The European Financial Reporting Advisory Group (EFRAG) announced the publication of its revised Exposure Drafts of the European Sustainability Reporting Standards (ESRS), significantly simplifying and scaling back reporting requirements for companies under the EU’s Corporate Sustainability Reporting Directive (CSRD).
Among the key changes from the initial ESRS, the new standards remove all voluntary disclosures, and reduce reporting datapoints by 68%, going even beyond EFRAG’s recent estimate of a 66% reduction.
The initiative to update ESRS forms part of the European Commission’s Omnibus I proposal aimed at significantly reducing the sustainability reporting and regulatory burden on companies, targeting regulations including the CSRD, as well as the Corporate Sustainability Due Diligence Directive (CSDDD), the Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM).
EFRAG was mandated by the European Commission in June 2020 to prepare the initial ESRS, which were adopted by the Commission in 2023. Following the release of the Omnibus package, the Commission mandated EFRAG with developing technical advice to revise the ESRS in line with the proposals simplification objectives.
In a statement announcing the release of the new draft standards, EFRAG said that it “focused on cutting complexity and improving usability,” and that its work included extensive consultations with companies already reporting under the CSRD, as well as with those preparing to begin reporting under the regulation.
One of the focus areas for simplification targeted by EFRAG’s update is the ESRS’ double materiality assessment (DMA), one of the key reporting requirements introduced by the CSRD, mandating disclosure both on the risks and impact of sustainability issues on an enterprise, as well as on the enterprises’ impacts on environment and society, including disclosing on how material impacts, risks, and opportunities (IROs) change over time.
In its consultation process in preparing the updated standards, EFRAG said that respondents reported that the process of determining which topics to report on was “particularly intense,” and frequently commented on “a disproportionate effort compared to the result” from the DMA exercise. EFRAG made a series of changes in response to the feedback, including introducing “practical considerations” for companies carrying out the DMA, clarifying that the process should focus on identifying the most obvious topics, and adding that “that the expected level of evidence to support the conclusions must be reasonable and proportionate,” in addition to clarifying criteria for determining the significance of information.
Additional simplification levers followed by EFRAG included improving the readability and conciseness of sustainability statements and their connectivity with corporate reporting generally, and improving the understandability, clarity and accessibility of the ESRS. EFRAG also focused on enhancing the interoperability of the ESRS with the IFRS Foundation’s sustainability reporting standards, including adopting the same wording where possible, emphasizing the “fair presentation” framework used by the IFRS standards, and introducing new relief mechanisms also used in the IFRS standards, such as exemptions where reporting would cause undue cost or effort.
According to EFRAG, the new standards have been shortened in length by more than 55% compared to the initial ESRS, with mandatory datapoints reduced by 57%, and total datapoints, including the elimination of voluntary disclosures, by 68%.
Alongside the release of the exposure drafts, EFRAG launched a 60-day consultation to gather feedback on the proposed update to the ESRS, which will remain open through September 29, 2025. The Commission recently extended its deadline for EFRAG’s technical advice on the ESRS, with the finalized standard now due to be delivered by the end of November 2025.
Patrick de Cambourg, Chair of the EFRAG Sustainability Reporting Board, said:
“EFRAG is fully aligned with the strategic vision set out by the European Commission. These revisions aim to deliver what Europe needs at this moment: a more focused, more usable sustainability reporting system that remains ambitious but does not overburden companies. Capitalising on effective experience, this is about making ESRS a more workable reality—so that sustainability reporting supports, rather than hinders, resilience, investment, and long-term value creation.”
Click here to access the new ESRS exposure drafts and consultation.
