Next Stop On The Omnibus: EFRAG Consults On Amendments To The ESRS

In July 2025, the European Financial Reporting Advisory Group(EFRAG)has published its long awaited draft amendments to the European Sustainability Reporting Standards (ESRS). The amendments seek to reflect the overall objective of the Sustainability Omnibus Package to ease the regulatory burden on companies in scope of the Corporate Sustainability Reporting Directive (CSRD) (see our detailed briefing on the Sustainability Omnibus Package here).

The European Commission formally requested that EFRAG provide technical advice on simplification of the ESRS in March 2025. Following significant stakeholder engagement, including a public call for evidence and discussions with companies already required to report under CSRD (i.e. those large listed EU companies not benefiting from the 'stop-the-clock' portion of the Sustainability Omnibus Package – see our briefing here), EFRAG published revised and simplified exposure drafts of the ESRS in July 2025 for public consultation (the Exposure Drafts).

Key amendments

The main takeaways from the Exposure Drafts include:

• The number of mandatory datapoints contained in the Exposure Drafts is significantly reduced as compared to the current ESRS. EFRAG says that it has removed 57% of the mandatory datapoints currently contained in the ESRS and all voluntary disclosures have been removed. Many of the previously voluntary datapoints have been moved into a new document, the Non-Mandatory Illustrative Guidance (NMIG), which provides non-binding illustrations as to how companies could apply the ESRS.
• There is simplification of, and further guidance on, the double materiality assessment reflectingfeedback which included comments that although the process was worthwhile, the effort required was disproportionate to the results obtained.
• Both the cross-cutting standards and the topical standards have been streamlined, seeking to reduce overlap and make the ESRS more accessible. This includes repositioning the Application Requirements so that they sit under the Disclosure Requirement to which they relate. In addition, there are several changes to sub-topics contained in the topical standards, with content either moved or amended, to facilitate simplification.
• There has been a focus on enhancing interoperability with the ISSB standards with a number of changes made to better align with the ISSB standards, in particular express reference to the concept of "fair presentation" which is a key concept in the ISSB standards.
• The revised ESRS still cover all major sustainability topics mandated by the CSRD and follow the same broad structure of the current ESRS.

Impact of proposed changes on companies reporting under the CSRD

The Exposure Drafts will be welcomed by the majority of companies in scope of CSRD. They considerably reduce the quantity of required disclosures, are easier to navigate and should reduce the burden of reporting as well as preparing for reporting. This should lead to both time and cost saving for companies, allowing them to focus on the most significant sustainability issues and to report on sustainability matters in a way which more closely with aligns with strategic priorities. The Exposure Drafts also contain additional guidance for companies on key issues, including those that have been the subject of debate and discussion following publication of the ESRS in 2023.

The increased interoperability with the ISSB standards will be particularly helpful for companies and groups which are subject to both the CSRD regime and a reporting regime in based on the ISSB standards. This should lead to less duplication for them both in relation to work required and reporting.

The six levers of simplification underpinning the Exposure Drafts

When considering amendments to the ESRS, EFRAG has considered in particular six "levers of simplification" to ease the regulatory burden on companies.

1. Simplification of the Double Materiality Assessment

The double materiality assessment remains a cornerstone of the ESRS reporting regime. The determination of material matters is the starting point to ascertain the material information to be disclosed in relation to the material impacts, risks and opportunities related to those matters.

However, EFRAG acknowledges that there was a lack of clarity in relation to the assessment in the ESRS and that this has been identified as a significant burden on companies as a result. The Exposure Drafts therefore propose a number of changes and clarifications to the double materiality assessment regime.

One of the main changes is to incorporate reference to the principle of fair presentation, which is a key concept contained in the ISSB standards and other reporting frameworks. It is hoped that emphasising the fact that the ESRS is a fair presentation framework will reduce the risk of over-reporting. In addition, a new 'practical considerations' section has been introduced containing guidance which seeks to ensure that the materiality exercise is proportionate. Key points in that guidance include:

• that if it is clear that a topic is not relevant (or obviously is relevant) to the company or its peers, the extensive consideration would not be required; and
• the double materiality assessment should take a "top-down" approach, starting by looking at the company's business model and industry sector to identify obvious material topics, rather than a bottom-up consideration of all possible topics.

Other changes include:

• there is new commentary that materiality should act as an overarching filter for the information included in a sustainability report. This means even general disclosures can be omitted if they are not material;
• guidance has been introduced on how to consider implemented remediation, mitigation and prevention policies and actions when assessing the materiality of an impact; and
• the current reference to a company being required to consider the sustainability matters covered in the topical ESRS has been amended so that those topics are now illustrative examples of matters that companies should consider and the references to the sub-sub-topics in the ESRS have been removed from this list.

2.Better readability of sustainability statements and connectivity with corporate reporting as a whole

Many ESRS sustainability statements published to date have been perceived as too granular and mixing critical information with excessively detailed datapoints.

To address these issues without being overly prescriptive, the Exposure Drafts propose more flexible and concise approaches to reporting, including the use of:

• executive summaries at the beginning of sustainability statements;
• appendices for technical detail and the most granular information (such as detailed metrics); and
• cross-referencing to link information, avoid repetition and streamline disclosures.

3. Modifying the relationship between ESRS 1 General Requirements and ESRS 2 General Disclosures

In the current ESRS, some of the general disclosures contained in ESRS 2 overlap with disclosures contained in the topical standards, particularly in the areas of governance and strategy.

The Exposure Drafts seek to address this issue by consolidating cross-cutting information in the revised ESRS 2 which will serve as the primary source for certain key information - for example, a company's sustainability strategy, policies, targets and due diligence processes - and this information is not required to be repeated when reporting under relevant topical standards. Mandatory datapoints in topical standards have been limited to the most essential, with others either being deleted or moved to the NMIG.

4. Improved clarity and accessibility of the ESRS

EFRAG has removed all voluntary disclosures in the Exposure Drafts and has amended the general structure of the standards to relocate Application Requirements underneath the respective Disclosure Requirements. Language throughout ESRS has also been tightened, seeking to avoid ambiguous terms that have prompted a number of the queries raised on the EFRAG ESRS Q&A Platform. These revisions aim to reduce ambiguity and ensure consistent interpretation of requirements, thereby also reducing divergent assurance practices.

5.Introduction of burden-reducing reliefs

EFRAG has introduced an "undue cost or effort" exemption in several areas in the Exposure Drafts. This exemption allows companies to omit specific disclosures where obtaining certain data from the value chain is impracticable or would require unreasonable cost. If a company relies on this exemption, it must provide an explanation.

EFRAG has requested public feedback specifically on an additional proposed relief in relation to disclosures on anticipated financial effects of sustainability risks. EFRAG seeks views on two possible approaches:

• a requirement to disclose qualitative and quantitative information, with a relief that qualitative disclosures may be omitted where the company cannot quantity the financial effects (which is broadly aligned with the relief in the ISSB standards); or
• a focus on qualitative disclosures only, with the opportunity to provide voluntary quantitative disclosures, where available.

6. Enhanced interoperability with the ISSB standards

The Exposure Drafts take steps to harmonise terminology and requirements with the ISSB standards. EFRAG recognises that a high degree of interoperability offers significant benefits to entities within scope of CSRD, particularly those with reporting obligations in jurisdictions outside the EU.

The ways in which the Exposure Drafts seek to improve interoperability include:

• better aligning the terms and wording of certain disclosures to reflect the language used in the ISSB standards;
• placing greater emphasis on "fair presentation", which is a key concept in the ISSB standards;
• addressing the current difference on boundary reporting for greenhouse gas emissions, adopting the approach contained in the ISSB S2 standard such that the reporting boundary is aligned with the financial control (consolidation) boundary of the GHG Protocol. However, additional disclosures based on the operational control (consolidation) boundary of the GHG Protocol may be required where reporting under the financial control (consolidation) boundary does not meet the fair presentation requirement.

Key changes to the ESRS cross-cutting and topical standards

The Exposure Drafts include a line-by-line revision of all the standards: the two cross-cutting standards (ESRS 1 and 2) and the topical standards being the five environmental standards (E1-E5), four social standards (S1-S4), and one governance standard (G1).

Below is a brief overview of key changes in each standard:

Next steps

The consultation closes on 29 September 2025. Following this EFRAG will provide its final technical advice on revisions to the ESRS to the European Commission by 30 November 2025 (the original 31 October 2025 deadline having been extended). The European Commission will consider EFRAG's advice and use it as the basis for a delegated act to enact revised ESRS, though it would be open to the European Commission to make changes to EFRAG's advice when it publishes the final form revised ESRS (as it did when the original ESRS were adopted).