It’s been a busy month for corporate sustainability: the European Commission formally adopted the simplified ESRS, giving companies the clarity they need to move forward with CSRD reporting. In Europe, we also saw new voluntary and third-country reporting standards continue to take shape. Meanwhile, in California, CARB extended the SB 253 reporting deadline to November and announced a workshop on future requirements.
Simplified ESRS adoption
What happened: On July 3, the European Commission adopted the simplified ESRS. Reminder: while the CSRD addresses who needs to report and when, the ESRS cover what to report.
Why it matters: No more changes are expected to the ESRS. If you've been holding off on planning your CSRD reporting, this is the green light to move forward. Companies reporting in 2028 must use these standards in their sustainability reports. Wave 1 companies reporting in 2027 may optionally use these standards instead of the old ESRS.
Note: A mandatory two- to four-month scrutiny period from the Council and Parliament is ongoing, but it's widely expected to be procedural—the Council and Parliament can only accept or reject the standards in full, and rejection at this stage is extremely rare.
What you should do now:
- If you are a Wave 1 company, we recommend migrating to the new standards. The new standards require fewer narrative disclosures, and refreshing your data pipelines now sets you up for cheaper and faster reporting in future years.
- Read our guide on what changed to get a sense of the major changes in simplified ESRS.
- If you are a Wave 2 company, start planning your double materiality assessment (DMA). Your DMA will help you navigate the rest of your CSRD reporting journey.
- If you are new to CSRD/ESRS, read our Introduction to the ESRS.
SB 253 updates: Reporting deadline extended
What happened: On June 24, CARB announced that it was extending the deadline to report scope 1 and scope 2 emissions from August 10, 2026, to November 10, 2026.
Why it matters: Many companies were sprinting toward the August 10 deadline and looking for clarity on how to submit the report and pay fees. The deadline extension gives companies more time to comply and CARB more time to issue guidance.
What you should do now:
- For companies that have not yet completed their SB 253 reports, the new November 10 deadline gives you more runway. The requirements haven't changed, so any work you’ve already done is still usable.
- For companies that have completed their SB 253 reports, no further work is needed. Completed reports will still be valid, so you should wait for instructions on how to submit (which we are still awaiting from CARB).
SB 253 updates: CARB workshop scheduled for July 21
What happened: Earlier this month, CARB announced that it will hold a public workshop on reporting requirements (limited assurance, Scope 3) for 2027 reporting and beyond on July 21.
Why it matters: There is currently little detail on what exactly CARB expects from companies for assurance and scope 3. More clarity makes it easier for companies to plan for next year’s reporting.
What you should do now:
- No action needed, check the Watershed blog page later this week for a full update
Additional EU sustainability standards update
What happened: The ESRS might be finalized, but the working groups at the Commission and EFRAG are still keeping busy.
- On the same day as it adopted the ESRS, the Commission also adopted the voluntary ESRS, an optional sustainability reporting standard that companies not currently in scope for CSRD can use.
- Additionally, we got to see the first version of the ESRS for Third Countries (ESRS-TC) – standards for non-EU incorporated companies that meet specific revenue thresholds. These were formerly known as the N-ESRS. EFRAG, the technical advisors to the Commission on sustainability reporting, is still working through some changes here, and a version for public comment is expected towards the end of July. As a reminder, the revenue thresholds for using these standards are:
- >€450M net turnover in the EU for each of the previous 2 years AND
- An EU subsidiary or branch with >€200M net turnover in the previous year
Why it matters: Larger companies outside CSRD's scope had no clear reporting standard to follow. The voluntary ESRS gives them another option.
What you should do now:
- If you’re a non-European parent company in-scope for CSRD (formerly known as Wave 4 companies), you must either use the ESRS or ESRS-TC in your 2029 reporting (on FY28 data).
- If you’re a European company not in-scope for CSRD, you should decide what standard (voluntary ESRS vs. ISSB) is right for you.
- Read our guide on how to decide which European sustainability reporting standards are right for your company.
What we’re reading
Standards convergence
- The World Federation of Exchanges (the trade association for stock exchanges) has called for sustainability disclosures to shift to a ‘report once’ approach. The linked article notes that concerns about regulatory fragmentation have arisen again as the Commission decided not to endorse interoperability measures with ISSB.
- Calls from exchanges are especially significant, since nearly all sustainability disclosure requirements begin implementation with listed companies, which are governed by the rules set by stock exchanges. Most exchanges are not government bodies, and can move faster and coordinate more easily than national governments.
- As CSRD and ISSB implementations gather momentum around the world, we’re looking at whether and how exchanges are thinking about how to reduce companies’ reporting burden.
Lazard latest LCOE report published
- Last week, Lazard, an investment bank, released its popular levelized cost of energy report. The report tracks the cost of a megawatt-hour (MWh) of electricity over the lifetime of a generator in the United States.
- Over 20 years, the report has shown a steady decline in the cost of renewables versus natural gas generation. That trend continues, but new dynamics are emerging.
- First, US storage costs are rising as tariffs on Chinese lithium-ion batteries take effect (while globally, average prices are falling). China controls most of the battery supply chain, making a near-term reversal unlikely without a major trade or technology shift.
- Even so, unsubsidized solar-plus-storage remains broadly cost-competitive with natural gas, even after accounting for the cost of keeping the grid stable when solar and wind output drops.
