We will now look at the proposed changes to the ESRS 2 - General information standard. This standard is the very core of the reporting, as it specifies the cross-cutting reporting requirements that apply to all businesses, regardless of sector. ESRS 2 covers central reporting areas defined in ESRS 1, and establishes the requirements for information a business must provide on topics related to significant influences, risks and opportunities (IROs) within (i) management, strategy, handling of IROs, as well as (ii) guidelines, actions, goals and calculations (PATs).

In line with the general vision of simplification, ESRS 2 has undergone significant revisions, which has resulted in a 49% reduction in the number of data points for ESRS 2. These changes reflect a transition to a more principle-based approach for narrative information, where the focus is on strategically important information that is relevant and understandable to users.

Clearer structure and "fair presentation"

As described in ESRS 1, mandatory requirements ("shall disclose/shall include/shall report/shall describe/shall explain") are now presented in the main body of the standard. The mandatory methodological guidance ("Application Requirements" or "ARs") has been moved to separate boxes under the respective requirements, to clearly distinguish between requirements and guidance. All former "may disclose" requirements have now either been removed from the mandatory standards or moved to "Non-Mandatory Illustrative Guidance" (NMIG). This removes uncertainty about what is mandatory and provides guidance without creating new reporting burdens.

The principle of "fair presentation" is now more strongly emphasized as an overall approach, in line with the IFRS and ISSB standards. This means that the sustainability reporting must provide a balanced, complete, neutral and accurate picture, and not just be a "compliance exercise".

One of the most fundamental changes in ESRS 2 is the change of "Minimum Disclosure Requirements (MDRs)" to "General Disclosure Requirements (GDRs)". This is more than just a name change; it emphasizes that these requirements constitute the very reference point for required reporting, with the aim of reducing duplication across the standards and promoting more concise and relevant information.

Key changes in specific data points in ESRS 2

BP-1: Basis for preparation of the sustainability statement

This data point has been significantly simplified. It replaces several previous data points and now primarily requires the company to state when certain principles in ESRS 1 have been applied, and when there is a deviating application of the general requirements (e.g. time horizons or changes in preparation/presentation).

The requirement to confirm that the scope of consolidation is the same as for the financial statements, or to declare that it is not required, is now streamlined and included in the new paragraph 4(a).

Previously detailed requirements related to deviations from defined time horizons have been deleted and replaced with a general statement in BP-1 paragraph 5. This emphasizes the more principle-based approach.

GOV-1: The role of the administrative, management and supervisory bodies with regard to sustainability themes

The revision has consolidated previous data points, including those related to GOV-2, into a more compact format that reduces the level of detail.

The data point on the Board's gender diversity is maintained, but the calculation methodology has been moved to "Application Requirements" (ARs).

The data point that required a list of material IROs addressed by governing bodies has been deleted, as it is now covered by the SBM standards and general paragraphs 9 and 10.

GOV-4: Risk management and internal controls over sustainability reporting

Previous data points on dedicated controls and procedures for managing impacts, risks and opportunities (IROs), and how they are integrated with other internal functions, have been deleted to reduce the level of detail.

SBM-1: Strategy, business model and value chain

The data point on the number of employees broken down by geographical area has been deleted, as it overlaps with information in ESRS S1 and is often already incorporated by reference.

Detailed previous points on the interests and views of stakeholders have been deleted or moved to NMIG, to streamline the content.

SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model

The content of the former SBM-3 is now divided: the part that deals with the interaction between IROs and strategy/business model is retained in SBM-3, while the list of IROs with descriptions has been moved to IRO-2. IRO-2 is now the central place to find the "result of the double materiality assessment (DMA)".

Reporting of expected financial effects can now be done with two options:

• Alternative 1 requires quantitative and qualitative information, but allows for the omission of quantitative data under certain conditions (e.g. when the effects cannot be measured separately or the uncertainty is too high). This is largely in line with IFRS reliefs.
• Alternative 2 requires qualitative information on expected financial effects, with the option to include quantitative information. This alternative has met with concerns from the ECB as it may reduce the comparability and prioritization of quantitative information.

Previously, details on risk assessment methods, such as probability, scope and prioritization, have either been deleted or changed to reduce the level of detail.

The requirement to describe how the process for identifying, assessing and managing opportunities is integrated into the company's overall management process has been deleted.

IRO-1 and IRO-2: Description of the processes for identifying and assessing material impacts, risks and opportunities / Material impacts, risks and opportunities and their interaction with strategy and business model

The relationship between the identification of material IROs and themes/sub-themes has been clarified. Companies are now given the flexibility to decide at what level they should report (at IRO, theme or sub-theme level) based on the nature of the IROs and the company's management approach, in order to avoid unnecessary detail.

IRO-2 is now the central place to find the "result of the double materiality assessment", and includes data points on changes in IROs from the previous reporting period.

A new opportunity has been introduced to categorize material IROs according to the company's management priorities, which provides more flexibility to reflect the internal management strategy and have a different level of detail for different issues.

The data point on explaining how materiality information has been determined has been deleted.

GDR-P: General Disclosure Requirement for policies

This requirement has been streamlined. Specifications concerning senior-level responsibility, public availability of policies and further information in the event that the company had not adopted a policy, have been deleted. This also applies to actions and goals.

The requirement to describe the assessment of interests from affected stakeholders is now specified and limited to social themes.

GDR-A: General Disclosure Requirement for actions

• Previous requirements to report progress for actions that were published in previous periods have been deleted.
• The requirement to quantify operating costs (OpEx) and investment costs (CapEx) related to the implementation of actions has been adapted to link financial resources to key actions. The reference to "sustainability instruments" has been removed and moved to NMIG.
• It is now specified that the company can disclose non-financial resources (e.g. man-years/FTEs) allocated to key actions, without the requirement for monetary quantification.

GDR-M: General Disclosure Requirement for metrics

• The requirement to disclose whether the measurement of metrics is validated by an external party (other than the auditor) has been deleted to reduce the amount of detail, especially considering that sustainability statements are subject to limited assurance.
• The requirement to label and define the metric with meaningful, clear and precise names and descriptions has been deleted to reduce granularity.
• Contextual information for environmental and value chain metrics has been added.

GDR-T: General Disclosure Requirement for targets

• A reference to qualitative targets has been added, which provides more flexibility and better interoperability with the ISSB standards. 34
• The requirement to disclose stakeholder involvement in target setting has been moved out of ESRS 2 and into the social standards (ESRS S1, S2, S3, S4).
• Previous data points on changes in targets and associated measurements or methods have been deleted, as they are already covered by ESRS 1 and BP-2.
• The requirement for a comprehensive table for progress reporting against targets has been deleted as it was considered redundant.

ESRS 2 as a navigation point for the entire framework

These changes underline ESRS 2's role as a central navigation point for the entire ESRS framework. Many of the general requirements related to policies, actions, targets and measurements (PATM) that were previously specific in the thematic standards (ESRS E1-E5, S1-S4, G1), have now been removed or moved to NMIG, and ESRS 2's GDRs serve as the primary reference point for this information.

This means that companies, when reporting under a thematic standard such as ESRS E1 on climate change, must apply the provisions of ESRS 2 for the PATM reporting. The thematic standards will then focus on the specific measurements and contextual aspects that are unique to the given theme. If only a sub-theme is material, the reporting must be limited to the specific sub-theme, in order to avoid unnecessary detail.

NMIG: guiding supporter

The NMIG document is now the central repository for previously mandatory guidance and illustrative examples that have been moved from the mandatory standards. EFRAG recommends that NMIG not become part of the Delegated Act itself, precisely to preserve its non-binding status and avoid additional reporting burdens. This gives companies the opportunity to adapt the guidance to their own experiences and best practices.

Conclusion

The revised ESRS 2 requirements, with their sharper focus on materiality and a more principle-based approach, represent a significant opportunity for companies to create more concise, relevant and decision-useful sustainability reports. By removing unnecessary details and promoting flexibility, EFRAG wants to make the reporting work more manageable and meaningful. 41

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This article was prepared with the help of a large language model (AI tool), Notebook LM. The information is based on the drafts from EFRAG (European Financial Reporting Advisory Group), including their [Draft] Amended ESRS Exposure Drafts, Basis for Conclusions and Log of Amendments, dated July 2025. 42

EFRAG's materials, such as these drafts, are published for comment and are intended as technical advice to the European Commission. EFRAG itself emphasizes that the information in their drafts does not constitute advice and should not replace the services of a qualified professional. 43

We encourage you to report any errors or inaccuracies you may find in this article so that we can correct them. Please note that the AI tool does not guarantee the accuracy or completeness of the information, and recommends independent verification.