Final ESRS drafts: An overview of the changes to ESRS 2

Susbcribe to newsletter free of charge

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 achieved 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 to ESRS 2.

The revised drafts of ESRS 2 lead to a structural simplification of the general disclosure requirements. The adjustments aim to make the structure of the standard clearer and the requirements more comprehensible.

In the course of the current revision, the narrative requirements in governance and strategy have been streamlined and partially merged, while at the same time the information on the business model, value chain and stakeholder involvement has been noticeably simplified. The disclosures on policies, measures, key figures and targets have also been clearly restructured, which avoids overlaps with topic-specific standards and makes the presentation clearer. The materiality analysis within the framework of the IRO disclosures has also been reorganized: IRO ‑1 preserves the core of the DMA process description, while IRO‑2 takes up the results from SBM 3 and integrates them harmoniously.

The sustainability report must always be prepared using a “fair presentation” approach. According to ESRS 1, a “fair presentation” is given if the sustainability report is prepared on the basis of the double materiality approach and a holistic reporting approach, i.e. with the supplementary addition of company-specific topics, and all topics relevant to the company are taken into account.

Overarching innovations

The “simplified Draft” version of the ESRS introduces 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 information 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 retained.

As part of the current revision of the standards, content has been specifically added and moved. For example, in the context of the policy, measures, key figures and target information, care was taken to ensure that there were fewer overlaps with the topic standards; as a result, information on overarching human rights policies and information on the stakeholders covered must now be provided within the framework of ESRS 2. In addition, Appendix A of ESRS 2 contains an explicit mapping of the data points from other EU legislation such as SFDR, the Benchmark Regulation or CRR.

Innovations in connection with ESRS 1

ESRS 1 provides for a number of other significant changes in the course of the “simplified Draft” version, including, for example, the emphasis on the principle of “without undue cost or effort”, which aims to avoid disproportionate effort or costs in the context of reporting; as well as clarifications regarding data collection within the value chain. This article only mentions the contents of ESRS 1 that also have direct references to ESRS 2. A comprehensive review of ESRS 1 including a more detailed elaboration of the points mentioned below can be found in the Article Final ESRS drafts: An overview of the changes to ESRS 1.

Materiality analysis

Within the framework of the IRO 1 and IRO 2 disclosures, there are changes to the disclosures on the materiality analysis, which must be considered in the context of the adjustments to ESRS 1, which defines further simplifications of the materiality analysis.

More detailed information and practical advice can be found in the Article Draft Simplified ESRS: Overview of adjustments to the double materiality analysis.

Information in connection with the value chain

In ESRS 2, as in the other topic-specific standards, different disclosures are required in connection with the value chain; these are in the context of the requirements of ESRS 1 to consider. As part of the Simplified ESRS Drafts, the requirements have been clarified and streamlined: Clearer reporting boundaries are drawn, which distinguish between the company’s own business activities and the value chain. At the same time, the previous systematic preference for direct data for key figures in the value chain has been lifted in order to enable more flexible and practical reporting approaches.

Overview of content innovations

BP‑1: Simplification of the information on the general principles for the preparation of the sustainability declaration through direct – reference to ESRS 1 via the “comply or explain” principle.

BP‑2: Update of the disclosure requirements with a focus on the use of transitional arrangements (Phase‑in-Provisions). Topics that were previously in BP ‑2 were treated more broadly have largely been moved to other locations, making the standard more compact and avoiding duplication; some points have also been removed.

GOV: The number of governance disclosures has been reduced from five to four by combining GOV‑1 and GOV‑2. In addition, the narrative requirements within the framework of the GOV information are now less detailed.

SBM: Reduction of the details to be disclosed on the business model and value chain (SBM-1) and stakeholder engagement (SBM-2). The disclosure requirements on material impacts, risks and opportunities and their interaction with strategy and business model (SBM-3) remain comprehensive and have only been slightly shortened in terms of content. However, the information in the course of the resilience analysis is now limited to qualitative information on the risks addressed. The requirements for the description of the methodology of the materiality analysis carried out have been specified.

IRO: The requirements regarding the level at which the materiality analysis is to be carried out, e.g. with regard to the inclusion of geographical locations and specific environmental and social issues to be taken into account, have been clarified. The requirements for the description of the methodology of the materiality analysis carried out have also been specified. At the same time, the IRO ‑2 information expanded: Individual contents of the earlier SBM‑3 disclosure requirement, which relate to IROs as a result of the double materiality analysis, have been relocated here.

GDR to PAT: The Disclosure Requirements previously referred to as MDR information have now been renamed and simplified to General Disclosure Requirements on Policies, Actions, Metrics and Targets (GDR to PAT). In particular, overlaps with topic-specific standards have been removed. New Application Requirements (AR) also help to make the information clearer and more transparent. At the same time, however, it is clarified that PAT information should show a reference to the respective IROs in order to present the management of these. If IROs are managed at an aggregated level, a presentation can also be made at topic level.