Revised ESRS Exposure Drafts: EFRAG Launches Public Consultation on Streamlined Standards

The European Financial Reporting Advisory Group (EFRAG) has launched a public consultation on revised European Sustainability Reporting Standards (ESRS). The updated drafts aim to simplify reporting, reduce administrative burden, and improve clarity, while preserving core sustainability principles.

On 31 July 2025, the European Financial Reporting Advisory Group (EFRAG) published revised exposure drafts for the European Sustainability Reporting Standards (ESRS), launching a 60-day public consultation. EFRAG's initiative follows the European Commission's request to streamline the first set of standards adopted in July 2023 under the CSRD. EFRAG is expected to deliver its technical advice to the Commission by 30 November 2025.

The amendments aim to make the ESRS easier to apply and better aligned with the needs and capacities of undertakings, without weakening sustainability reporting requirements. They also respond to feedback about overwhelming complexity, interpretative uncertainty, and insufficient clarity.

Consultation and Timing

The consultation period will run from 31 July to 29 September 2025, lasting 60 days. During this time, EFRAG will conduct a series of outreach events in September and October to support dialogue and gather feedback ahead of the finalisation of the technical advice.

Streamlining the Standards

A defining feature of the revised drafts is the substantial reduction in reporting requirements. The number of mandatory datapoints (subject to materiality) has been reduced by 57%, while the total volume of datapoints, including voluntary disclosures, has declined by 68%. These changes aim to streamline the disclosure process while preserving the core reporting principles.

On 20 June 2025, EFRAG provided an update to the European Commission clarifying that the reduction in mandatory datapoints was achieved through the following six levers:

Simplification of the Double Materiality Assessment (DMA)
Better readability and conciseness of sustainability statements and improved integration into corporate reporting
Critical modification of the relationship between Minimum Disclosure Requirements (MDRs) and topical standards
Improved understandability, clarity, and accessibility of the Standards
Introduction of other suggested burden-reduction reliefs
Enhanced interoperability

The structure enhances navigability while preserving the core reporting principles of double materiality and stakeholder relevance.

Simplification of the Double Materiality Assessment (DMA)

EFRAG has implemented revisions to reduce the complexity of the Double Materiality Assessment (DMA) while maintaining its essential role in identifying material sustainability topics. Key changes aim to clarify the relationship between impacts, risks, and opportunities (IROs) and the reportable topics, helping avoid unnecessary detail and encouraging a management-oriented approach.

New guidance recommends starting the assessment with a top-down analysis of the business model to identify obviously material topics. Reporting is expected to be proportionate, especially when a topic’s materiality is evident. The concept of information materiality has been strengthened and applied across all datapoints, including general disclosures.

Terminological simplifications include replacing "matter" with "topic" or "sub-topic," with flexibility for undertakings to limit disclosures when only part of a topic is material. Updates also address scoring practices, aggregation criteria, and eliminate excessive granularity in illustrative topic lists. A proposed second threshold for “strategic relevance” was rejected due to complexity concerns.

Better Readability and Conciseness

EFRAG responded to stakeholder concerns that ESRS disclosures were overly detailed and difficult to navigate. To improve understandability, conciseness, and overall presentation, the revised drafts introduce voluntary options such as executive summaries and appendices for detailed or non-material disclosures. The amendments also clarify how to prevent duplication, particularly in relation to policies, actions and targets (PATs), and provide undertakings with increased flexibility in structuring the sustainability statement according to their specific context.

Critical Modification of the Role of General Disclosure Requirements (GDRs)

EFRAG redefined the role of General Disclosure Requirements (GDRs), formerly known as Minimum Disclosure Requirements. GDRs at the ESRS 2 General disclosures level now solely define the required disclosures on policies, actions and targets (PATs). The previous overlap with topical standards caused duplication and complexity.

To resolve this, most mandatory ("shall") datapoints for PATs in topical standards were deleted or moved to non-mandatory guidance, keeping only the essential items in GDRs. Appendix C of ESRS 2 was removed, and most topical PAT specifications were eliminated, except for select cases such as climate resilience. Preparers are now required to report PATs only if they exist, using a tabular format, and no justification is needed if they are absent.

Improved Understandability and Clarity

EFRAG addressed interpretative confusion caused by unclear distinctions between mandatory and voluntary content in the 2023 Delegated Act. The revised drafts eliminate the ambiguous “may disclose” category and clearly separate mandatory requirements (ARs) from non-mandatory guidance, moving the latter to the NMIG.

Introduction of Horizontal Burden-Reduction Reliefs

EFRAG introduced a set of horizontal reliefs to reduce reporting burdens, drawing on ISSB standards but adapting them unilaterally. These include reliefs on materiality, coverage, and qualitative ranges for financial effects, while excluding Scope 3 GHG emissions and commercially sensitive disclosures.

Beyond ISSB-aligned reliefs, EFRAG proposed broader simplifications such as expanding the “undue cost and effort” principle to all metrics, and offering two options for disclosing financial effects: full qualitative and quantitative disclosures, or qualitative only when quantitative input isn't feasible. New reliefs address data quality challenges, simplify value chain input hierarchies, and ease group-level data collection.

EFRAG also clarified reliefs for resilience, anticipated financial plans, and major transactions. Boundaries for GHG emissions and value chain reporting were adjusted to align with IFRS S2 and the GHG Protocol.

A value chain data cap based on the VSME standard was introduced to reduce reliance on direct data. Additional reliefs target financial institutions and forward-looking disclosures, which are often complex and resource-intensive.

Enhanced Interoperability with ISSB Standards

EFRAG emphasized the importance of alignment between ESRS and ISSB standards to support undertakings reporting in multiple jurisdictions. A joint interoperability guidance was published in May 2024, highlighting how ESRS compliance could also satisfy ISSB requirements, particularly in climate reporting. Maintaining alignment is seen as crucial to minimize reporting burdens.

Based on the Omnibus proposal, the EC announced plans to revise the ESRS Delegated Act to improve global interoperability. EFRAG has considered incorporating all IFRS reliefs unless there are strong reasons not to. However, EFRAG’s interoperability assessment has not been reviewed by the ISSB and may require further work.

Stakeholders and EC representatives stressed avoiding unnecessary divergence between standards. EFRAG will continue dialogue with international initiatives to ensure coherence and support global sustainability reporting.

Requirements Not Modified Due to Level 1 Regulatory Context

Certain requirements remain unchanged in the amended ESRS as they are subject to ongoing legislative developments under Level 1 regulation:

The definition of value chain for financial institutions was not adjusted, as this issue is currently under broader legislative consideration. Draft sector-specific guidance was tested, but feedback highlighted implementation challenges and potential unintended consequences.
The exemption for financial holdings from consolidating subsidiaries has not been pursued, as this falls outside EFRAG’s current mandate.
Suggestions to introduce relief for omission of confidential information and extend phasing-in provisions were not adopted, since these may require modifications to the CSRD itself.
The clarification of the term “compatibility with 1.5 degrees” in ESRS E1 Climate change was not revised. Interpretative discussions on this topic are ongoing and were already part of earlier EFRAG work on climate transition planning.

Conclusion

The revised ESRS exposure drafts reflect EFRAG’s commitment to making sustainability reporting more practical and coherent, without compromising core objectives. By streamlining disclosures, refining guidance, and aligning with global frameworks such as the ISSB, EFRAG seeks to make reporting more practicable and less resource-heavy while ensuring relevance and comparability. As the consultation proceeds, stakeholder feedback will play a critical role in refining the standards and shaping the future of sustainability reporting in Europe and beyond.

Supporting Materials

EFRAG has released documents to accompany the public consultation. You can read them below:

Cross-Cutting Standards

ESRS 1 – General Requirements

ESRS 2 – General Disclosures

Environmental Standards

E1 – Climate Change

E2 – Pollution

E3 – Water

E4 – Biodiversity & Ecosystems

E5 – Resource Use & Circular Economy

Social Standards