Background to the changes - new definition of reportable entities
In late 2025 and early 2026, there were significant changes to the directive CSRD (Corporate Sustainability Reporting Directive).. The circle of entities subject to mandatory reporting has narrowed significantly. Under the new rules, only entities that meet two criteria combined: they employ more than 1,000 employees and have net revenues exceeding PLN 1.9 billion are subject to mandatory sustainability reporting.
As a result, many large companies that had previously been preparing for mandatory reporting found themselves able to report voluntarily. They faced a key dilemma: which standard to choose to maintain credibility in the eyes of investors and financial institutions?
The answer to this question is the joint recommendation issued on March 19, 2026 by: Association of Stock Exchange Issuers (SEG), Polish Institute for Human Rights and Business, Chamber of Fund and Asset Managers, Sustainable Investment Forum Poland (POLSIF), Responsible Business Forum and Union of Polish Banks.
„Simplified ESRS is a standard that was created in response to the real needs of large companies and their stakeholders. By choosing it, companies not only build the credibility of their reports, but also invest in the future. The expectations of banks and investment funds and large business partners are clear: they need complete, verified ESG data. They can find such data in reports that comply with ESRS standards. Simplified ESRS is a rational strategic choice, not just a technical one.” ~ he said Piotr Biernacki, ESG Reporting Partner at MATERIALITY and Chairman of the SEG Sustainability Committee
Text of a recommendation on the choice of a standard by large voluntary reporting companies:
Why simplified ESRS and not VSME?
Some large reporting companies voluntarily considered choosing the standard VSME (Voluntary Small and Medium Enterprises)., dedicated to micro, small and medium-sized enterprises. However, experts point out that this standard is not compatible with the scale and operational complexity of large units and groups.
Risk of insufficient data quality
The VSME standard was designed to simplify processes for the SME sector. For large companies, its application involves a number of risks:
- No materiality analysis:
The VSME Standard in its basic form does not require a full dual materiality analysis, which is the foundation of the ESRS Standards.
Learn more about the double significance test. - Financial sector expectations:
Investors and banks, operating under a regime of SFDR (Sustainable Finance Disclosure Regulation), need high-level data that VSME-based reports simply cannot provide. We wrote about this in an article summarizing the simplified ESRS. - No EU Taxonomy:
The current version of VSME does not include requirements for reporting on sustainable investments, making it difficult to assess a company's compliance with the European Union's environmental goals.
Advantages of simplified ESRS for large units
According to the recommendation, the simplified ESRS (which the European Commission plans to adopt in the form of a delegated regulation in June 2026) represent a „golden mean.” They combine high substantive quality with fewer data points than before (datapoints). In addition, they are organized and written in clear language.
The key arguments for this choice are:
- Global Cohesion:
Simplified ESRS maintains high compatibility with international standards, such as IFRS S1 and S2 (issued by the International Sustainability Standards Board) and standards GRI (Global Reporting Initiative). This allows the company to prepare a single report that meets the needs of different stakeholder groups. Learn more about the simplified standards in MATERIALITY ACADEMY course. - Consistency with EU regulations:
Simplified ESRS are aligned with various European laws. This makes it simpler to create a report based on them, because we use data and information that we collect anyway for compliance with these laws. - An easier path to full reporting:
Using simplified ESRS prepares the company for possible entry into the full CSRD obligation in the future, minimizing „regulatory shock.”. - Credibility and attestation:
Reports prepared according to the simplified ESRS can be subjected to an attestation process in accordance with national standards, such as. KSUA 3002PL, which significantly increases the quality of the data contained in them in the eyes of the audience.
Recommendation in practice - what should companies do?
The signatory organizations recommend that large entities and groups deciding to voluntarily report for fiscal year 2026 should opt for the simplified ESRS. At the same time, they stress that the original ESRS 2023 standards. can serve a supportive function and be a source of good practice in deepening the content of the report.
As MATERIALITY, observing the market and supporting companies in their reporting processes, we see that consistency of standards is the key to effective communication with the capital market. We invite you to learn more about our services and tools supporting sustainable development.
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