Perspectives · Disclosure & Delivery

When the Reporting Floor Moves, Projects (Must) Move With It.

The European Union has reopened the rulebook that governs how companies report on sustainability. Most coverage has framed this as a compliance story for finance teams and chief sustainability officers. It is also a project delivery story, and the organizations that deliver projects have a very short window to understand why.

On 18 March 2026, the Omnibus Directive (EU) 2026/470 entered into force. From that date, the European Commission has six months to publish a revised version of the European Sustainability Reporting Standards, known as the ESRS. The deadline is 18 September 2026. The new version applies to the 2027 reporting year. Before the text is locked, there is a four-week public feedback window in the second quarter of 2026. After that, no further changes.

This is the sustainability reporting equivalent of pouring a new foundation while the building above it is already occupied.

What is actually changing

The current ESRS were developed by the European Financial Reporting Advisory Group (EFRAG), the technical body that advises the European Commission on both financial and sustainability reporting. The standards sit underneath the Corporate Sustainability Reporting Directive, known as the CSRD, which is the law that requires large companies operating in the European Union to report on their environmental and social impacts.

The Omnibus Directive does three things that matter. It raises the size threshold for mandatory reporting to companies with more than 1,000 employees and more than 450 million euros in net turnover. It reduces the number of mandatory data points by approximately 61 percent. And it changes the boundary used to measure greenhouse gas emissions from the operational control approach to the financial control approach, aligning with how the International Sustainability Standards Board (ISSB) defines its boundary in IFRS S2.

The ISSB is the sister body of the International Accounting Standards Board, both housed inside the IFRS Foundation. It issues the global baseline standards for sustainability disclosure, known as IFRS S1 and IFRS S2. As of January 2026, twenty-one jurisdictions have adopted these standards on either a voluntary or mandatory basis, including the United Kingdom, Australia, Canada, Brazil, Singapore, Chile, Qatar, and Mexico.

Why this is a project delivery question

Sustainability reporting is often treated as an output. Numbers go in at the top of the year, a report comes out at the bottom. The reality is that almost every number in that report originates inside a project. The carbon footprint of a new facility is set during design. The labor practices in a supply chain are determined at procurement. The water impact of a manufacturing line is locked in at commissioning. The reporting team does not generate this data. They collect it from the projects that produced it.

When the reporting standard changes, the data requirements change. When the data requirements change, the project gates that capture that data must change with them. A project chartered in 2026 against the current ESRS may be delivering against a different set of disclosure obligations by the time it is operational in 2027 or 2028. If the project does not anticipate this, the organization will be reporting on assets that were never instrumented to provide the right information.

The shift in the greenhouse gas accounting boundary is a clear example. Operational control means a company reports on emissions from assets where it has the authority to introduce and implement operating policies. Financial control means it reports on assets where it has the ability to direct financial and operating policies with a view to economic benefit. These are not the same set of assets. Joint ventures, leased facilities, and equity investments often fall into one boundary and not the other. Project sponsors who have been measuring emissions one way will need to either remeasure or rebuild their baselines.

This is not a finance department problem to solve in isolation. The data lives in projects.

What this means for organizations that deliver projects

The first implication is governance. Projects carry the accountability for ensuring that what a project produces aligns with what the parent organization must disclose. If the disclosure rules are being rewritten, the project team needs to know which rules will apply to the project at handover, not which rules applied at chartering. This requires a live link between the sustainability reporting function and the project portfolio, not an annual exchange. The GRI stated this in our December 2025 webinar, which as of today has 21,057 views.  You can watch it and see for yourself.

The second implication is competence. Project managers working on assets that will be capitalized and operated past 2027 need to understand the difference between operational control and financial control boundaries, the role of value chain data requests, and the reason a customer or investor may suddenly ask for information the project was never designed to capture. This is a threshold competence question for anyone delivering projects in industries with material sustainability disclosure obligations.

The third implication is methodology. The principles that underpin the P5 Standard for Sustainability in Project Management are designed to integrate environmental, social, and economic considerations into the project life cycle from initiation through closure. When the reporting standard moves, the impact ontology underneath the project does not. What changes is how that impact is communicated, aggregated, and disclosed. Projects that have been managed against a discipline-grade impact framework rather than a disclosure-grade reporting checklist will adapt with less disruption. Projects built backwards from a checklist will not.

The fourth implication is the value chain. The Omnibus narrows the population of companies that must report directly, but it does not eliminate the demand for sustainability data flowing down through the supply chain. Smaller organizations that deliver projects for larger reporting entities will continue to face data requests, now constrained by what the Voluntary Sustainability Reporting Standard for Small and Medium-Sized Enterprises (VSME) permits. Project teams sitting inside contractor and subcontractor organizations should expect those requests to continue, and should expect the substance of those requests to shift as the upstream reporting requirements shift.

What to do in the next two quarters

The four-week consultation window in the second quarter of 2026 is the last formal opportunity for any organization to raise technical concerns before the European Commission locks the text. Project delivery organizations with material exposure should monitor that window through the Commission's corporate sustainability reporting page and engage either directly or through their professional bodies.

Beyond the consultation, three actions are reasonable for any organization that delivers projects against material sustainability obligations. First, identify which projects in the current portfolio will be operational in 2027 or later, and treat those as exposed to the revised standard. Second, audit the greenhouse gas boundary used in those projects against the financial control approach that will apply going forward. Third, confirm that the project gates capturing sustainability data are aligned to a methodology that can absorb a change in the disclosure standard without requiring the project to be re-baselined.

The PMI-GPM Project Sustainabilty Reporting Guide was developed to help organizations identify and report materiality at the project level, in a way that feeds the disclosure obligations sitting above it. The guide is built on principles, not on a specific version of any one standard, which is why it remains usable as the rules around it move. We are watching the rewrite closely. If the revised text requires changes to the guide, we will make them quickly so that practitioners can continue to rely on it through the transition.

That gap is becoming financially dangerous. Under the CSRD enforcement regime, member states have set penalties that can reach into the millions of euros for incomplete or misleading disclosures, and equivalent regimes are taking shape in ISSB-aligned jurisdictions. An organization that omits project-level materiality is not making its report shorter. It is making a statement about the completeness of its disclosure that an auditor, a regulator, or a litigant can test. When that statement is tested and found to be wrong, the organization will not be defending a methodology choice. It will be defending why a material category of impact was excluded from a regulated filing.

The reporting floor is being repoured. The projects standing on it need to be ready when it sets.