With the transition to a circular economy accelerating, staying ahead of sustainability reporting requirements is no longer just a compliance exercise—it is a strategic imperative. The regulatory landscape evolved rapidly throughout 2025 and into 2026, shifting dramatically from mere proposals to global execution. For professionals tracking corporate sustainability, navigating supply chain dynamics, and building localized circular solutions, these overarching shifts define the new operational reality.
Here is your comprehensive guide to how the International Sustainability Standards Board (ISSB) and the Corporate Sustainability Reporting Directive (CSRD) are reshaping global disclosures, with a critical spotlight on what this means for small and medium-sized enterprises (SMEs).
ISSB - The Global Baseline Rapidly Expands
The ISSB has officially cemented its role as the global baseline for international sustainability reporting, pushing toward global comparability. By 2025, 36 jurisdictions had either adopted or were actively incorporating ISSB standards into their regulatory frameworks.
- Broad Adoption: Seventeen jurisdictions have now finalised their approach, representing 57% of global GDP and over 50% of global greenhouse gas emissions.
- Key Markets: Australia, Brazil, Nigeria, Canada, Japan, and the UK are actively aligning or adopting the standards.
- Mandatory Timelines: Jurisdictional implementations are officially hitting the books. In Brazil, securities regulators issued rules to make the standards mandatory starting January 1, 2026. The UK published exposure drafts in mid-2025 with reporting beginning from January 2026.
- Interoperability: A major theme has been reducing the reporting burden through interoperability, particularly aligning ISSB standards with the European Sustainability Reporting Standards (ESRS) to prevent double reporting for multinational firms.
Upgrading the Sector Standards (SASB)
As global uptake surged, the ISSB prioritised enhancing the industry-specific SASB Standards as a core pillar of its 2024–2026 work plan, ensuring these frameworks provide robust, decision-useful data for investors globally.
- Priority Industries: The ISSB published exposure drafts proposing comprehensive amendments to priority industries, focusing heavily on Extractives & Minerals Processing and the Processed Foods sectors.
- Targeted Enhancements: Targeted amendments were proposed across dozens of other industries to seamlessly align crucial metrics, such as Water Management and Workforce Health & Safety, with the overarching IFRS S2 climate-related disclosures.
- Continuous Improvement: Following comment periods in 2025, the ISSB has actively reviewed stakeholder feedback in 2026 to finalise revised standards that eliminate outdated regional metrics and improve global applicability across all borders.
The CSRD “Stop-the-Clock” Directive and Revised ESRS
While the ISSB built massive global momentum, the European Union recognised the immense compliance and administrative burden facing companies and took decisive action to recalibrate its timeline and radically simplify requirements.
- Timeline Adjustments: The EU adopted “Stop-the-Clock” measures in the Omnibus proposal to officially postpone reporting obligations for specific companies. This delays CSRD reporting for large undertakings not yet reporting (Wave 2) and listed SMEs (Wave 3) to give them adequate time to prepare their data systems.
- Streamlined Datapoints: On July 3, 2026, the European Commission officially adopted revised European Sustainability Reporting Standards (ESRS) to simplify reporting. The revised ESRS streamline processes by reducing the number of mandatory datapoints by more than 60% and the total number of datapoints by more than 70%.
- Cost Reductions: These drastic simplifications are expected to reduce reporting costs by more than 30% per company.
- Flexibility & Alignment: The revised standards give undertakings greater discretion and align more closely with global sustainability reporting standards.
The VSME Standard
Historically, SMEs were caught in the crossfire of the “trickle-down effect” as massive enterprises aggressively requested fragmented, complex ESG data from their supply chains. The rollout of the Voluntary Reporting Standard for SMEs (VSME) marks a massive turning point for localised business.
- Formal Adoption: Following its recommendation in 2025, the European Commission adopted the VSME alongside the revised ESRS on July 3, 2026.
- Expanded Scope: The VSME covers “protected undertakings” that are not subject to mandatory CSRD reporting and do not exceed an average of 1,000 employees.
- Core Objectives: The voluntary standard facilitates reporting through a simple framework and directly addresses the trickle-down effect by strictly limiting the information that large corporations can request from these smaller undertakings.
- Strategic Advantage: By utilising this streamlined architecture, SMEs can now respond efficiently to large corporate data requests, boost their access to green finance, and focus on actual local sustainability rather than drowning in enterprise-level spreadsheets.
Stay Informed
The 2025–2026 reporting updates mark a step forward in the global push for sustainability transparency. With the ISSB establishing a clear global baseline, the EU taking steps to streamline ESRS datapoints, and the VSME standard providing small businesses with a unified reporting framework, sustainability reporting is increasingly being systematised, streamlined, and integrated.
.png)