EFRAG's Simplified ESRS: Long-awaited Simplification

On 3 December 2025, the European Financial Reporting Advisory Group ("EFRAG") delivered its technical advice on the draft simplified European Sustainability Reporting Standards ("Simplified ESRS") to the European Commission, following approval by EFRAG's Sustainability Reporting Board on 28 November 2025.

In our previous article here, we explored the six key simplification levers in EFRAG's exposure drafts of the ESRS which were published for public consultation at the end of July 2025. The Simplified ESRS incorporate feedback received from the public consultation and EFRAG has sought to better respond to the simplification mandate by substantially reducing mandatory datapoints and clarifying key concepts. The result is a revised set of standards which seek to take a balanced approach between meeting the objectives of the European Green Deal and reducing unnecessary administrative burdens on undertakings.

The key takeaways on the amendments to the Simplified ESRS are as follows:

1. Datapoint reductions: mandatory data points reduced by 61% and an overall 71% reduction in datapoints

In July 2025, EFRAG signalled a ~57% reduction in mandatory datapoints and 68% overall when voluntary items were removed (with voluntary content moved to the Non-Mandatory Illustrative Guidance). The Simplified ESRS further increases the reduction of mandatory datapoints to 61%, with the overall cut at 71%. EFRAG confirms this was achieved through an agreed "decision tree" that eliminated less relevant datapoints while preserving those that met key CSRD objectives. EFRAG has introduced only three new datapoints (relating to waste management, adequate wages and transition plans) and additionally moved three further datapoints from voluntary to mandatory (only where material).

Practically, narrative requirements around policies, actions and targets have been further streamlined and duplication across topical standards removed, reinforcing the principles‑based approach first proposed in July 2025. Preparers will no longer need to justify not having in place, nor provide timetables for adoption of policies, actions or targets nor provide timetables for future adoption. The intent is less duplication, less prescriptive narrative, and clearer emphasis on how the business actually manages sustainability issues.

2. Double Materiality Assessment ("DMA"): a more proportionate approach, with explicit guardrails

The Simplified ESRS now state more explicitly that a full DMA need not be repeated annually unless significant changes arise. They also allow for aggregate‑level reporting by topic, where disclosure at impact, risk and opportunity ("IRO") granularity is not necessary. EFRAG has streamlined the list of topics that is no longer mandatory to consider, as well as clarifying that undertakings may report solely on material sub‑topics. These amendments seek to reinforce key principles-based guidance including the role of materiality of information acting as a 'filter' to the DMA, and the option to apply a 'top-down' approach to the materiality assessment.

The fair‑presentation framework has been made more explicit and acts as an overarching filter: undertakings are not required to disclose non‑material information. This further aligns the standards with IFRS S1 and shifts practice away from a tick-box compliance exercise.

3. Value‑chain burden reliefs: estimates in, preference for direct data out

EFRAG has codified further practical relief mechanisms in the Simplified ESRS, which, amongst others, include:

• A proportionality mechanism to avoid undue cost or effort. This mechanism allows reliance on "reasonable and supportable" information available without undue cost or effort, with an expectation that coverage improves year‑on‑year. When invoked, companies should explain the scope, rationale, and the plan to close data gaps.
• Allowing for partial-coverage of certain metrics due to a lack of data (taking an undue cost or effort approach), or to exclude activities where they are not drivers of material IROs, only if doing so does not impair the relevant or faithful representation of the disclosure.
• The exclusion of joint operations where the is no operational control from environmental metrics, while encouraging qualitative context on governance and oversight where exposures may still be material.
• Allowing undertakings to omit information from their sustainability statements where disclosure is prohibited or permitted to be withheld under applicable Union law due to its classified or commercially sensitive nature.
• The elimination of the preference for direct data over estimated date in value chain reporting.

The above relief mechanisms are designed to be used transparently and temporarily rather than as permanent exemptions.

4. Anticipated Financial Effects ("AFE"): reliefs, phasing‑in, and closer ISSB alignment

In relation to AFE, which has been among the most contentious topics, the Simplified ESRS require both qualitative and quantitative information on AFE to be disclosed. However, EFRAG has specified when quantitative information on AFE may be omitted - for instance, where the relevant effects are not separately identifiable, or the level of uncertainty in their measurement is so high the resulting information would not be useful. In such a case, qualitative information should be provided and the basis for omission explained. Additionally, ESRS 1 sets out further transitional provisions, allowing 'wave-one' undertakings to omit disclosure of certain quantitative information for financial years prior to 2030. EFRAG's changes improve conceptual and language alignment with ISSB standards and allow for a level of flexibility.

5. Better readability: non-mandatory content fully separated and simplified report architecture

The Simplified ESRS rename and drastically streamline the former Minimum Disclosure Requirements in ESRS 2 for policies, actions and targes, as General Disclosure Requirements. The intent is less duplication, less prescriptive narrative, and clearer emphasis on how the business actually manages sustainability issues.

A notable change in the Simplified ESRS is the complete separation of binding requirements from guidance, eliminating the confusing mix of mandatory and non‑mandatory application requirements and removing the "voluntary disclosure" category from the standards. Mandatory application requirements now sit directly under the corresponding disclosure requirements. EFRAG also performed a comprehensive editorial review to align terminology, ensure objectives reflect the related requirements, and remove ambiguous language.

In line with the proposal in July 2025, companies now have clearer options to use an executive summary, shift detail to appendices (including EU Taxonomy information), and incorporate by reference "connected information" to avoid duplication and preserve readability of the management report. The purpose of these amendments is to enable undertakings to "tell their story" in a balanced and consistent manner while also providing access to the detailed data without blurring the management report type information.

Next steps

EFRAG is expected to publish the Basis for Conclusions, the Explanatory Note and the Cost Benefit Analysis of the Simplified ESRS by the end of December 2025. These are likely to provide more insight and guidance into the underlying changes.

The Commission will draft a Delegated Act which will formally amend the current ESRS using EFRAG's advice as the basis. While the Commission is not obligated to adopt EFRAG's drafts verbatim, further tweaks are unlikely given the extensive nature of EFRAG's consultation and the tight timeline. The Delegated Act will be subject to a period of public consultation, before a four-month scrutiny period by the European Parliament and the Council. The Commission must adopt the revised standards at the latest six months after the entry into force of the Omnibus I directive, which is currently expected to happen in February 2026 (20 days following its publication in the EU Official Journal).

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