What the Latest ESRS Simplifications Mean for Your Company (June 2025)

The European Sustainability Reporting Standards (ESRS) are a big part of the EU’s plan to make companies more transparent about their environmental, social, and governance (ESG) impacts. These standards, required under the Corporate Sustainability Reporting Directive (CSRD), help investors, customers, and other stakeholders understand how businesses are managing sustainability risks and opportunities.

But the first version of the ESRS turned out to be quite complex, leading many companies to struggle with heavy reporting workloads. To tackle this, the European Commission kicked off a revision process aimed at simplifying the ESRS, making reporting easier while keeping the core goals intact—like supporting the European Green Deal.

On June 20, 2025, the European Financial Reporting Advisory Group (EFRAG) released an important progress report outlining the key changes they’re proposing. This blog breaks down what’s happening with the ESRS simplification, why it matters for businesses, and what you can expect in the months ahead.

Why the ESRS Are Being Revised?

The journey to simplify the European Sustainability Reporting Standards (ESRS) officially began with the European Commission’s Omnibus proposals, published on 26 February 2025. These proposals set out the plan to revise the first set of ESRS with a clear goal: make sustainability reporting less burdensome for companies while ensuring the standards still meet their key policy objectives.

To keep the process on track, the European Commission set a tight timeline. They aim to adopt the revised ESRS through a delegated act no later than six months after the Omnibus proposals come into force. This means companies can expect clearer, simpler standards soon.

The European Financial Reporting Advisory Group (EFRAG) has been tasked with a critical role in this process. As the EU’s technical advisor on sustainability reporting, EFRAG is responsible for developing the detailed revisions and providing expert recommendations to the Commission. Their work includes gathering input from thousands of stakeholders, analyzing existing sustainability statements, and drafting the revised standards.

The main objectives driving the ESRS revision are:

• Reduce unnecessary administrative burdens: Cut down on excessive data points and reporting complexity that make compliance costly and time-consuming.

• Maintain alignment with the European Green Deal and global standards: Ensure the ESRS remains consistent with broader EU sustainability goals and international frameworks like the ISSB standards.

• Clarify and streamline reporting requirements: Make the rules easier to understand and apply, while improving the quality and relevance of the disclosed information.

In short, the revision aims to make sustainability reporting more practical and focused, helping companies provide meaningful, decision-useful information without getting bogged down in paperwork.

What These Changes Mean for Companies

1. Reduction of Mandatory Datapoints

One of the headline actions is a substantial cut—targeting more than 50%—in the number of mandatory datapoints companies must report. This reduction is carefully calibrated to maintain the core objectives of the CSRD, focusing on “core” or “decision-useful” information.

• Removing less relevant datapoints: Datapoints that are deemed least important for general-purpose sustainability reporting, including some narrative and granular breakdowns, are either deleted or moved to non-binding guidance. This step avoids overwhelming companies with excessive detail that adds little stakeholder value.

• Prioritizing quantitative over narrative data: Quantitative datapoints (measurable indicators) are prioritized over narrative text because numbers tend to offer clearer, more comparable insights. At the same time, the approach to narrative disclosures is shifting from highly granular to more principle-based, focusing on key policies, actions, and targets rather than exhaustive lists.

• Clear distinction between mandatory and voluntary datapoints: The revision improves the clarity of which datapoints are compulsory and which are voluntary or recommended, reducing confusion and compliance effort. This involves separating mandatory content from non-mandatory guidance within the standards themselves.

2. Improved Clarity and Consistency

Many stakeholders found aspects of the ESRS ambiguous or overly complex. The revision aims to clarify and harmonize these issues:

• Enhanced application of the materiality principle: A major simplification involves streamlining the double materiality assessment (DMA), which identifies sustainability matters companies must report on. The updated guidance emphasizes a “top-down” approach—starting from the business model and sector context—rather than exhaustive scoring of each potential topic. This reduces unnecessary effort and helps companies focus on what truly matters strategically.

• Better alignment with other EU legislation: The revised ESRS will align more closely with related EU regulations, such as the Sustainable Finance Disclosure Regulation (SFDR), the EU Taxonomy, and the Corporate Sustainability Due Diligence Directive (CSDDD). This harmonization avoids duplication and contradictory requirements.

• Simplified structure and presentation: The ESRS standards will be reorganized to separate mandatory requirements clearly from non-binding content. This includes allowing executive summaries, appendix sections for detailed metrics, and grouping related disclosures to avoid repetition. The structure will be more user-friendly for both preparers and auditors.

3. Focus on Interoperability and Lessons Learned

• Global interoperability: The ESRS revision strengthens alignment with international frameworks, especially the ISSB’s IFRS Sustainability Standards (IFRS S1 and S2). This includes consistent terminology, reporting boundaries (e.g., adopting the consolidated financial statements perimeter for GHG emissions), and materiality concepts.

• Incorporating feedback from first ESRS application: By analyzing over 700 sustainability statements and thousands of stakeholder comments, EFRAG has identified specific pain points and practical challenges. The revision addresses these by removing redundancies, clarifying ambiguous provisions, and providing reliefs for difficult-to-report areas like value chain metrics and forward-looking financial effects.

• Burden-reduction reliefs: The revision considers relief mechanisms such as allowing partial reporting when data is unavailable, excluding non-material activities from calculations, and clarifying how to handle acquisitions and disposals in sustainability disclosures.

What This Means in Practice

• Companies will no longer need to report every datapoint exhaustively but instead focus on those that materially affect their business and stakeholders.

• Reporting will become more streamlined and readable, supporting better executive communication rather than a compliance “checklist” approach.

• Cross-cutting disclosures like policies, actions, and targets (PATs) will be aggregated where possible, and duplicated reporting across different standards reduced.

• Greater clarity on reporting boundaries and materiality will help companies confidently decide what to include without fear of underreporting.

• The interplay with other EU regulations will reduce overlap, making compliance more efficient.

Work Plan and Timeline

The simplification of the ESRS is being carried out through a structured, five-step work plan designed to ensure thorough analysis, broad stakeholder engagement, and timely delivery of revised standards. Here’s an overview of the key phases and their timelines:

1. Establishing a Vision for Simplification (April – Mid-May 2025)

EFRAG began by setting a clear vision on actionable levers for substantial simplification. This phase involved identifying the most promising ways to reduce reporting burdens based on preliminary analyses of existing sustainability statements and initial stakeholder outreach. By early May, a broadly supported set of simplification principles and strategies was agreed upon by EFRAG’s Sustainability Reporting Board (SRB).

2. Gathering Stakeholder Evidence and Feedback (April – June 2025)

This critical phase focused on collecting extensive input from a wide range of stakeholders, including preparers, investors, auditors, regulators, and civil society. More than 820 stakeholders responded to a public survey, contributing approximately 16,000 comments. In addition, EFRAG conducted 41 one-on-one interviews and 22 workshops involving around 600 companies across different industries and sizes. This evidence-gathering also included benchmarking analyses of existing ESRS sustainability statements and detailed reviews of frequently asked questions to identify pain points and clarify ambiguities.

3. Drafting and Approving Exposure Drafts (May – July 2025)

Following the evidence collection, EFRAG moved into the drafting phase, preparing Exposure Drafts that propose specific amendments to the ESRS. This work is delegated to specialized sub-groups comprising EFRAG SRB and Technical Expert Group (SR TEG) members. By mid-June, an initial draft (Version 0) was shared for internal review, followed by an updated draft (Version 1) incorporating feedback and additional details. The drafting process is expected to conclude by late July.

4. Public Consultation on Exposure Drafts (August – September 2025)

Once finalized, the Exposure Drafts will be published for public consultation. Stakeholders will have approximately 40 to 45 days to provide feedback through surveys and other channels. While some have expressed concerns about the consultation period being short and occurring during a less convenient time, EFRAG is open to extending the duration if the European Commission adjusts the October 31 deadline for delivering technical advice.

5. Finalizing and Delivering Technical Advice to the European Commission (October 2025)

The last step involves analyzing consultation feedback, finalizing the revisions, and delivering EFRAG’s technical advice to the European Commission by the mandated deadline of October 31, 2025. This advice will inform the Commission’s adoption of the revised ESRS via a delegated act.

Status Update as of 20 June 2025

EFRAG reports that progress is well aligned with the planned timeline. The first two steps—vision setting and stakeholder engagement—are complete, with robust evidence underpinning the simplification proposals. Drafting is actively underway, with drafts shared for input and ongoing discussions at board and expert group levels. EFRAG emphasizes strong collaboration among all parties despite tight deadlines and highlights the commitment to quality and transparency throughout the process.

Stakeholder Engagement and Input

A key part of the ESRS simplification process has been extensive engagement with a wide range of stakeholders. EFRAG has made it a priority to gather diverse perspectives to ensure that the revised standards are both practical and relevant to those who prepare and rely on sustainability reports.

EFRAG received valuable contributions from national standard setters in France, Germany, Spain, and Italy, as well as input from several European industry associations, including groups representing insurance, banking, asset management, and broader business interests. These organizations provided important insights drawing on their regulatory expertise and sector-specific experience.

To better understand how the current standards are applied, EFRAG conducted a thorough benchmarking analysis of around 700 sustainability statements prepared for the 2024 reporting year. This analysis highlighted common challenges and pinpointed areas where improvements were needed. Alongside this, feedback from EFRAG’s ESRS Q&A platform, collected over more than a year, helped identify provisions that users found unclear or difficult to implement.

This wide-ranging and detailed input has been invaluable, allowing EFRAG to base its simplification proposals on real-world experience and the priorities of diverse stakeholders. The result is a revision process grounded in practicality and aimed at making sustainability reporting more focused, efficient, and user-friendly.

Drafting and Approval Process

The drafting and approval of the revised ESRS are being managed through a well-organized and collaborative approach. EFRAG has established five dedicated sub-groups, each tasked with developing amendments to different parts of the standards. These groups focus both on general standards—such as ESRS 1 and ESRS 2—and on metric-specific details within the topical standards. This division of labor allows for deep technical expertise to be applied efficiently across the complex body of work.

The drafting process is iterative, with multiple rounds of review and feedback. Early drafts, referred to as Version 0, were shared with members of EFRAG’s Sustainability Reporting Board (SRB) and Sustainability Reporting Technical Expert Group (SR TEG) for detailed input. Their comments were carefully analyzed and incorporated into an updated Version 1 draft, which was then reviewed and discussed in dedicated sessions. This back-and-forth continues to ensure that the revisions are both technically sound and practically implementable.

Because of the tight timeline set by the European Commission, EFRAG has made some adjustments to its usual due process procedures. For instance, the planned public consultation on the Exposure Drafts will be shorter than typical, lasting about 40 to 45 days and scheduled during a period that some stakeholders find less than ideal. EFRAG is aware of these concerns and has expressed its willingness to extend the consultation period if the Commission agrees to modify the October 31 deadline for submitting the final technical advice. This flexibility would help enhance the quality of stakeholder input and ensure a more robust review process.

Throughout the drafting and approval stages, EFRAG remains committed to transparency, inclusiveness, and high-quality technical work—balancing the demands of regulatory deadlines with the need for comprehensive stakeholder engagement.

Challenges and Next Steps

While significant progress has been made in revising the ESRS, some challenges remain—particularly around the upcoming public consultation phase. Many stakeholders have expressed concerns about the relatively short consultation period of around 40 to 45 days and its scheduling during a time that may not be ideal for maximum participation. EFRAG recognizes these concerns and has indicated a willingness to extend the consultation if the European Commission allows flexibility with the October 31 deadline for delivering the final technical advice.

Several important discussions and decisions are still ongoing, with key meetings planned through July 2025. These sessions will focus on finalizing the detailed amendments and ensuring that all feedback and technical considerations are adequately addressed before the Exposure Drafts are published.

Looking ahead, the next major milestone is the public consultation scheduled for late July through September. Following this, EFRAG will analyze the feedback and finalize its technical advice for submission to the European Commission by the mandated deadline of October 31, 2025. This advice will play a crucial role in shaping the final form of the revised ESRS and how sustainability reporting evolves across Europe.

Despite the tight timeline and complexities, EFRAG remains committed to delivering a balanced and effective set of revised standards that reduce reporting burdens while maintaining transparency and decision-usefulness.

Conclusion

The revision of the European Sustainability Reporting Standards (ESRS) marks a significant milestone for companies and stakeholders navigating the evolving landscape of sustainability reporting. By focusing on reducing unnecessary administrative burdens, improving clarity, and aligning with global standards, the revised ESRS will make sustainability disclosures more practical, relevant, and decision-useful.

This revision process stands out for its highly collaborative and evidence-based approach. Through extensive stakeholder engagement, thorough benchmarking, and careful analysis, EFRAG has crafted proposals that reflect real-world challenges and diverse perspectives. This ensures the updated standards will better support companies in meeting their sustainability commitments while serving the needs of investors, regulators, and society at large.

As the process moves forward, companies should stay informed and engaged, as further updates and refinements are expected. Continued stakeholder involvement will be key to shaping a robust, workable sustainability reporting framework that advances transparency without overburdening businesses.

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