When EFRAG (European Financial Reporting Advisory Group) delivered its proposal for revised European Sustainability Reporting Standards (ESRS) in July 2025, the goal was clear: Significant reduction in reporting burden without sacrificing core information. The result is a leaner, more focused package, where the changes in ESRS E1 (Climate Change) as the largest thematic standard are significantly reduced.

The revision of ESRS E1 alone accounts for a large proportion of the reduction:

• The number of mandatory ("shall"-) data points has been reduced by a full 53.3% (from 197 to 92).
• All 15 previously voluntary ("may"-) data points have been completely deleted.
• The total word count for the standard has been reduced by 65%.

This reduction is largely due to EFRAG having removed detailed "checklist requirements" and moved narrative elements to other parts of the framework or to non-binding guidance (NMIG).

The biggest change: From E1 to ESRS 2

The most important structural change is the simplification and centralization of disclosures on Policies, Actions, and Targets (PATs). Instead of each thematic standard (like E1) having its own detailed PAT requirements, companies must now primarily follow the general disclosure requirements (GDR-P, GDR-A, GDR-T) in ESRS 2. This creates a more principle-based and coherent reporting.

Review of the 11 key requirements in revised ESRS E1

The 11 remaining Disclosure Requirements (DRs) in ESRS E1 represent the core of climate reporting. Let's go through them one by one to see what they entail and what is new.

Disclosure Requirement E1-1 - Transition plan for climate change mitigation

This requirement is streamlined but retains its strategic focus. It shall provide insight into the company's plans to adapt strategy and business model to a low-emission society and the 1.5°C target.

• What's new?
  • Clearer language: The text has been improved to clarify that it is the information about the transition plan, and not necessarily the plan itself, that shall be reported.
  • New requirements for increased relevance: To harmonize with international standards (such as IFRS S2), a requirement has been added to report on dependencies (e.g., technological or political preconditions) on which the plan is based. This includes a qualitative assessment of how "locked-in emissions" can affect target achievement.
  • Reduced burden: The requirement to disclose whether the company was excluded from the EU's Paris-aligned Benchmarks (PAB) has been deleted, as this was considered unnecessarily burdensome.

Disclosure Requirement E1-2 - Climate-related risks and scenario analysis

This is a new, restructured requirement that focuses on how the company identifies and assesses climate risks.

• What's new?
  • Focus on method: The requirement gathers previously scattered points on IRO (Impacts, Risks, and Opportunities) and SBM (Strategy and Business Model). It now requires the company to explain the methodology used to assess exposure to physical hazards and transition events using scenario analysis. This provides a more holistic understanding of the company's risk assessment process.

Disclosure Requirement E1-3 - Resilience in relation to climate change

This requirement is about describing the robustness of the company's strategy and business model in the face of identified climate risks.

• What's new?
  • Structured for clarity: This is also a restructured requirement, now closely aligned with IFRS S2. The company shall report the results of its resilience analysis, explain uncertainties, and describe its capacity to adapt in the short, medium, and long term.

Disclosure Requirement E1-4 - Policies related to climate change

Here we see the effect of centralization to ESRS 2.

• What's new?
  • Radically simplified: The previously detailed requirements have been deleted. The requirement is now only a reference: The company shall report its climate-related policies in accordance with the general requirements in ESRS 2 GDR-P.

Disclosure Requirement E1-5 - Actions and resources in relation to climate change

This requirement has also been simplified and centralized.

• What's new?
  • Core information retained: Although the main reporting follows ESRS 2 GDR-A, a critical, climate-specific requirement has been retained: The company shall still provide quantitative figures for CapEx and OpEx (investments and operating expenses) related to climate actions. This is considered essential for assessing the credibility of the transition plan.

Disclosure Requirement E1-6 - Targets related to climate change

As for Policies and Actions, this requirement is now primarily linked to ESRS 2.

• What's new?
  • Important climate specifications: Reporting shall follow ESRS 2 GDR-T, but with some important clarifications:
    • GHG emission reduction targets shall be gross targets, meaning that the purchase of carbon credits or CO₂ removal cannot be included to achieve the target.
    • The targets shall still be compatible with the 1.5°C target, and the company must state whether the targets are science-based.

Disclosure Requirement E1-7 - Energy consumption and mix

This is a central quantitative measurement point that has been retained but simplified.

• What's new?
  • Simplification: A previous requirement to report energy intensity for sectors with high climate impact (HICS) has been deleted, as it was considered to have little decision-making utility.
  • Clarity: The requirement to report energy consumption in Mega-Watt-hours (MWh) has been retained to ensure consistent and comparable data.

Disclosure Requirement E1-8 - Gross Scopes 1, 2, 3 GHG emissions

This is the backbone of climate reporting and has largely been preserved.

• What's new?
  • Redundancy removed: The requirement to report total GHG emissions has been deleted, as this figure can easily be calculated by summing Scope 1, 2, and 3.
  • Scope 3 remains mandatory: Unlike some easements in other frameworks (such as ISSB), reporting of significant Scope 3 emissions remains mandatory in ESRS. There are no exceptions for cases where it is "impractical".

Disclosure Requirement E1-9 - GHG removals and GHG mitigation projects financed through carbon credits

This requirement has been significantly simplified to reduce the level of detail.

• What's new?
  • Less detail: Detailed requirements for disaggregation of carbon credits (e.g., by standard, region) have been removed. The company must still report on the use of CO₂ removal and carbon credits, but with a lower level of detail.

Disclosure Requirement E1-10 - Internal carbon pricing

The requirement has been retained but made more precise.

• What's new?
  • Focus on application: Reporting is now focused on explaining if and how an internal carbon price is used in decision-making (e.g., investment analyses) and what the price per ton of CO₂ is. This is now more in line with IFRS S2.

Disclosure Requirement E1-11 - Anticipated financial effects from material physical and transition risks and potential climate-related opportunities

Here we find the most significant relief, especially for companies that find quantifying climate risk methodologically challenging.

• What's new?
  • Phase-in period: Companies can omit reporting this information in the first year.
  • Qualitative focus initially: Companies can choose to provide only qualitative descriptions of the anticipated financial effects for the first three years if quantitative reporting is impractical.
  • Moved to guidance: Many of the previously detailed and technical requirements for quantification have now been moved to non-binding guidance (NMIG).

Conclusion

The revised ESRS E1 confirms that EFRAG has listened to input from the business community. By removing burdensome, duplicated, and less decision-useful data points, the goal is for companies to spend less time on a pure compliance exercise and more time on communicating the strategic core of their work on climate change, transition plans, and real emission targets. The new standard is more streamlined, strategic, and easier to navigate.

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Important information: This article was written using AI to analyze EFRAG's draft new ESRS standards (July 2025). Please remember that this is based on a draft and is not official advice. We do our best to ensure everything is correct, but always recommend consulting the original sources. Please let us know if you find any errors.