Final ESRS drafts: An overview of the changes to ESRS 1

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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 process to date and the general measures to simplify the standards. The following focuses on the central changes of ESRS 1.

The central innovations of the Draft Simplified ESRS 1 include adjustments to the transitional provisions (phase-in options) as well as changes to the requirements for double materiality analysis, the value chain and, in general, for the collection and disclosure of key figures.

Overarching innovations in the structuring of the standards

The “simplified Draft” versions of the ESRS introduce a significant streamlining and standardization of the structure and writing style of the standard. Mandatory disclosures (“shall” disclosures) are now anchored directly in the main text, while methodological information and voluntary disclosures (“may” disclosures) are summarized in the Application Requirements (AR), which are presented in boxes directly below the respective Disclosure Requirements. This close integration of the mandatory disclosures with the associated ARs increases the user-friendliness of the standard. Many previously optional “may” formulations have also been removed. As a result of these changes, the binding information is now more clearly defined, while a certain degree of flexibility in the presentation is still retained.

Fair Presentation as a central principle

With the “simplified Draft” versions, the principle of Fair Presentation is expressly emphasized. A “Fair Presentation” according to ESRS 1 requires the disclosure of relevant information about the company’s material impacts, risks and opportunities and their truthful presentation. In order to achieve a truthful presentation, the company must provide a complete, neutral and correct representation of its material impacts, risks and opportunities. This includes the provision of comparable, verifiable and understandable information as well as the addition of company-specific information if the application of the ESRS alone is not sufficient to ensure a comprehensive understanding of the material aspects.

In practice, this could lead to companies focusing their reporting more on completeness and comprehensibility. It may be necessary to provide supplementary, company-specific information in order to convey the most realistic picture possible of the material sustainability aspects. At the same time, the information should be prepared in a neutral and verifiable manner in order to meet the requirements of the Fair Presentation principle.

Simplification of the materiality analysis

The process of double materiality analysis has been further simplified in the course of the Simplified ESRS Drafts. Companies can now use a “top-down” approach to identify selected topics as material or immaterial without a detailed assessment process. In addition, the list of sub-topics to be considered as mandatory in the context of the materiality analysis has been shortened and the requirement for the methodology has been specified. More detailed information and practical advice can be found in the article “Overview of adjustments to the double materiality analysis” .

Practical guidelines for determining the scope of reporting

In the “simplified Draft” version, the boundaries of reporting are defined more clearly and a more precise distinction is made between the company’s own business activities and the upstream and downstream value chain.

Material impacts, risks and opportunities must be extended to the relevant areas of the value chain, whereby only material information needs to be included.

The previous systematic preference for direct data for value chain key figures has been removed in order to enable more flexible and practical reporting approaches. There are supplementary regulations for special cases to ensure consistent and comprehensible reporting.

The adjustment aims to ensure that companies in practice can specifically define the scope of reporting and use pragmatic approaches for data collection, such as estimates or sector-based values. The aim is to maintain flexibility without impairing the comprehensibility and completeness of the reporting.

Broad application of the principle “without undue cost or effort”

The principle “without undue cost or effort” is to be applied on a company-specific basis and emphasizes the careful weighing of the costs for the company and the benefits of the resulting information for the users of the sustainability report. The “simplified Draft” version stipulates that companies only have to take into account information that is available without disproportionate effort or costs when collecting data and reporting. This applies in particular to the identification of material impacts, risks and opportunities, the delimitation of the value chain and the creation of key figures and reports on financial effects.

Additional transitional periods (“phase-ins”)

Additional transitional periods (“phase-ins”) for companies in the first wave (“Wave 1”), who will receive additional transitional periods to gradually adapt to the requirements. The following are particularly affected:

• Until 2026: E4 (Biodiversity & Ecosystems), S2 (Employees in the value chain), S3 (affected communities), S4 (Consumers & End users), S1-6, S1-7 for non-EEA countries and largely S1-10 to S1-14

• Until 2029: Quantitative information on substances of concern (E2-5)
• Until 2029: Expected quantitative financial effects (“anticipated financial effects”)