) group, expressed public support for the VSME. The EC officially adopted EFRAG’s VSME as a Recommendation in late July 2025. Since then, EFRAG has been ramping up implementation support. In late April EFRAG released this educational video in 16 EU languages to help SMEs understand the different functionalities of the VSME section of the Knowledge Hub. Non-listed SMEs are invited to share their reports by 31 July 2026 so as to help EFRAG identify emerging practices and good examples to support other SMEs starting their sustainability journey. The European Business Review (EBR) published an analysis of the descoping of companies under the revised CSRD. The EBR argues that SMEs should expedite the capability to produce sustainability data rather than wait until a client demands it.
Voluntary Standard (VS)
As noted above on 5 May 2026 the EC opened a consultation on a voluntary sustainability reporting standard for smaller companies (VS) at the same time as a consultation on draft revised ESRS with a 3 June 2026 deadline for feedback. The draft 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. Share your views here.
On 20 May 2026 EFRAG hosted an SME Forum Informative session with the EC on the VS. Watch the recording by registering here and read the highlights in this Corporate Disclosures article. The VS is almost identical to the VSME. The Belgian Institute of Auditors has published a table comparing the EC consultation draft of the VS with the VSME prepared by EFRAG - see here. The EC must adopt the delegated act establishing the VS by July 2026, in concert with the adoption of the simplified ESRS. 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.
Many believe the VS will be ill-suited to companies employing up to 1,000 as the VSME used as the basis for the VS was developed for much smaller companies. Some, such some major Polish organisations, that large companies which are outside the scope of the revised CSRD report according to the simplified ESRS instead of the VS.
EFRAG Publish Sustainability Report and Annual Review
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. EFRAG SR Technical Advisory Group (TEG) member Piotr Biernacki critiques the report in this article (part of his new Materiality newsletter). EFRAG has also published its 2025 Annual Review that summarizes its achievements in 2025.
EFRAG Work Program 2026
In late April 2026 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. The Governance & Accountability Institute has compared EFRAG’s 2026 work plan with that of the ISSB here.
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 April 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.
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.
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| Global Developments in Sustainability Finance, Governance and Reporting |
ISSB Update
This ISSB Update summarises the May 2026 International Sustainability Standards Board (ISSB) meeting. Listen to the ISSB Chair and Vice-Chair share key takeaways from the ISSB May 2026 board week in the latest episode of the ISSB podcast including: the disclosure requirements for information about the use of nature-related scenario analysis; the identification of nature-related risks and opportunities; and the feedback from last year’s consultation on the ISSB’s proposed amendments to nine 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. EFRAG is consulting on its Draft Comment Letter to this consultation. Stakeholders are invited to comment through a survey on EFRAG's Draft Comment Letter by 28 June 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 31 May 2026 there was three open sustainability disclosure consultations – Switzerland and Nepal.
On 11 May 2026 the ISSB Chair Emmanuel Faber explained the jurisdictional ‘passporting’ project in a speech at the IFRS Foundation’s 2026 International Sustainability Conference in Beijing (watch the conference recording here). Faber said passporting would allow, in those jurisdictions, foreign private issuers and subsidiaries of international companies that operate in a domestic jurisdiction to report against the requirements in that jurisdiction using the ISSB Standards as issued by the ISSB.
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 on IFRS S1 and IFRS S2 (TIG) that can be answered by applying the words in IFRS S1 and S2, together with the accompanying resources. This centralised resource enables stakeholders to access and apply the guidance more easily.
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 approach, therefore, minimizes disruption, which is especially important as companies and jurisdictions are in the process of implementing and adopting the ISSB Standards.
Many are disappointed the ISSB chose a PS over a standard: global leaders across finance, science and conservation called for a standard by way of this open letter. 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 2026; 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.
Read this ISSB Update that includes a summary of the May 2026 ISSB meeting deliberations on the development of the PS. Until such time as the PS is finalized the TNFD recommendations will remain in force. To help professionals build a foundational understanding of the LEAP approach – the TNFD’s integrated assessment methodology that helps organisations with the identification and assessment of nature-related issues – the TNFD has released five new lectures.
Taskforce on Inequality and Social-Related Financial Disclosures
Just as the TCFD did for climate and the TNFD did for nature, so the Taskforce on Inequality and Social-related Financial Disclosures (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 and is now open for public consultation until 31 July 2026. The final framework is expected to be published by the end of 2027, following a pilot programme and further consultations over the coming months.
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 as it proposed in its strategy and work plan consultation.
ISSB and GRI Statement
On 26 May 2026 to provide further clarity on how Global Reporting Initiative (GRI) and the IFRS Foundation are working together to enable a seamless, global and comprehensive sustainability-reporting system, the two organisations issued a statement. The statement clarifies how this system is being designed, and what purpose and audiences it serves. Read the statement here.
GRI Developments
The Global Reporting Initiative (GRI) is updating existing standards related to pollution. The public comment period on three exposure drafts (EDs) closes on 8 June 2026.
OECD Due Diligence Mapping
In April 2026 the OECD published a report that map due diligence reporting requirements across several legal and voluntary frameworks. The mapping reveals that often information cannot be reused across frameworks leading to duplicative reporting.
IFAC SMOs Updated
IFAC has updated our Statements of Membership Obligations (SMOs) 1–7, effective 1 Apri 2026. As this article explains the integration of expanded corporate reporting standards (SMO 5 and 7) is a key change. The revised SMOs incorporate expanded reporting standards issued by the IPSASB and ISSB.
US Developments
According to Corporate Disclosures a PwC US analysis of the voluntary climate risk disclosures filed by 94 US companies compare favourably against the TCFD framework. |
| 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. The IAASB plans to publish an FAQ on materiality shortly. The IAASB invites stakeholders to submit implementation questions or matters for the IAASB’s consideration here.
ACCA and CAANZ recently published the second in a series of guidance papers on sustainability assurance. This paper illustrates the requirements of ISSA 5000 through a case study on emissions estimates and net zero targets.
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
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.
ACCA Report
In May 2026 the ACCA hosted the launch event for our UK–China report ‘Accelerating jurisdictional implementation of sustainability disclosure and assurance standards’. This report aims to equip policymakers and regulators in the UK and China with recommendations for accelerating the development and implementation of high-quality sustainability disclosure and assurance standards.
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 May 2026, practice, quality and clarity vary significantly.
US Developments
In response to plans by California and New York to introduce assurance on emissions disclosures starting with limited assurance on direct emissions, the AICPA’s Auditing Standards Board is proposing updates to its attestation standards. View the exposure draft (ED) here: the exposure period ends 30 June 2026.
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