The European Financial Reporting Advisory Group (EFRAG) has published a draft status report detailing its efforts to revise the European Sustainability Reporting Standards (ESRS). This initiative forms part of the European Union’s strategy to alleviate sustainability reporting and compliance burdens on businesses. EFRAG anticipates a data point reduction exceeding 50% in the forthcoming ESRS revision, while ensuring the core objectives of the Corporate Sustainability Reporting Directive (CSRD) remain intact.
This update follows the European Commission’s release of the Omnibus I package in late February, which aims to significantly reduce the sustainability reporting and regulatory burden on companies. The package proposes major amendments to several regulations, including the CSRD, Corporate Sustainability Due Diligence Directive (CSDDD), Taxonomy Regulation, and Carbon Border Adjustment Mechanism (CBAM).
As part of the Omnibus package, the Commission plans to revise the ESRS to substantially decrease the number of data points required by the sustainability reporting standards. EFRAG was tasked by the European Commission in June 2020 to formulate the initial ESRS, which the Commission adopted in 2023.
Following the Omnibus package release, the Commission instructed EFRAG to develop technical advice to revise the ESRS, aligning with the proposed simplification objectives. The Commission’s directive to EFRAG includes a timeline of seven months, with a new advice deadline set for 31 October 2025.
EFRAG’s update indicates that its burden reduction efforts are based on evidence from preparers who have already implemented the standards, as well as from investors and stakeholders using sustainability statements. The group noted that the ESRS currently includes “narrative data points that are too granular,” suggesting that many could be either eliminated or moved to non-binding guidance without compromising the goal of providing high-quality data focused on “core” information.
EFRAG is considering adopting a less detailed approach to narrative disclosures in areas such as policies, actions, and targets. The group aims to remove the least relevant data points, specifically those unnecessary for meeting disclosure objectives.
The update also highlights several key areas EFRAG is targeting to simplify the ESRS. These include streamlining the double materiality assessment (DMA) process, enhancing the readability and conciseness of sustainability statements, improving the clarity of the standards, and fostering interoperability between the ESRS and the IFRS sustainability standards.
Acknowledging the tight timeline for revising the ESRS, EFRAG expressed willingness to extend its consultation period if the Commission considers adjusting the October 2025 deadline. EFRAG believes a longer timeline could contribute to more secure quality management.
Looking ahead, EFRAG plans to approve the Exposure Drafts for its technical ESRS advice in July, with publication and feedback scheduled for August and September. The finalised advice is expected to be delivered to the Commission in October.
