ESRS: EFRAG presents its initial proposals for amendments to the standards

Following on from the omnibus, revising the ESRS

The European Commission has announced its intention to revise the ESRS to make them more accessible and less burdensome for companies. This initiative follows the so-called "omnibus" proposals, presented on 26 February 2025, aimed at modifying CSRD reporting and the CS3D Directive. EFRAG has been asked by the European executive to provide technical advice on this matter.

This summer: a consultation on the revised ESRS

Following an initial phase of consultation with more than 820 stakeholders - online and through working sessions involving around 600 companies - and reflection on the main simplification levers to be used, EFRAG is currently drafting a preliminary version of the revised ESRS. It will be put out to public consultation between the last week of July and the first week of September (between 40 and 45 days maximum).

Reduce the number of data points

The main objectives of this revision are to reduce the number of mandatory data points (particularly narrative data points), to simplify the structure and presentation of the standards and to strengthen interoperability with global sustainability reporting standards (IFRS S1 and S2 or GRI, for example).

Simplifying dual materiality analysis (DMA)

Too much time spent on identifying material subjects

The first important issue is the assessment of double materiality, the presentation of which should be reviewed in the revised ESRS. The analysis of double materiality has been identified as a significant source of administrative burden involving a disproportionate effort on the part of companies that have engaged in a compliance exercise rather than a strategic analysis, with "particularly intense" work carried out on the materiality of the subjects to be identified in accordance with the ESRS.

Reducing the complexity of DMA

To remedy this, the amendments proposed by EFRAG are mainly aimed at:

• Reduce the overall complexity of the process by: clarifying the interaction between the identification of impacts, risks and opportunities (IROs) and the analysis of material issues (and sub-issues), and by specifying the expected level of granularity of sustainability reporting (at the level of an issue and not an IRO).

• Clarify and strengthen the criteria for filtering the materiality of information for all data points (including those in ESRS 2).

• Ensure the following principle: when only one sub-game is material, the company does not have to declare all the data points contained in a thematic standard (ESRS E1, for example). An appendix will illustrate this principle.

• Specify how a company can include information on non-material issues in its CSRD reporting.

Making CSRD reports easier to read and present

ESRS reporting too granular

ESRS sustainability reports were often perceived as too granular, mixing critical information with excessively detailed data points. Companies reportedly found it difficult to "tell" their sustainability story clearly. Reporting was therefore seen as a compliance process.

Provide an executive summary at the beginning of the CSRD report

To address this, EFRAG's proposed changes include:

• The option of having an 'executive summary' at the beginning of the ESRS sustainability statement to address the main material issues and their interaction with key aspects of the company's strategy and governance.

• The possibility of disclosing more granular information (such as metrics) in dedicated sections or appendices.

• The presentation of information on non-material issues in dedicated sections or appendices.

Reducing the number of ESRS data points

EFRAG is tasked with proposing a substantial reduction in data points to achieve more concise and efficient reporting. To this end, the Advisory Group proposes in particular:

• To organise the presentation of the minimum publication requirements (MDR) differently between the ESRS 2 and the thematic ESRSs.

• Drastically reduce the specifications for mandatory policies, actions and target objectives (PATs) in the thematic standards.

• Clarify that TAPs should only be reported if they are already in place within the company on a material issue and that a policy covering different material issues should only be described once throughout the report.

• Change the general structure of the standards to clearly separate mandatory and non-mandatory content, and reduce voluntary publication requirements within the ESRS.

• Make narrative data points less granular and delete those that are not necessary.

Next steps in the ESRS review

After taking into account the comments received on its preliminary draft submitted for consultation this summer, EFRAG will draw up its official draft revision of the ESRS. It will be submitted to the European Commission by 31 October. The European executive will then formally adopt the revised standards. The European Commission services will be free to make changes to EFRAG's draft.

The co-legislators will then have 2 months to oppose the text proposed by the European Commission. The new standards will not be available until early 2026 at the earliest.