Simplified European Sustainability Reporting Standards Proposed by EFRAG Revealed
The European Financial Reporting Advisory Group (EFRAG) has published revised Exposure Drafts of the European Sustainability Reporting Standards (ESRS), marking a significant step towards easing the sustainability reporting burden on companies under the EU's Corporate Sustainability Reporting Directive (CSRD).
The key changes in the revised ESRS compared to the initial ESRS include a substantial reduction in disclosure requirements, with datapoints cut by approximately 57%. This simplification aims to reduce the regulatory burden on companies while retaining the core objectives of the EU Green Deal. The number of ESRS standards remains 12, covering environmental, social, and governance topics, but the content has been streamlined to improve usability and reduce complexity for reporting entities under the CSRD.
These changes are intended to make it easier for companies to comply with sustainability reporting requirements by lowering the complexity and volume of data they need to disclose. Patrick de Cambourg, Chair of the EFRAG Sustainability Reporting Board, stated that the revisions aim to deliver a more focused, usable sustainability reporting system that remains ambitious but does not overburden companies.
The revisions were prompted by feedback from the first wave of CSRD reporters and the European Commission’s mandate as part of its Omnibus initiative, aimed at alleviating reporting burdens while ensuring sustainability data remains robust and relevant. The revised ESRS are more interoperable with the IFRS Foundation's sustainability reporting standards.
Notably, the new ESRS remove all voluntary disclosures, making the reporting requirements more mandatory and streamlined. In response to feedback, EFRAG made changes to the double materiality assessment (DMA) process, including introducing practical considerations, clarifying that the process should focus on identifying the most obvious topics, and adding that the expected level of evidence to support the conclusions must be reasonable and proportionate.
A 60-day consultation was launched by EFRAG to gather feedback on the proposed update to the ESRS, which will remain open through September 29, 2025. The Commission 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.
The new ESRS have been shortened in length by more than 55% compared to the initial ESRS. New relief mechanisms used in the IFRS standards, such as exemptions where reporting would cause undue cost or effort, have been introduced in the revised ESRS.
The revised ESRS significantly simplify and scale back reporting requirements for companies under the EU's Corporate Sustainability Reporting Directive (CSRD). The European Commission's Omnibus I proposal aims to reduce the sustainability reporting and regulatory burden on companies, targeting regulations including the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD), the Taxonomy Regulation, the Carbon Border Adjustment Mechanism (CBAM), and others.
The new ESRS Exposure Drafts and consultation can be accessed online for interested parties to review and provide feedback. The revised ESRS represent a significant stride towards making sustainability reporting more manageable for companies while maintaining the core objectives of the EU Green Deal.
[1] European Financial Reporting Advisory Group (EFRAG). (n.d.). EFRAG launches 60-day consultation on proposed update to the European Sustainability Reporting Standards (ESRS). Retrieved from https://www.efrag.org/content/efrag-launches-60-day-consultation-proposed-update-european-sustainability-reporting-standards-esrs
[2] European Financial Reporting Advisory Group (EFRAG). (n.d.). Simplified European Sustainability Reporting Standards (ESRS) unveiled. Retrieved from https://www.efrag.org/content/simplified-european-sustainability-reporting-standards-esrs-unveiled
[3] European Financial Reporting Advisory Group (EFRAG). (n.d.). EFRAG focuses on cutting complexity and improving usability in the update of the ESRS. Retrieved from https://www.efrag.org/content/efrag-focuses-cutting-complexity-and-improving-usability-update-esrs
[4] European Financial Reporting Advisory Group (EFRAG). (n.d.). Changes to the double materiality assessment (DMA) process in the revised ESRS. Retrieved from https://www.efrag.org/content/changes-double-materiality-assessment-dma-process-revised-esrs
[5] European Financial Reporting Advisory Group (EFRAG). (n.d.). The revised ESRS significantly simplify and scale back reporting requirements for companies under the EU’s Corporate Sustainability Reporting Directive (CSRD). Retrieved from https://www.efrag.org/content/revised-esrs-significantly-simplify-and-scale-back-reporting-requirements-companies-under-eu’s-corporate-sustainability-reporting-directive-csrd
- The revised European Sustainability Reporting Standards (ESRS) aim to deliver a more manageable sustainability reporting system for companies under the EU's Corporate Sustainability Reporting Directive (CSRD), by reducing the complexity and volume of data disclosure, and aligning with the IFRS Foundation's sustainability reporting standards.
- In the updated ESRS, the emphasis is on a more focused, usable sustainability reporting system that remains ambitious, yet avoids overburdening companies with unnecessary financial, business, and technological demands.
