EFRAG publishes revised ESRS Exposure Drafts and launches public consultation

With the publication of the revised​ ​Exposure Drafts ​on 31 July 2025, EFRAG has launched the public consultation on the planned simplification of the European Sustainability Reporting Standards (ESRS). The revision follows a mandate from the European Commission set out in the Omnibus I proposal of February 2025.

The revision seeks to reduce reporting burdens, enhance usability, and at the same time uphold the policy objectives of the European Green Deal and maintain interoperability with international frameworks, in particular the ISSB.

The Exposure Drafts are the result of a process that began with a public consultation attracting over 800 responses. Based on this input, EFRAG issued a Pro​gres​​s Report​ in June 2025 setting out the intended simplifications in detail.

All formulations containing the terms “shall disclose”, “shall include”, “shall report”, “shall describe” and “shall explain” have been reviewed and simplified. They now appear exclusively in the main body of the standard and are identified there as mandatory datapoints.

A new feature is that, directly beneath each disclosure requirement, a framed section contains the corresponding mandatory Application Requirements (ARs). This structured presentation comprises, on the one hand, “shall consider” statements providing methodological guidance and, on the other, “may (present)” statements offering optional presentation possibilities. Compared with the previous structure, this represents a significant improvement in clarity: previously, ARs were compiled at the end of each topical standard, making their link to specific disclosure requirements not always clearly recognizable. In addition, these ARs sometimes contained mandatory content, which created legal uncertainty. Now it is immediately clear which AR relates to which specific paragraph, and mandatory disclosures are clearly separated from methodological or explanatory context.

Non-mandatory content has either been deleted, rephrased as ARs, or transferred to a separate document, which will in future be referred to as the “Non-Mandatory Illustrative Guidance” (NMIG). The legal status of the NMIG document is still to be determined – it could be published as an annex to the delegated act or issued independently. EFRAG recommends the latter, but the decision lies with the European Commission and will be taken in due course.

57% of the mandatory datapoints have been deleted, reclassified as voluntary, or transferred to the NMIG. In particular, narrative requirements have been significantly reduced. Of the voluntary disclosures, 11% have been deleted. As a result, the overall length of the standards has been reduced by 55%.

The fundamental principle of double materiality (impact materiality and financial materiality) will be retained. However, the Exposure Draft for ESRS 1 contains several clarifications in this regard. In future, companies will be able to apply either a top-down or bottom-up approach to the double materiality assessment. The top-down approach begins at the topic level – for example, based on the business model, value chain, strategic priorities, or peer analysis – and allows companies to include or exclude obviously material or non-material topics without further detailed examination. Only where materiality is unclear are additional individual analyses at the level of specific impacts, risks and opportunities (IROs) required. The bottom-up approach, by contrast, starts at this detailed level and, where necessary, aggregates into reportable topics. EFRAG emphasizes that the top-down approach is often more pragmatic in practice and leads to comparable results. The separate consideration of all time horizons (short-, medium- and long-term) as well as each individual dimension of severity (e.g. magnitude, scope, irreversibility) will no longer be mandatory – unless this is essential for assessing materiality. The previously mandatory comprehensive list of topics contained in ESRS 1 AR 16 will be converted into a non-binding orientation aid. It is also clarified that the materiality of a sub-topic does not automatically require disclosure of all content from the related topical standard.

Companies will have greater flexibility in terms of structure and layout – for example, through an optional executive summary and the option to place detailed information (e.g. on the EU Taxonomy) in annexes.

The reporting boundary for GHG emissions will in future be based on the concept of financial control in line with the GHG Protocol and ISSB. Where necessary, operational control may also be reported. Additional reliefs concern, among other things, value chain reporting, the treatment of acquisitions, and sensitive information. A new element is the inclusion of the “fair representation” principle. The proposed changes set out in the Exposure Drafts will be examined in more detail in further articles.

The public consultation runs until 29 September 2025; contributions can be submitted via the EFRAG website. The final technical advice is scheduled to be submitted to the European Commission by 30 November 2025. This will be followed by the adoption process at EU level. Substantive adjustments during the final deliberations on the delegated act remain possible.

According to the European Commission, the revision of the ESRS is to be completed by the 2027 financial year. Until the corresponding delegated act enters into force, the current version of the ESRS as of 31 July 2023 will continue to apply. In this context, on 11 July 2025 the European Com​mission issued a delegated act extending and expanding the ESRS transitional provisions​. We will, of course, continue to keep you informed about further developments and specific changes to the individual topical standards.​​​​​​​​​​