New Study Drives EU Push To Simplify Sustainability Reporting Under Draft Amended ESRS

Key Takeaways

• Significant Reporting Reduction: EFRAG’s draft amended ESRS cut mandatory datapoints by 61 percent compared with the original standards, aiming to ease the reporting burden without undermining the EU Green Deal’s objectives.
• Double Materiality Simplified: Companies would no longer need to conduct a full double materiality assessment every year unless there are significant changes, shifting the focus toward what is genuinely decision-useful.
• Expanded Reliefs And Phase-Ins: The draft introduces broader proportionality mechanisms, value-chain flexibility, confidentiality reliefs, and extended phase-ins for complex quantitative disclosures through 2029 for first-wave reporters.
• Clearer Structure And Storytelling: The amended ESRS aim to improve readability by separating binding requirements from guidance, allowing executive summaries, appendices, and clearer use of incorporation by reference.
• Interoperability Preserved: Despite simplification, alignment with ISSB and GRI standards remains a priority, reducing friction for companies reporting across multiple global frameworks.

Deep Dive

After months of pressure from companies grappling with the first wave of Corporate Sustainability Reporting Directive (CSRD) disclosures, the European Financial Reporting Advisory Group (EFRAG) has delivered a sweeping proposal to simplify the European Sustainability Reporting Standards, cutting back disclosure requirements while keeping the EU’s broader climate and sustainability ambitions intact.

The draft amended standards were formally transmitted to Maria Luís Albuquerque, the European Commissioner for Financial Services and the Savings and Investments Union, following a 2025 mandate from the European Commission to reduce complexity in the ESRS delegated act.

EFRAG’s simplification effort was explicitly shaped by lessons learned from so-called “wave 1” CSRD reporters in 2024. Many early adopters warned that the original ESRS were too granular, too rigid, and too resource-intensive, particularly for companies still building internal sustainability data systems.

In response, EFRAG says the amended standards reduce mandatory datapoints by 61 percent compared with the ESRS adopted in 2023, or 71 percent when voluntary datapoints are included. The goal, according to the advisory body, is not only to shorten the standards but to make them easier to apply in practice, without abandoning the core objectives of the European Green Deal.

How EFRAG Got There

The pace of the work was unusually intense. After receiving its mandate at the end of March 2025, EFRAG launched a call for input that drew responses from more than 800 stakeholders. It supplemented that feedback with dozens of interviews with preparers across sectors and Member States, a benchmarking review of roughly 650 sustainability statements from the 2024 reporting year, and an analysis of nearly 900 questions submitted through EFRAG’s ESRS Q&A platform.

Exposure drafts were published in July 2025 and opened for a 60-day public consultation. More than 700 responses followed, alongside outreach events and targeted field testing. EFRAG acknowledged that the timeline required adjustments to its usual due process, but said the breadth of participation helped ensure the revised standards reflect real-world reporting challenges.

A Lighter Touch On Double Materiality

One of the most consequential changes is the overhaul of the Double Materiality Assessment, long viewed as the most burdensome part of ESRS reporting.

Under the amended standards, materiality is reinforced as an overarching filter rather than a mechanical checklist. Companies are no longer required to perform a full double materiality assessment every year unless there are significant changes, and they gain greater flexibility to report at topic level rather than at highly granular impact-risk-opportunity levels.

EFRAG also clarified that companies are not required to disclose information prescribed by ESRS if it is not material—an explicit nod toward a “fair presentation” approach that aligns more closely with global financial reporting logic.

Fewer Rules, More Proportionality

The revised ESRS introduce a wide set of reliefs aimed at easing compliance pressure, particularly in complex areas such as value-chain data. Companies may rely more heavily on estimates where direct data collection would involve undue cost or effort, and reliefs are introduced for acquisitions, disposals, and activities that are not significant drivers of material impacts.

Transitional provisions are also expanded. For first-wave reporters, additional phase-ins extend until 2029 for certain quantitative disclosures, including anticipated financial effects, reflecting ongoing concerns about data quality and methodological maturity.

EFRAG also introduced a confidentiality-based relief allowing omissions where EU law permits non-disclosure of sensitive information, a point that several board members viewed as essential to making the standards workable.

Beyond cutting datapoints, EFRAG reworked the architecture of the standards themselves. The amended ESRS separate binding requirements from guidance more cleanly, eliminate the “voluntary disclosure” category, and relocate mandatory application requirements directly under the relevant disclosure provisions.

Companies are explicitly allowed to include executive summaries, use appendices for detailed disclosures, and rely more clearly on incorporation by reference. The intention, EFRAG said, is to help companies “tell their sustainability story” in a way that fits more naturally within the management report, rather than burying readers in technical detail.

Interoperability Still In Focus

Despite the simplification push, EFRAG stressed that interoperability remains a core objective. The amended standards are designed to preserve alignment with ISSB and GRI frameworks where compatible with EU law, building on the joint ESRS-ISSB interoperability guidance published in 2024.

Changes to anticipated financial effects, relief mechanisms, and the emphasis on fair presentation are all intended to reduce friction for multinational companies reporting across multiple regimes.

All 12 amended ESRS were approved by the EFRAG Sustainability Reporting Board on 28 November 2025, though not without debate. Several standards required approval by qualified majority rather than consensus, and dissenting views—particularly around the scope and duration of reliefs—were formally recorded for transparency.

EFRAG cautioned that its technical advice arrives while the EU’s broader “Omnibus” legislative process is still underway. If the final outcome of that process affects the substance of the standards, EFRAG has said it stands ready to revise the amended ESRS accordingly. Additional supporting documents, including a cost-benefit analysis and explanatory notes, are expected before the end of December.

For companies bracing for future CSRD reporting cycles, the message is clear. The EU is not retreating from sustainability reporting but it is acknowledging, at least for now, that making the rules workable matters just as much as making them ambitious.

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