Sustainability

EFRAG releases revised ESRS Exposure Drafts

08 Aug 20256 min read
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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 European Sustainability Reporting Standards (ESRS) is one element of the proposals. For this, the European Financial Reporting Advisory Group (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. As well as 12 amended ESRS EDs, they have issued the Basis for Conclusions, Log of Amendments and other helpful examples and summaries. Response to these EDs is made via a consultation survey. Access to the ESRS simplification webpage, which includes all of these documents, can be made from here. 

Summary of modifications

In order to simplify the ESRS without compromising the objectives of the Green deal, the EDs propose to revise the ESRS by utilising six ‘top-down’ levers of simplification and a ‘bottom-up’ review of all datapoints. These are intended to reduce complexity, and are summarised below. Note that this summary is not an exhaustive list of all the revisions set out in the EDs.

‘Top-down’ levers of simplification 

Lever Proposed simplifications
LEVER 1: Simplification of the Double Materiality Assessment (DMA)
  • Reduces overall complexity of the DMA process by clarifying that the DMA is 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 impacts, risks and opportunities (‘IROs’) and the assessment of material topics and sub-topics
    • the illustrative nature of the list of topics in ESRS 1, AR 16 (now relocated to Appendix A)
    • 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)
LEVER 2: 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
LEVER 3: 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 proposals:
  • Reduce the number of mandatory datapoints in cross-cutting MDRs at the ESRS 2 level
  • Reduce mandatory PAT datapoints in topical standards
  • Clarify that PATs only need to be reported if an entity has them
  • Apply the same approach to the topical specifications of ESRS 2
LEVER 4: Improved understandability, clarity and accessibility of the Standards
To reduce the number of voluntary disclosures, the proposals:
  • Remove voluntary disclosures (‘may’ disclosures)
  • Amend the general structure of the Standards to clearly separate mandatory and non-mandatory content
  • Introduce non-mandatory implementation guidance
LEVER 5: 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 overestimates from counterparts in the value chain
  • Clarifies the treatment of leased assets in a way compatible with the operational control approach in the Greenhouse Gas (GHG) Protocol
  • Introduces relief for the anticipated financial effects disclosure, similar to that available for IFRS S1 
LEVER 6: 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
  • Makes numerous editorial and substantial adjustments to align elements of the ESRS with the GHG Protocol

 

‘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 levers discussed above, EFRAG has cut mandatory datapoints by 57% and the full set of disclosures, both mandatory and voluntary, by 68%. 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. For a full breakdown of eliminated datapoints, please review the Log of Amendments for each respective Standard.

Next steps

The key amendments summarised above are proposed in the EDs, with changes from the original ESRS documented in the Log of Amendments. Feedback can be provided via completing the consultation survey through EFRAG’s webpage. The survey itself contains 30 questions in which respondents can provide their feedback – respondents can choose which questions they respond to. There is also an optional section to provide more detailed comments at the Disclosure Requirement level or paragraph of the ED, which can be given using an Excel spreadsheet provided.

The consultation period is open for 60 days until 29 September 2025. Following the close of the consultation period, EFRAG will review the results of the survey and provide its final technical advice on the ESRS to the European Commission by 30 November 2025.

Our thoughts

We are pleased to see the progress that EFRAG is making towards their ESRS simplification goal with these revisions. 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 their overall goal of achieving simplification of the ESRS and hope that, particularly for smaller entities, these clarifications will make it easier for reporting entities to understand and implement the Standards.

However, we believe that the volume of revisions will make the process of assessing these proposed changes difficult in the time frames provided. We understand this is a result of the tight timeline that EFRAG has to issue the final report to the European Commission at the end of November, but this timeline may not allow for adequate due process.

We have published several other alerts related to the Omnibus package. For more information, click here: 

  • Sustainability Alert: European Commission adopts ‘quick fix’ amendments to ESRS for Wave 1 entities
  • Sustainability Alert: The European Commission adopts a new Delegated Act to Simplify EU Taxonomy reporting requirements
  • Sustainability Alert: Omnibus package stop-the-clock proposal adopted by European Parliament
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