Revision of the ESRS: EFRAG presents first progress report

published on 25 June 2025 | reading time approx. 4 minutes

The European Financial Reporting Advisory Group (EFRAG) has submitted a first Progress Report to the European Commission on the revision of the European Sustainability Reporting Standards (ESRS). The report outlines the current status of the revision process, which aims at a significant simplification of the standards and a reduction of reporting requirements. Key areas of focus include the simplification of the materiality assessment, the reduction of narrative disclosures, structural clarifications, enhanced interoperability with international standards, and targeted reliefs for complex reporting requirements. The number of mandatory datapoints is expected to be reduced by more than 50 %. A first draft is scheduled to enter public consultation at the end of July.

Revision of the ESRS: Progress Report outlines concrete measures to reduce reporting requirements

With the publication of the Omnibus-I proposal on 26 February 2025, the European Commission announced its intention to revise the European Sustainability Reporting Standards (ESRS) through a delegated act. The objective of this initiative is to streamline sustainability reporting requirements, enhance the practical applicability of the standards, and at the same time ensure alignment with the political goals of the European Green Deal and interoperability with international frameworks, in particular the ISSB Standards.

A key objective of the revision is the significant reduction of mandatory datapoints. EFRAG has announced that all “shall” requirements will be systematically reviewed. In addition to deleting individual datapoints, a substantial number of requirements are expected to be reclassified as voluntary or transferred to non-binding guidance.

Narrative disclosures in particular—previously criticised as overly detailed and of limited usefulness—are to be significantly reduced. EFRAG plans to streamline the related content in ESRS 2 and the topical standards and focus more strongly on core messages and principles. These measures are intended not only to reduce the burden for reporting entities, but also to improve the quality and comparability of sustainability reporting. EFRAG currently expects that more than 50% of mandatory datapoints can be eliminated, reclassified as voluntary, or shifted to guidance.

EFRAG has been mandated to submit a final draft of the revised ESRS to the European Commission by 31 October 2025. The Progress Report submitted on 20 June 2025 outlines the planned next steps and identifies six key levers for simplifying the standards, in addition to the datapoint reductions mentioned above.

Die EFRAG wurde beauftragt, bis zum 31. Oktober 2025 einen finalen Vorschlag der überarbeiteten ESRS vorzulegen. Der dazu am 20. Juni 2025 an die Europäische Kommission übermittelte Fortschrittsbericht konkretisiert das weitere Vorgehen und benennt neben den oben genannten Punkten sechs zentrale Hebel zur Vereinfachung der Standards.

Six levers for simplification

Lever 1: Simplification of the Double Materiality Assessment (DMA)

First, EFRAG is planning a revision of the provisions relating to the Double Materiality Assessment (DMA), as its implementation has proven to be a significant burden in practice. The objective is to reduce the complexity of the process and eliminate unnecessary scoring exercises. The determination of material topics should be more strongly guided by the business model (a top-down approach), with proportionate expectations for supporting evidence—particularly where a topic is obviously material for the sector, peers, or the business model. A detailed assessment of all potential topics, often carried out using the list in ESRS 1 AR16, is no longer to be required.

Furthermore, it will be explicitly clarified that the materiality of a single sub-topic does not trigger reporting on all datapoints within the corresponding topical standard. A non-binding appendix is expected to provide guidance in this regard. In addition, the concept of "fair presentation" is to be reinforced, to help align sustainability reports with the principles of relevance and faithful representation while avoiding excessive compliance burdens.

Although the relief effect cannot be precisely quantified, EFRAG expects that the proposed changes will significantly simplify the DMA and support a more focused sustainability reporting process.

Lever 2: Better readability and conciseness of the sustainability statements and better inclusion in corporate reporting as a whole

Secondly, the readability and integration of the sustainability statement into corporate reporting shall be improved. In many cases, ESRS sustainability reports have been perceived as overly granular and lacking a clear strategic narrative. To address this, EFRAG intends to clarify existing flexibilities within the standards. These include the option to provide an executive summary, the possibility to relocate detailed information—such as EU Taxonomy disclosures—to dedicated annexes, and the avoidance of redundant or fragmented content.

It will also be clarified that information need not be disclosed more than once and that the order of disclosures is not rigidly prescribed. These clarifications are expected to reduce reporting burdens and give undertakings more room to communicate their material sustainability topics in a coherent and accessible manner.

Lever 3: Critical modification of the relationship between Minimum Disclosure Requirements (MDRs) and topical specifications

Third, EFRAG is planning a critical revision of the relationship between the Minimum Disclosure Requirements (MDRs), currently embedded in ESRS 2, and the topical standards. In order to avoid duplication and reduce the overall volume of disclosures, only selected datapoints related to policies, actions and targets (PATs) shall remain mandatory. These disclosures shall only apply where such PATs exist in the undertaking and relate to material topics. Furthermore, it is clarified that the materiality of a sub-topic does not automatically trigger the disclosure of all datapoints under the corresponding topical standard. Key overlaps between ESRS 2 and the topical standards – for example on governance, strategy or IRO-1 – shall also be addressed. Overall, the number of mandatory PAT-related datapoints is to be reduced to the essential minimum, and excessive granularity is to be avoided.

Lever 4: Improved understandability, clarity and accessibility of the standards

Fourth, the structure of the standards is to be revised in order to clearly differentiate between mandatory and voluntary content. The currently sometimes ambiguous “may disclose” datapoints shall either be explicitly identified as non-binding or largely removed. The objective is to enhance readability, reduce audit efforts and ensure a clear distinction between regulatory requirements and additional recommendations.

Lever 5: Introduction of other suggested burden-reduction reliefs

Fifth, the EFRAG proposes a number of targeted burden-reduction reliefs, for example regarding data availability in the value chain, the definition of the consolidation perimeter for GHG emissions, the treatment of acquisition-related changes, and the handling of sensitive information. These measures are intended to facilitate the first-time application of the ESRS, particularly for SMEs and mid-sized listed companies.

Lever 6: Enhanced interoperability

Sixth, the interoperability of the ESRS with international frameworks – in particular the IFRS Sustainability Disclosure Standards issued by the ISSB – is to be significantly strengthened. To promote comparability and reduce complexity for internationally active companies, the wording in the ESRS shall be systematically aligned with the terminology used in IFRS S1 and S2, where the content and objectives are equivalent. This mainly concerns disclosures related to governance, strategy, risk management and metrics, which are already covered in both frameworks. The aim is to create a consistent and coherent disclosure framework through closer linguistic and structural alignment.

Next steps

According to current planning, the revised draft of the ESRS is expected to be published by the end of July 2025. The public consultation is planned to run for 40 to 45 days and will likely end in early September. It will be supported by an online survey and complemented by dedicated outreach activities. A possible extension of the consultation period is currently under consideration and depends on whether the European Commission decides to adjust the current deadline for the final submission of the revised standards (31 October 2025).