In March 2025, as part of the Omnibus Package, the European Commission formally requested the European Financial Reporting Advisory Group (EFRAG) to provide its technical advice on revising the European Sustainability Reporting Standards (ESRS) by 31 October 2025.
As the technical advisor to the European Commission on corporate reporting standards, EFRAG was responsible for developing the first set of ESRS adopted in July 2023. Their current mandate is to revise the ESRS to substantially reduce reporting burdens for companies while maintaining the integrity of the CSRD. EFRAG has now released a draft status report on the revised ESRS, signalling the type of changes companies can expect to see in the revised ESRS.
Key Takeaways from EFRAG draft status report
EFRAG's draft proposals signal significant changes to the ESRS, including -
- Over 50% reduction in mandatory data points: EFRAG is targeting a reduction of over 50% in the number of mandatory disclosures data points in the ESRS, aimed at eliminating less relevant information and focusing on a company's core information. EFRAG notes that that by deleting non-essential requirements, making some disclosures voluntary, and turning some detailed guidance into non-binding material, the standards can drop roughly half of their mandatory content while still preserving the core objectives of the CSRD.
- Streamlining general disclosures (ESRS 2): ESRS 2 – the general sustainability standard applicable to all sustainability issues – contains mandatory data points, especially around governance, strategy, and the policies / actions / targets for each sustainability topic, which lead to duplication and excessive detail when combined with topic-specific standards. EFRAG proposes to significantly reduce mandatory data points in ESRS 2, to focus on strictly essential data points, with the rest either deleted or moved to voluntary guidance.
- Clarifying voluntary vs mandatory content: Originally, the ESRS had 269 voluntary ("may disclose") data points scattered through the standards. EFRAG plans to significantly reduce the voluntary disclosures and clearly label mandatory requirements from non-mandatory guidance, making the ESRS easier to understand and apply.
- No change to the topical standards: Notably, EFRAG is not proposing to reduce the number of topical standards - ESRS E1-E5 for Environmental topics, S1-S4 for Social, and G1 for Governance will remain. This means that the ESRS framework will continue to cover a broad range of sustainability topics across environmental, social, and governance dimensions.
- Simplifying double materiality assessments: The double materiality assessment (DMA) principle in the ESRS requires companies to assess both impact materiality (how the company impacts society and the environment) and financial materiality (how sustainability issues affect the company's value). EFRAG is now proposing a more pragmatic, top-down approach to materiality, with an assessment performed at the group level while engaging or consulting with subsidiaries to gather evidence. The intent is to focus efforts on truly pertinent topics and require reasonable and proportionate evidence for materiality decisions to make materiality assessment more useful for decision-making by relevant persons (such as investors, regulators, shareholders).
- Greater use of estimates and practical reliefs: EFRAG has indicated that the revised standards are expected to support more use of estimates, proxies, and industry averages when direct data is not available. In line with this, EFRAG is considering explicit reliefs for metrics. One would permit companies to exclude non-material parts of their operations from certain calculations. Another would allow partial disclosures on own operations and value-chain data to improve data quality over time.
- Easing on Sensitive Information: EFRAG's status report indicates they are exploring expanded reliefs for commercially sensitive information and long-term estimates with high uncertainty.
- Emphasis on readability and conciseness: EFRAG also suggests ways to make sustainability reports themselves more readable. For instance, companies could include an executive summary at the start of the sustainability statement highlighting key material topics, successes, and challenges. These changes are along the lines of recommended practices to shift sustainability reporting from a pure compliance exercise to a more communicative exercise, within the streamlined mandatory framework.
Next Steps in the ESRS Revision Process
- Mid-July 2025 – Draft standards published: EFRAG plans to publish the Exposure Draft of the revised ESRS by mid-July 2025.
- Public Consultation (Summer 2025): Following publication, a public consultation period within which stakeholders may provide feedback on the draft, will run, initially slated for six weeks.EFRAG notes the shorter timeframe and summer holidays and is willing to extend the consultation period if the Commission moves the October deadline for final technical advice.
- Final EFRAG proposal (by 31 Oct 2025): EFRAG must submit its final technical advice – essentially the final draft of the revised ESRS – to the European Commission by 31 October 2025. Between September and late October, EFRAG will digest consultation feedback and make final adjustments. By end of October, we will know what the new ESRS look like in final form (at least from EFRAG's perspective).
- European Commission adoption: Once EFRAG's final technical advice has been submitted, the Commission will use EFRAG's work as the basis to propose a delegated act legally enacting the revised ESRS. It's important to note that the Commission can make further changes to EFRAG's draft ESRS if they consider it necessary. In fact, when the first set of ESRS was adopted in 2023, the Commission introduced several modifications to EFRAG's version – phasing-in certain reporting requirements; giving companies more flexibility to decide exactly what information is relevant ("material") in their circumstances; and making some of the proposed requirements voluntary. We may see similar fine-tuning this time.
- Scrutiny by Parliament and Council: After the Commission adopts the delegated act (the revised ESRS), the European Parliament and the Council of the EU will have a two-month scrutiny period to review it. During this time, they can only approve or reject the standards but cannot amend them. If neither the Parliament nor the Council objects within this timeframe, the delegated act containing the revised ESRS automatically becomes law and takes effect.
- Applicability to companies: Once adopted, the revised ESRS will apply to all companies within the scope of the CSRD. There could be transitional provisions, but the expectation is a relatively swift switch to the simplified regime, particularly benefiting the second wave of companies coming into CSRD scope in 2027.
EFRAG's proposed revisions to the ESRS mark a decisive shift toward simplification and usability. For companies within the CSRD's scope, this is broadly welcome news: compliance is expected to become less burdensome, and interpretive guidance more accessible. Yet the real test lies ahead—whether the final framework can deliver meaningful simplification without blunting the directive's underlying policy ambitions remains an open question.
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