EFRAG's long-awaited revised European Sustainability Reporting Standards (ESRS) are now open for public consultation – promising a 68% reduction in overall disclosures (notably via the removal of voluntary "may disclose" options), a simplified structure, and a major shift toward a fair presentation regime.
Context
On 31 July 2025, EFRAG published the amended ESRS Exposure Drafts (EDs) as part of the Omnibus revision effort. These revisions aim to reduce reporting burdens, clarify expectations, and increase alignment with international frameworks. The revised EDs, which are open to public consultation until 29 September 2025, concern all 12 ESRS and are accompanied by detailed logs of amendments, new implementation guidance, and a glossary.
Key takeaways
1. Clarifications on scope, consolidation and value chain limits
- Amendments to ESRS 1 Chapter 5 were made to clarify scope, now including criteria for non-EU subsidiaries, subsidiaries excluded from consolidation due to being non-material and subsidiaries with different reporting periods.
- Transitional provisions on entity-specific disclosures were deleted and sector-specific ESRS are no longer foreseen.
- For phase-in provisions, it has been clarified that the first application of ESRS depends on timely implementation of the CSRD into national law.
- Information from the value chain must be limited to what is reasonable, supportable and available without undue cost or effort.
- A new paragraph in ESRS 1 confirms that data collection from upstream/downstream partners must respect existing EU regulatory limits, helping to reduce burdens linked to third-party data collection.
- The amended ESRS 1 also includes a new definition of "own operations", which usually correspond to the assets/liabilities, revenues and costs of the entities in the perimeter of financial consolidation, with listed exceptions.
2. Significant reduction in datapoints and structure simplifications
- Mandatory datapoints cut by 57%, total disclosures reduced by 68%.
- "May disclose" datapoints have been deleted from mandatory material and some have been included in the Non-Mandatory Implementation Guidance (NMIG), including the former AR 16 topical list. As an exception, a few have been kept as part of the Application Requirements (AR), and others have been converted to "shall disclose" (i.e. total water withdrawn and discharges for own operations, transition plan for biodiversity and training for procurement team). "Shall disclose" datapoints are now consolidated in the main body of the standard with boxed methodology guidance through the ARs.
- Minimum Disclosure Requirements (MDRs) have been converted into general disclosures under ESRS 2, avoiding repetition across topical standards
- Narrative disclosures in areas like policies, actions, targets (PAT) have been streamlined to reduce boilerplate text. PAT disclosures are now required only when such measures are in place.
- More flexibility is provided to companies, which will have the option to report either at topic or impacts, risks and opportunities (IROs) level, include executive summaries, place granular or non-material information in appendices, and aggregate or disaggregate information based on clarified criteria.
3. Simplified DMA
- A new top-down approach starts from the business model to identify relevant IROs, helping companies focus on what really matters.
- The level of evidence required is now expected to be reasonable and proportionate, reducing unnecessary documentation.
- A materiality filter applies to all datapoints, including those in ESRS 2 General disclosures, helping eliminate irrelevant disclosures.
- Materiality is now more clearly tied to decision usefulness, prioritising stakeholder needs over exhaustive detail.
- Companies are expected to consider actions and policies (e.g. mitigation or remediation) when assessing materiality.
- The ESRS now operate under a fair presentation regime that is aligned with the ISSB.
- The term "matter" has been replaced by "topic", and level of "sub-subtopics" has been removed, reducing granularity.
4. Enhanced interoperability with international standards and EU regulations
- Definitions and wording in ESRS have been aligned with IFRS disclosure standards, promoting cross-border comparability and easing dual reporting burdens for international companies.
- The EDs address longstanding concerns about SFDR principal adverse impact (PAI) indicators, which previously made up 16% of mandatory datapoints, including many of limited practical relevance. EFRAG has thus deleted or consolidated several overlapping or low-value SFDR datapoints – especially in Environmental (E1–E5) and Social (S1–S4) standards.
5. Topics still pending following ongoing legislative process
In line with the EU Commission's recommendation, certain requirements were left unchanged in the amended ESRS, pending ongoing legislative developments that are expected to amend the CSRD, such as:
- How to apply the own operation and value chain definition to financial institutions.
- Exemption from consolidating subsidiaries by undertakings that are financial holdings.
- Relief for omission of confidential/sensitive information and phasing-in provisions.
- Clarification on the meaning of "compatibility with 1.5 degrees" for transition plans.
What's next?
- Public consultation is open until 29 September 2025 via the online survey platform.
- A final version of the revised ESRS is expected later this year (currently by end of November 2025), though deadlines may shift pending decisions by the EU Commission.
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