What the Commission's May 2026 Draft Changes and What It Doesn't

On May 6, the European Commission published its revised draft of the European Sustainability Reporting Standards, the most complete public signal yet of where the final text will land. The draft is open for feedback until June 3. The Commission faces a July 2026 legal deadline for formal adoption. A scrutiny period by the European Parliament and Council follows before the standards formally enter into force.

For companies in or approaching CSRD reporting, this is the closest available proxy to the final text. We compared all 12 standards, ESRS 1 and 2, E1 through E5, S1 through S4, and G1, against the November 2025 EFRAG draft, paragraph by paragraph. What follows is a structured read on what changed, what held, and what it means for reporting programs already in motion.

THE CHANGES ARE NOT PRIMARILY ABOUT SIMPLIFICATION

The dominant narrative around this draft has been simplification. That framing is accurate as far as it goes; the November 2025 EFRAG draft was already a substantial reduction from the original 2023 ESRS. The May draft continues that direction in some areas.

But simplification is not the whole story. The May draft also introduces targeted tightenings, methodological clarifications, and a series of deliberate cross-standard alignments with CSDDD due diligence language. Understanding what changed and why requires distinguishing among these three categories.

ESRS 1: THE FOUNDATION RULES GET SHARPER

ESRS 1 is the master standard. Changes here affect how every other standard is applied.

The most consequential shift is in the language of materiality. The May draft replaces "not required to disclose" with "shall not disclose" for immaterial ESRS information. This does not change the double materiality model, which is untouched, but it changes the framing from a permission to a clearer expectation. Concise reporting is now explicitly required, not just permitted.

The value-chain cap also becomes operational. Where November's version vaguely referred to limits under EU law, the May draft ties the cap explicitly to the EU voluntary reporting standard, with different limits applying depending on the size of value-chain partners; stricter for those with 10 or fewer employees. Reporting companies now have a concrete ceiling on what they may request from their supply chains.

On DMA methodology, the May draft confirms that a top-down, topic-level assessment is generally sufficient. Granular IRO-by-IRO analysis is only required where it would likely change the materiality conclusion, a clarification that reduces pressure to build unnecessarily exhaustive assessment frameworks.

ESRS 2: GOVERNANCE ACCOUNTABILITY TIGHTENS

ESRS 2 introduces small wording changes but significant effects.

The most important shift is from "and" to "or" in the absence of policies, actions, and targets. Under November's wording, a disclosure obligation arose only if all three were missing. Under May's wording, the absence of any one of the three is sufficient. A single gap now requires explanation.

GOV-1 also moves from process to substance. Boards are now required to disclose their actual sustainability expertise and skills in relation to material IROs, not only the process by which their competence is assessed. A new requirement to state when the materiality assessment was last updated adds a transparency expectation consistent with the principle that a full DMA need not be repeated annually, but its recency must be visible.

ESRS E1: CLIMATE REPORTING MOVES IN TWO DIRECTIONS

E1 is where the dual nature of the May draft is most visible, with more flexibility in one area and tighter accountability in another.

On GHG measurement, financial control remains the default boundary, but equity share and operational control are now genuine alternatives rather than mandatory supplemental disclosures. Companies with complex ownership structures now have a meaningful methodological choice.

In the other direction, the May draft tightens accountability on climate claims. Transition plans referencing targets not compatible with 1.5°C now require explicit explanation, including how those targets compare to reference values. A transition plan no longer implies alignment by default, a clarification that closes a disclosure gap November's version left open.

The test for carbon credit neutrality claims also strengthens: from "neither hinder nor undermine" GHG reduction targets to being "consistent with" achieving them. The shift moves from an absence-of-obstruction standard to an affirmative-consistency standard.

ENVIRONMENTAL STANDARDS E2–E5: TARGETED ADJUSTMENTS

The remaining environmental standards changed less significantly.

E2 removes the secondary microplastics datapoint; E2-4 now covers primary microplastics only. At the same time, identifying material pollutant emissions now requires a formal managerial assessment rather than a default reference to regulatory thresholds. One datapoint is removed; one methodological expectation is added.

E5 corrects waste classification terminology from "reuse" to "preparation for reuse", aligning with the Waste Framework Directive. The distinction matters in practice: "reuse" applies to products not yet classified as waste; "preparation for reuse" is the appropriate waste-management operation. Companies reporting on waste treatment routes may need to reclassify.

E3 (Water) and E4 (Biodiversity): Largely stable. E4 adds one practical clarification: companies are no longer expected to provide an exhaustive list of all individual sites or locations interacting with biodiversity-sensitive areas, aggregation is explicitly permitted where it remains decision-useful. SFDR linkages are now embedded in both standards.

SOCIAL STANDARDS S1–S4: A SYSTEMATIC POLICY SIGNAL

The most deliberate editorial pattern in the May draft is visible across the social standards.

All four, S1 through S4, covering the own workforce, value-chain workers, affected communities, and consumers, received the same set of changes applied consistently. That uniformity is not coincidental.

The most significant is the introduction of a clear evidentiary threshold for reporting human-rights incidents. Across all four standards, "shall disclose" now applies only to substantiated incidents, defined as those supported by objective, factual, and verifiable information. Unverified allegations and open matters are no longer automatically within the scope of reporting. This reduces the risk of over-reporting while raising the quality bar for what is disclosed.

Alongside this, all four standards adopt the same expanded action language, "prevent, mitigate, bring to an end, minimize, and remediate", directly mirroring CSDDD due diligence terminology. The alignment is deliberate: ESRS social reporting and CSDDD conduct obligations are being brought into closer conceptual correspondence.

S1 also introduces a metric-level change with direct numerical impact. Employee turnover now covers permanent employees only, not all employees. For companies with significant temporary, seasonal, or non-guaranteed-hours workforces, reported rates may decline materially — and will not be directly comparable to prior disclosures.

ESRS G1: STABLE, WITH ONE NOTABLE TRANSPARENCY UPGRADE

G1 preserves all six of its disclosure requirements. The most notable shift is in political contributions, which move from aggregated to disaggregated by country or geographical area where relevant. Companies with political activity across multiple jurisdictions will need geographic granularity, not consolidated totals.

G1-2 also replaces "ESG" language with "sustainability topics" and "sustainability performance" throughout, aligning with ESRS terminology across supplier engagement, procurement training, and performance disclosures.

WHAT THE MAY DRAFT PRESERVES

Across all 12 standards, the double-materiality model remains unchanged. Impact and financial dimensions, their interaction, and impact assessment as the general starting point remain intact. No disclosure requirement was removed from any standard. Phase-in provisions — updated to reflect the post-Omnibus I and Stop-the-Clock structure — are preserved.

The reporting architecture companies have been building is still the same architecture.

THREE QUESTIONS WORTH ASKING NOW

The Commission faces a July 2026 legal deadline for formal adoption. A scrutiny period follows before the standards formally take effect. The May draft is not final. It is close enough to prepare against.

Three questions it raises for practitioners already in motion:

• Is your materiality assessment documented at the topic level — and do you have a record of when it was last updated? The May draft makes both expectations explicit.

• Does your incident tracking infrastructure distinguish substantiated cases from unverified allegations? The evidentiary threshold now applies consistently across all four social standards.

• If your transition plan references targets that are not 1.5°C-compatible, is that gap explicitly explained? The May draft now requires it.

These are not new obligations invented by the May draft. They are clarifications of what was already expected, made precise enough to require a considered answer.

ARE YOU NAVIGATING YOUR CSRD REPORTING PROGRAM?

The May 2026 draft changes how companies approach materiality, incident reporting, and climate disclosures. If these changes affect your program, we can help you assess the implications for your specific sector and reporting scope.

→ Book a complimentary 30-minute ESRS Readiness Session

In this session, we will:

• Review how the May 2026 changes apply to your sector and reporting scope

• Identify the 2–3 areas of your program most affected by the new draft

• Give you a concrete next step based on your current situation

No obligation. If we're not the right fit for your situation, we'll let you know.