The European Financial Reporting Advisory Group (EFRAG) has submitted its technical advice to the European Commission on the draft simplified European Sustainability Reporting Standards (ESRS). This is a key step in the Omnibus package, which was released in February 2025, after a call from stakeholders and ‘wave 1’ reporters that the ESRS were overly complicated and created a huge burden for companies.
Background
Since the Corporate Sustainability Reporting Directive (CSRD) initially came into force on 1 January 2023, there have been increasing demands in the European Union to streamline the requirements and reduce the reporting burden associated with sustainability reporting. As a result, in November 2024, the European Commission announced an intention to introduce a proposal to amend three key pillars of the European Green Deal through an Omnibus package. These key pillars are the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD) and the Taxonomy Regulation.
The Omnibus package, released in February 2025, has resulted in several sets of proposals to date – revising the existing ESRS is one element of the proposals. For this, the EFRAG have been tasked by the European Commission to provide technical advice for the adoption of a delegated act which will revise and simplify the existing ESRS.
On 31 July 2025, EFRAG issued Exposure Drafts (EDs) revising all 12 existing ESRS, with a 60-day public consultation period. On 3 December 2025, after considering the feedback received from the consultation, EFRAG submitted its technical advice to the European Commission (EC) on the draft simplified ESRS.
Summary of modifications
In order to simplify the ESRS without compromising the objectives of the EU Green deal, the EFRAG revisions to the ESRS focus on several key areas of simplification. These are intended to reduce complexity and are summarised below. Note that this summary is not an exhaustive list of all the changes set out in the revised ESRS.
Areas of simplification
Simplification of the Double Materiality Assessment (DMA)
- Reduces overall complexity of the DMA process by clarifying that the DMA can be a ‘top-down’ approach and that the expected level of evidence to support conclusions should be reasonable and proportionate
- Introduces the filter of information materiality for all datapoints
- Introduces a section called ‘Practical considerations in determining the material impacts, risks and opportunities and their related topics to be reported’
- Replaces the term ‘material matters’ in certain places to emphasise that the impacts, risks and opportunities (IROs) are material and the topics are ‘to be reported on’
- Clarifies the following:
- the interaction between the identification of material IROs and the assessment of material topics and sub-topics
- the list of topics in ESRS 1, AR 16 (now relocated to Appendix A) are non-mandatory
- the expected level of granularity (aggregation or disaggregation) in reporting
- Addresses how mitigation, prevention and remediation actions are considered in assessing an impact for materiality
- Clarifies that if only a sub-topic is material, this does not trigger reporting on all datapoints in the relevant topical standard
- Places additional emphasis on the objective of fair presentation, consistent with the IFRS Sustainability Disclosure Standards (IFRS SDS).
Better readability/conciseness of the sustainability statements and better inclusion in corporate reporting as a whole
- Provides the option to have an ‘executive summary’ at the beginning of the sustainability statement
- Provides the option to disclose the most granular information in a dedicated section or appendix
- Clarifies that entities can present EU Taxonomy-related information in a specific appendix
- Allows entities to present additional information on non-material matters in dedicated sections or appendices
Critical modification of the relationship between Minimum Disclosure Requirements (MDRs) and topical specifications
- To address the overlap between mandatory datapoints in topical standards and MDRs for policies, actions and targets (PATs) in ESRS 2 ‘General disclosures’, the revisions streamline the ESRS 2 MDRs for PATs and rename them General Disclosure Requirements (GDRs)
Improved understandability, clarity and accessibility of the Standards
- Removes voluntary disclosures (‘may’ disclosures)
- Amends the general structure of the Standards to clearly separate mandatory and non-mandatory content
Introduction of other suggested burden-reduction reliefs
- Introduces relief for acquisitions and disposals based on pragmatism and availability of data
- Introduces reliefs related to the use of ‘reasonable and supportable information that is available without undue cost or effort,’ similar to those in IFRS S1 ‘General Requirements for Disclosure of Sustainability-related Financial Information’ – the scope of these reliefs is broader than IFRS S1 as it includes all metrics and the value chain
- Removes the preference for direct data over estimates from counterparts in the value chain
- Introduces relief for the anticipated financial effects disclosure, similar to that available for IFRS S1
- Introduces relief for metrics due to lack of data
- Introduces relief for metrics when activities are not drivers of material IROs
- Introduces a generic relief allowing for omission of information if prohibited under certain laws
- Includes the update on phase-in provisions granted in the ‘quick-fix’ amendments
Enhanced interoperability
- Makes numerous editorial and substantial adjustments to bring the ESRS in line with the IFRS SDS. This includes the fair presentation and undue cost and effort items noted above, among many others
‘Bottom-up’ review of all datapoints
Many stakeholders have been critical of the large number of ESRS datapoints and the resulting reporting burden. This assertion was supported by EFRAG’s data gathering efforts which noted that stakeholders believe that narrative datapoints are too granular, preferring a more principles-based approach, and that many datapoints could be removed without impacting the quality of data and information.
To address these concerns, in addition to the changes discussed above, EFRAG has cut mandatory datapoints by 61% and eliminated voluntary disclosures, resulting in a 70% reduction to the full set of disclosures. This was achieved by making revisions that reflect a less granular approach to narrative disclosures for PATs and eliminating the least relevant datapoints – those that do not directly meet the disclosure objectives.
Next Steps
The EC now needs to adopt a new Delegated Act revising the first set of ESRS based on EFRAG’s technical advice, in order for this to be transposed into legislation.
Our thoughts
We are pleased to see that EFRAG have now completed their part in the ESRS simplification by providing the technical advice to the EC. As the revisions are very significant, it is too early to fully understand the impact they will have on alleviating the reporting burden. However, we support the EC’s overall goal of achieving simplification of the ESRS and hope that these clarifications will make it easier for reporting entities to understand and implement the Standards.
We have published several other alerts related to the Omnibus package. For more information, click here:
- Further updates on EU Parliament negotiations regarding reduced sustainability reporting and diligence requirements
- EU Parliament continues negotiations on reduced sustainability reporting and diligence requirements
- EFRAG releases revised ESRS Exposure Drafts
- European Commission adopts ‘quick fix’ amendments to ESRS for Wave 1 entities
- The European Commission adopts a new Delegated Act to Simplify EU Taxonomy reporting requirements