A deep dive into the 6 big simplifications in the new ESRS
Our analysis looks at what has changed and how it will impact your reporting going forward
For firms preparing to comply with the EU’s Corporate Sustainability Reporting Directive (CSRD), the European Financial Reporting Advisory Group (EFRAG) has just released a major proposed update to the European Sustainability Reporting Standards (ESRS). The draft revisions, reduce mandatory datapoints by 57% and eliminate all voluntary disclosures, cutting the total datapoint count by 68%. It’s a significant shift, one that responds directly to corporate concerns and aims to rebalance ambition with pragmatism (while also raising some concerns from advocates).
Below, we unpack what’s changing, why it matters, and what your organization should be doing now.
The Bigger Picture: Why These Reforms Now?
This simplification effort is part of the European Commission’s broader Omnibus initiative to reduce regulatory burden across multiple regulatory instruments: CSRD, CSDDD, the Taxonomy Regulation, and CBAM. Following pressure from preparers, EFRAG was asked to revisit the ESRS through a technical lens, balancing reporting usability with strategic sustainability goals.
A new online portal also launched this summer allows the public to review over 650 ESRS filings submitted in 2025. The data shows that 97% of firms engaged internal stakeholders for their double materiality assessments, but external stakeholder involvement remains too low. Only 32% reported on biodiversity, and just over half disclosed transition plans. These early disclosures reveal that inconsistencies, uncertainties, and lack of comparability remain challenges in the current disclosure landscape.
What Has Changed: Six Levers of Simplification
EFRAG’s revision was more than simplification of specific elements, but a fundamental move to reduce the reporting burden and focus on the most impactful datapoints. The Basis for Conclusions identifies six “levers” of simplification:
Lever 1: A Simpler Double Materiality Assessment (DMA)
The DMA was one of the most heavily criticized areas in the original ESRS by filers. EFRAG’s feedback analysis revealed it was seen as disproportionately resource-intensive and difficult to audit. The revised standard now:
Emphasizes top-down strategic relevance: firms can begin with their business model to identify obvious material topics.
Clarifies that evidence must be reasonable and proportionate—not exhaustive.
Adds flexibility to report at sub-topic level only, avoiding the need to tick every box in a topical standard.
Reframes materiality in terms of material impacts, risks, and opportunities (IROs) not in terms of "material topics" per se.
Provides explicit relief on assessing mitigated vs unmitigated impacts (“gross vs net”).
The updated DMA seeks to enable firms to focus on their top issues without being overwhelmed by checklists and scoring exercises.
Lever 2: Clearer, Shorter, More Connected Reporting
The revised ESRS prioritizes readability, structure, and strategic coherence. New guidance allows:
Executive summaries at the beginning of sustainability statements.
Use of appendices for detailed metrics and taxonomy disclosures.
Removal of duplicated content through connected information principles as firms no longer need to repeat policies across multiple sections.
Lever 3: Overhaul of General Disclosure Requirements (GDRs)
A significant structural change comes in the form of the consolidation of narrative disclosures. The previously overlapping disclosures across ESRS 2 (General) and topical standards have been streamlined:
The revised ESRS centralizes most PAT (Policies, Actions, Targets) disclosures in ESRS 2 only.
Firms are not required to report a PAT if none exists nor to explain why.
This single change alone has driven much of the 57% reduction in mandatory datapoints.
Lever 4: Improved Clarity and Accessibility
EFRAG has eliminated the “may disclose” category entirely, as some filers argued that it had become a de facto compliance burden. Instead:
All non-mandatory content has been moved to a new Non-Mandatory Illustrative Guidance (NMIG) document.
Application Requirements (ARs) are now placed under the relevant Disclosure Requirements, clarifying what is binding.
These steps are designed to help preparers and auditors better distinguish between core obligations and more tangential ones.
Lever 5: Reliefs to Reduce Reporting Burden
New horizontal reliefs have been introduced, inspired by the ISSB’s IFRS S1 and S2:
Use of “undue cost or effort” for limited data availability, particularly across the value chain.
Ability to report partial scope metrics with transparency.
Optionality in disclosing quantitative anticipated financial effects (Option 1: required unless no data; Option 2: qualitative only).
Clarified treatment of acquisitions/disposals, and reporting only announced investments and plans.
No required hierarchy for value chain data (i.e., firms are not required to try primary data first).
Metrics for non-material activities can now be excluded, and resilience disclosures can be qualitative-only. This has been an area of concern and criticism from environmentalists and those focused on climate risks.
Lever 6: Enhanced Interoperability with ISSB Standards
EFRAG reaffirmed its goal of maintaining high interoperability with ISSB standards, a priority for firms with global reporting obligations. To this end:
ESRS now aligns more closely with IFRS language, especially around “fair presentation.”
GHG boundary rules have been adjusted to allow for financial control as the main boundary, with an operational control overlay where needed (e.g., oil and gas sector).
Reliefs similar to those in IFRS S1/S2 have been incorporated, albeit with some deviations.
Despite these efforts, EFRAG acknowledges that certain deletions and reliefs may create divergences with the ISSB, which will be addressed in updated interoperability guidance.
Key Statistics: By the Numbers
What Stayed the Same in the Updates?
While the simplifications are substantial, several elements of the ESRS framework remain untouched. Notably:
Double materiality remains the cornerstone of the reporting system, distinguishing ESRS from IFRS S1/S2. Both financial and impact materiality must still be assessed.
Scope 3 GHG emissions continue to be required, albeit with more flexible boundaries and reliefs in cases of limited data.
The ESRS still maintains alignment with key EU policy goals such as the European Green Deal, the Sustainable Finance Disclosure Regulation (SFDR), and the Taxonomy Regulation.
Transition plans remain important. While the wording and structure have shifted, expectations on disclosure of decarbonization strategies are still present and especially relevant for certain sectors.
The defenders of the new simplifications will argue that this is not a retreat from sustainability ambition, but rather a recalibration aimed at usability and relevance.
Key Dates and What Comes Next
Public Consultation:
Open until 29 September 2025. Stakeholders: including companies, investors, auditors, and NGOs are all encouraged to submit comments.
Final Technical Advice:
EFRAG will submit its recommendations to the European Commission by 30 November 2025, with final adoption expected in early 2026.
Field Testing:
A cost-benefit analysis and targeted field tests are underway, and EFRAG is hosting a series of outreach events across Europe through September and October.
Implications for Reporting Firms
This new draft represents a strategic window of opportunity for firms. If you’re preparing your CSRD report for FY2025 or beyond, we recommend that you:
Reassess your reporting architecture: You may no longer need to maintain redundant disclosures or repeat data across sections.
Simplify your materiality process: Use the top-down, business-model-centric DMA approach to zero in on truly material topics.
Clarify your use of reliefs: Understand where new options, such as partial metrics or qualitative-only disclosures, might apply.
Re-engage with interoperability: Firms reporting under both ESRS and ISSB should revisit alignment assumptions.
Submit feedback: If there are areas where further clarity or support is needed, now is the time to shape the final standard.
In Summary
The original ESRS were ambitious, but to many filers, overwhelming. This revision reflects a shift and a concession to pragmatism. If implemented well, the simplified ESRS will preserve Europe’s leadership on sustainability reporting while restoring trust in the system’s practicality and cost-effectiveness.
As EFRAG chair Patrick de Cambourg noted, “This is about making ESRS a more workable reality—so that sustainability reporting supports, rather than hinders, resilience, investment, and long-term value creation.”
That is a sensible vision to follow.
Further reading and links:
At D.A. Carlin & Co., we help business and government leaders navigate this complex and fast-changing landscape. Whether you're planning for global compliance, mobilizing investment, or scaling resilient strategies, we’re here to support you. Get in touch at info@dacarlin.com to learn more.