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A Guide to the Revised Sustainability Reporting Standards (ESRS)

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Welcome to the first article in our series, which will dive into the most important revisions and concepts introduced in the [Draft] Amended ESRS 1 Exposure Draft, July 2025. This amendment represents a significant step toward a more streamlined and practical approach to sustainability reporting in Europe.

In March 2025, the European Financial Reporting Advisory Group (EFRAG) was mandated by the European Commission to provide advice on simplifying the European Sustainability Reporting Standards (ESRS), with a deadline set for the end of November 2025. This work resulted in the release of 12 draft revised ESRS (Amended ESRS Exposure Drafts) for public consultation on July 31, 2025, with a comment deadline of September 29, 2025.

Background and overarching goals of the simplification

The revision of the ESRS was initiated following the European Commission's "Omnibus" proposal, with a clear goal of substantially reducing the number of mandatory data points. The overarching goals of the simplification included:

  • Reducing the reporting burden: Eliminating data points that were considered least important and prioritizing quantitative data over narrative text.
  • Clarifying the distinction between mandatory and voluntary data points: Providing increased clarity and consistency to previously unclear requirements.
  • Providing a clearer description of the materiality principle: Ensuring that companies only report material information.
  • Enhanced interoperability: Increasing harmonization with global sustainability reporting standards, especially the International Sustainability Standards Board (ISSB) standards (IFRS S1 and S2), to avoid double reporting for companies operating in multiple jurisdictions. And improving alignment with other EU legislation.
  • Simplified structure and presentation: Streamlining the standards' structure and presentation to make them easier to read and understand.

Key Changes and Simplifications

EFRAG has implemented several important changes to achieve these goals:

  • Elimination of voluntary disclosures: The category of "voluntary disclosure" has been completely removed, as it was often misunderstood as a checklist rather than an encouragement of good practice.
  • Clearer distinction between mandatory and non-mandatory content: The revised structure presents all "shall disclose/include/report/describe/explain" requirements in the main body of the standard.
    • "Application Requirements" (ARs) provide mandatory methodological guidance in separate boxes.
    • Non-mandatory illustrative guidance (NMIG) has been moved to a separate document, which EFRAG recommends not be included in the delegated act.
  • Focus on "Fair Presentation": Greater emphasis has been placed on the ESRS as a framework for fair presentation, a key concept in the ISSB and other reporting frameworks. This is intended to reduce the risk of over-reporting and promote a more principle-based approach.
  • Double Materiality Assessment (DMA): New "practical considerations" for DMA have been introduced, with a "top-down" approach that starts with an analysis of the business model to identify the most obvious topics. DMA is the starting point for sustainability reporting under the ESRS.
  • Simplified terminology: "Sub-subtopics" have been eliminated, and the term "matter" has been replaced with "topic" or "sub-topic" to simplify the content.
  • Clarity on Policies, Actions, Targets (PATs): It has been clarified that PATs should only be reported "if a company has them." There is no longer a requirement to disclose reasons for a lack of PATs or plans to implement them.
  • Adjustment of reporting boundaries for greenhouse gas emissions: The organizational boundary for GHG emissions has now been adjusted to align with the financial control (consolidation) boundary in the GHG Protocol, which supports a better connection to financial reports.
  • Leasing: For leased assets, it has been clarified that the party causing the impact reports it (e.g., the lessee in their own operations, the lessor in their downstream value chain).

Overall reductions in data points

  • Total mandatory ("shall") data points (excluding MDR/GDR): Reduced from 803 to 347, a decrease of 56.8%.
  • Total voluntary ("may") data points: All 270 data points have been deleted, a 100% reduction.
  • Total number of data points (excluding MDR/GDR, both mandatory and voluntary): Reduced from 1,073 to 347, an overall reduction of 67.7%.

Reduction per individual ESRS standard (Total data points)

  • ESRS 2 (General Disclosures):
    • 49% reduction in data points.
    • Originally: 92 mandatory and 12 voluntary data points.
    • After reduction: 40 mandatory and 0 voluntary data points.
  • ESRS E1 (Climate Change):
    • 53% reduction in data points.
    • Originally: 96 mandatory and 15 voluntary data points.
    • After reduction: 45 mandatory and 0 voluntary data points.
  • ESRS E2 (Pollution):
    • 70.3% reduction in data points (calculated from a total of 64 to 19).
    • Originally: 44 mandatory and 20 voluntary data points.
    • After reduction: 19 mandatory and 0 voluntary data points.
  • ESRS E3 (Water and Marine Resources):
    • 68.9% reduction in data points (calculated from a total of 58 to 18).
    • Originally: 40 mandatory and 18 voluntary data points.
    • After reduction: 18 mandatory and 0 voluntary data points.
  • ESRS E4 (Biodiversity and Ecosystems):
    • 78% reduction in data points.
    • Originally: 45 mandatory and 65 voluntary data points.
    • After reduction: 10 mandatory and 0 voluntary data points.
  • ESRS E5 (Resource Use and Circular Economy):
    • 68% reduction in data points (calculated from a total of 75 to 24).
    • Originally: 56 mandatory and 19 voluntary data points.
    • After reduction: 24 mandatory and 0 voluntary data points.
  • ESRS S1 (Own Workforce):
    • 53% reduction in data points.
    • Originally: 172 mandatory and 55 voluntary data points.
    • After reduction: 72 mandatory and 0 voluntary data points.
  • ESRS S2 (Workers in the Value Chain):
    • 60% reduction in data points.
    • Originally: 67 mandatory and 18 voluntary data points.
    • After reduction: 27 mandatory and 0 voluntary data points.
  • ESRS S3 (Affected Communities):
    • 62% reduction in data points.
    • Originally: 65 mandatory and 18 voluntary data points.
    • After reduction: 25 mandatory and 0 voluntary data points.
  • ESRS S4 (Consumers and End-users):
    • 64% reduction in data points.
    • Originally: 68 mandatory and 19 voluntary data points.
    • After reduction: 25 mandatory and 0 voluntary data points.
  • ESRS G1 (Business Conduct):
    • 50% reduction in data points.
    • Originally: 38 mandatory and 11 voluntary data points.
    • After reduction: 19 mandatory and 0 voluntary data points.

Reduction in General Disclosure Requirements (GDR) Data Points in ESRS 2

  • If policies, actions, or targets are adopted: The total number of GDR data points is reduced from 35 to 26, a 26% reduction.
  • If no policies, actions, or targets are adopted: The total number of GDR data points is reduced from 15 to 6, a 60% reduction.

This comprehensive reduction is a result of EFRAG streamlining the standards' architecture, simplifying narrative reporting, and removing unnecessary duplications. All voluntary disclosures have now been either removed, rephrased as guidance in the Application Requirements (AR), or moved to non-binding guidance documents (NMIG).

The importance of a clear and structured approach

Despite these simplifications, the ESRS still emphasizes the importance of clear, concise, and understandable reporting. The goal is to avoid generic "boilerplate" information and unnecessary duplication to ensure that reporting is as relevant and decision-useful as possible. The ability to connect information in the sustainability report with other corporate reporting, including financial reports, remains a central requirement.

Conclusion

The revised ESRS, presented in the July 2025 draft, is an effort to make sustainability reporting more effective, user-friendly, and relevant. By reducing complexity, increasing clarity, and improving interoperability, EFRAG seeks to make it easier for companies to tell their sustainability story and strategy for the future.

Follow this blog series to dive deeper into the specific changes and understand how your organization can best adapt to the new landscape.