ESMA issues opinion urging safeguards on revised ESRS disclosure standards

On February 18, 2026, the European Securities and Markets Authority issued its opinion on the delegated act for the revised ESRS, supporting simplification but warning against permanent disclosure reliefs and recommending a 2029 sunset clause. The position signals that EU reporting will stay demanding on transition plans, affecting Indian multinationals with EU exposure.

On February 18, 2026, the European Securities and Markets Authority (ESMA) released its opinion on proposed amendments to the sustainability reporting framework, addressing the delegated act for the revised ESRS aimed at reducing administrative burden. ESMA acknowledged the need for simplification but stressed that investor-grade data integrity must remain a priority. It expressed specific concern over permanent reliefs for certain disclosure requirements and recommended the European Commission introduce a sunset clause for these exemptions by 2029.

European companies preparing sustainability reports, their boards, auditors, and financial-market participants are directly affected. ESMA identified gaps where the revised ESRS fall short, notably the lack of detailed requirements for corporate transition plans, insisting companies provide standardized, comparable roadmaps for climate neutrality. It also flagged weak disclosures on governance and financial resources, advocating clearer reporting on board and management sustainability expertise and better visibility into capital expenditure allocated to environmental and social objectives.

Companies should anticipate that while reporting may become less voluminous short-term, pressure for material, verified information on transition strategy and board-level accountability remains high. ESMA stressed interoperability, urging alignment with the International Sustainability Standards Board's global baseline to prevent fragmentation for multinationals. ESMA and national competent authorities plan a pragmatic, proportionate approach during initial implementation, but flexibility must not become lax enforcement. Indian firms with EU operations should monitor the final delegated act and the recommended 2029 sunset clause.

Key figure — Recommended sunset clause: Permanent disclosure reliefs to expire by 2029