Draft Simplified ESRS: An overview of the changes in the environmental standards

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The final drafts of the revised European Sustainability Reporting Standards (ESRS) published on December 3, 2025, clearly show that the European Financial Reporting Advisory Group (EFRAG) has taken its task seriously and has been able to achieve a significant streamlining of the standards. The changes are extensive and lead to noticeable simplifications – 61% of the mandatory data points have been removed compared to the currently valid version of the ESRS. In our overarching article on the new ESRS drafts, you will find an overview of the overall context of the ESRS revision, the previous process, and the general measures to simplify the standards. The following focuses on the central changes to the environmental standards ESRS E1 to ESRS E5.

In general, the disclosure requirement in connection with ESRS 2 IRO-1 (description of the procedures for identifying and assessing the impacts, risks and opportunities in connection with the respective environmental topic) and the disclosure requirements for expected financial effects are eliminated in all non-climate-related environmental standards, as the corresponding information will be reported centrally in ESRS 2 in the future.

Significant changes in environmental standard E1 Climate change

Disclosure requirements for the transition plan for climate protection have been more closely aligned with the sustainability reporting standard of the International Financial Reporting Standards Foundation, IFRS S2, assumptions and dependencies have been clarified, and the focus has been placed on the essential features of the transition plan. The climate-related scenario analysis has been incorporated into the standard as a separate chapter and, with the elimination of the SBM-3 disclosures in E1, moves into the new chapter E1-2. The connection between the climate-related scenario analysis and the mandatory climate risk and resilience analysis has been clarified.

With regard to the expected financial effects of significant physical risks and transition risks as well as potential climate-related opportunities, individual disclosures are eliminated, such as the disclosure of the location of affected assets. Other requirements, such as those relating to stranded assets and potential liabilities, have been simplified. Unlike in the other environmental standards, the disclosure requirement for expected financial effects – taking into account the transitional provisions – remains explicitly as a separate data point.

The disclosures on concepts and measures have been slightly simplified, and some of the topic-related disclosures that have to be made beyond the MDR disclosures (now GDR disclosures) have been eliminated, including disclosures on energy and financial resources. The disclosure obligation for decarbonization levers remains in place.

If companies report a GHG reduction target, there is now more flexibility in the choice of the base year, while compatibility with the 1.5°C pathway is still ensured. With a view to the final report, it is interesting for companies to note that the targets and the associated reduction path no longer have to be specified in a table.

The key figures no longer require the specification of energy intensity, and the data points on biogenic CO₂ emissions have been reduced. In addition, there are significant changes with regard to greenhouse gas accounting (Scope 1, 2 and 3): While previously the operational control approach had to be used for the accounting of emissions, the financial control approach is now used. The operational control approach should only be applied if the financial control approach conveys a misrepresentation of the emissions due to specific facts and circumstances.

Significant changes in environmental standard E2 Pollution

The information on the emission of significant pollutants into air, water and soil remains a core aspect of E2 reporting. Overall, however, there is more flexibility here: The mandatory reference to the E-PRTR Regulation is eliminated (the reference to this has been moved to the application requirements), which allows companies to use their own methods to determine the “significant” pollutants. At the same time, this goes hand in hand with additional requirements for transparent and comprehensible documentation of the procedure.

New is the explicit differentiation of microplastics: Companies must disclose the quantities of primary microplastics, divided into microplastics produced or used in products and microplastics released into the environment. In addition, information on secondary microplastics is required, which is unintentionally created during the product life cycle, e.g. when larger plastic parts disintegrate in the downstream value chain. An example of this is plastic abrasion during the wear of car tires. However, this information may also be of a qualitative nature.

For (particularly) substances of very high concern, the reporting for non-chemical companies is limited to substances of very high concern (SVHC). In addition, the structure of the disclosure requirement has been changed and the key figures have been broken down more clearly. This facilitates implementation and promotes comparability, but may require adjustments in data collection and internal processes if a different presentation of the information was previously implemented.

Significant changes in environmental standard E3 Water

As the only standard, ESRS E3 was renamed as part of the revision and no longer fully covers the topic of “marine resources”. The use of marine resources (e.g. gravel or fish) will in future fall under the ESRS E5 standard, while impacts on marine biodiversity and ecosystems are to be addressed in ESRS E4. Only the use of seawater (e.g. in connection with desalination) is a relevant topic for reporting under ESRS E3.

In the draft for ESRS E3, the key figure obligations in particular have also been restructured: The focus is now on the presentation of the company’s entire water balance by requiring information on water abstraction and water discharge in addition to water consumption. Companies may have to adapt their data collection accordingly and ensure that the definitions and calculation methods are applied correctly (e.g. water consumption = water abstraction – water discharge). The key figure for water intensity is eliminated.

Also new is the more precise definition of water stress, which includes not only quantities but also the quality and accessibility of water. The standard now also contains global indicators and thresholds for assessing whether an area is under water stress. This should contribute to greater user-friendliness and comparability of the procedure.

Significant changes in environmental standard E4 Biodiversity and ecosystems

If the company already has a transition plan in the area of biodiversity and ecosystems and has already made it public, then it must be disclosed in the future.

The requirements for the disclosure of concepts have been simplified, while maintaining the requirements for the traceability of products or raw materials and for the coverage of locations in or near biologically sensitive areas. The data points on measures and targets have also been streamlined, with the information on the use of biodiversity offset measures still to be disclosed.

Key figures must still be provided in connection with the company’s material impacts on biodiversity and ecosystems. This list of key figures is now clearly defined and reduced. All location-related information is now summarized in the key figures chapter and has been significantly consolidated overall.

In the course of the restructuring, the location-related biodiversity analysis is no longer part of the IRO-1 disclosures and is therefore not a mandatory component of the double materiality analysis. The Concepts chapter (E4-2) only makes a recommendation for scenario analysis to identify risks and opportunities in the DWA, but the biodiversity analysis remains voluntary. The revised standards thus bring more structure to the previous disclosure obligations, especially with regard to the location-related information, but remain largely unchanged in content.

Significant changes in environmental standard E5 Resource use and circular economy

For resource inflows, no distinction is made between products and packaging; the focus is on all resources that flow into the company. A new definition is also provided for the term material materials. New is the obligation to disclose strategic raw materials within the material material classes. With this, the EU is directing the attention of companies to the management of financial risks in the availability of these strategic raw materials. A distinction between is only made if it is relevant for identified IROs, which eliminates another data point.

Regarding the resource outflows, the information on durability is now more practical: An industry comparison is no longer required, and qualitative information is now also explicitly . Qualitative information is also sufficient for repairability; the reference to established assessment systems has been removed. The calculation method of the recyclable share is clearly specified and must now be disclosed as a recycling rate, which is defined as the share of recyclable materials in the product in relation to the total product weight or packaging.

There were no major changes to the information on waste, but there were specifications on reuse and incineration; information on waste streams and radioactive waste remains. A data point on the percentage of waste whose final destination is unknown has been added. The disclosures according to E5 are therefore much more practical and are more strongly oriented towards the data availability of the companies.

Conclusion and outlook

The new drafts of the ESRS environmental standards contain numerous changes and in some cases bring noticeable simplifications. Some detailed disclosures – in particular additional MDR disclosures that go beyond the MDR disclosures of ESRS 2 – are eliminated. Non-climate-related IRO-1 information and information on financial effects will be reported under ESRS 2 in the future, only in E1 must these continue to be reported at this point. This reduces the scope of the individual environmental standards with regard to the deleted topic-related information, but still requires a stringent integration of the information into the overall reporting and – through the shifts in ESRS 2 – does not necessarily reduce the scope of the total data points to be reported.

The drafts are not yet final and have not been transposed into applicable law. The EU Commission will probably conduct another public consultation in 2026 and can make adjustments based on this, so companies should closely monitor the development.

Nevertheless, companies that will be subject to reporting requirements in the future should not wait with the implementation of the data collection processes until the standards have been finally published as a delegated regulation: In particular, “no-regret” data points such as GHG accounting should continue to have the highest priority.