Proposed changes to the European Sustainability Reporting Standards

Sustainability reporting in the EU is undergoing another wave of change. On July 31, 2025, EFRAG, an independent EU standard setter, published a draft set of revised European Sustainability Reporting Standards (ESRS). The drafts are now open for consultation by the public until the end of September.

These new drafts are part of the EU’s efforts to simplify and streamline the Corporate Sustainability Reporting Directive (CSRD). They complement, but are distinct from, the proposed legislative amendments to the CSRD itself (often referred to as the "Omnibus proposal"). While the CSRD defines who must report and when, the ESRS defines what those companies must report. EFRAG’s new drafts focus on making the "what" more practical, more focused, and less burdensome to apply.

EFRAG will consider feedback before submitting a final set of revised standards to the European Commission by November 30. But the drafts are already a strong signal of where EU sustainability reporting is heading—and what companies can start preparing for now.

Proposal overview

EFRAG’s proposed changes are focused on simplifying the ESRS standards and making reporting more decision-useful and proportionate. The proposals are the result of a formal mandate from the European Commission, issued in March 2025, which asked EFRAG to revise the first set of ESRS to reduce the number of mandatory datapoints, preserve the quantitative core of reporting, and improve the clarity of the standards overall.

Alongside the reduction in the number of mandatory datapoints, the proposals center on six main “levers” of change:

Simplification of the double materiality assessment
Better readability, conciseness, and connectivity with broader financial and strategic reporting
Better relationships between general and topical disclosures (such as climate or biodiversity)
Improved clarity and accessibility of the standards
Introduction of other burden-reduction efforts
Enhanced operability with the ISSB standards

The revised standards remain rooted in the CSRD’s foundational principles, especially double materiality, while aiming to give companies more practical tools and flexibility to report effectively. While these ESRS revisions are separate from the Omnibus negotiations on the scope of CSRD, the two tracks are closely linked.

A closer look at the key changes

EFRAG has significantly cut the number of datapoints that companies must report.

Across all standards, the number of mandatory datapoints has been reduced by 57%. The total number of datapoints (including voluntary datapoints) has been reduced by 68%, from 1,357 to 433.
EFRAG has focused these cuts on qualitative disclosures, with 77% of the reduction in mandatory datapoints coming from narrative or semi-narrative disclosures.
Voluntary datapoints that may still be useful for investors have not been deleted entirely: they’ve been moved into a new Non-Mandatory Implementation Guidance (NMIG) document, which companies can choose to consult.

EFRAG has made targeted changes to streamline how companies conduct their double materiality assessments.

A new section in ESRS 1 introduces "practical considerations" for conducting a DMA, encouraging a top-down, business-model-first approach.
Rather than requiring companies to assess every disclosure topic from the ground up, EFRAG suggests beginning with sector context and peer practices to identify likely material topics.
The standard now clarifies that evidence supporting a DMA should be reasonable and proportionate, in particular in circumstances when it is obvious that a given topic is material for the sector, for peers, and/or for the business model.

EFRAG has revised the drafting of the standards to improve conciseness and usability and help companies connect their sustainability reporting more directly to broader financial and strategic disclosures.

Simplified language has been introduced across all standards, with clearer definitions and fewer duplicative terms.
Where possible, disclosures are now grouped thematically, and examples are better aligned to typical business processes.
A particular emphasis has been placed on reinforcing links between sustainability and financial performance—supporting better narrative flow between CSRD disclosures and traditional management reporting.

EFRAG has reworked the structure of the General Disclosures standard (ESRS 2) to better clarify how it relates to the topical standards (like E1 on climate).

ESRS 2 remains mandatory, but has been streamlined for fewer overlaps with topical standards.
Requirements under ESRS 2 are now clearly distinguished from those in topical standards, helping companies avoid duplication.
Examples include the clearer separation of strategy and risk management disclosures from those in topic-specific standards. There is better clarity that policies, actions and targets are only to be reported 'if you have' them.

EFRAG has made editorial improvements throughout the standards to enhance clarity and accessibility.

Complex or ambiguous wording has been revised, and mandatory and non-mandatory content has been more clearly separated.
Definitions have been harmonised across standards to reduce inconsistency.
A new glossary and acronym table is included in the draft materials to improve accessibility.

EFRAG has included additional changes to reduce burden across multiple standards, particularly in areas where implementation has proven challenging.

Key examples include clarification on when forward-looking disclosures are expected, and clearer thresholds for materiality in metrics.
The hierarchy for input to be used in value chain metrics is removed, allowing estimates where practical and reliable.
Reliefs for commercially sensitive information will be discussed at a later stage, while we wait for further clarity in the wider omnibus process.
Consolidated financial statements are now the relevant boundary for E1 climate change reporting, with an additional disclosure following an operational control approach in specific circumstances where the financial control approach is not able to provide a fair presentation of the undertaking’s overall emissions. This better aligns with the GHG Protocol.

ISSB alignment: Where things stand

EFRAG has made progress in aligning the ESRS with the ISSB’s IFRS S1 and S2 standards, particularly in areas where definitions, concepts, and language can be harmonized without undermining EU-specific principles. Key points include:

The use of “fair presentation” as a guiding concept: The ESRS are now framed as a fair presentation framework, similar to the ISSB, to encourage meaningful, principle-based reporting and reduce box-ticking.
Appendix 7 in the Basis for Conclusions lists changes made to align terminology with the ISSB.
EFRAG is still consulting on whether to go further in aligning with the ISSB, particularly regarding quantitative disclosure of anticipated financial effects from sustainability risks and opportunities. The drafts present two options, reflecting the apparent lack of consensus on the issue in the EFRAG Sustainability Reporting Board.
In the meantime, EFRAG does propose timing reliefs for firms. For their first year of reporting, companies may omit all datapoints related to anticipated financial effects across environmental and social standards. For the second and third years, they are required to only report qualitative information about those effects, not quantitative figures.

Core differences remain, most notably the ESRS’ use of double materiality and broader stakeholder focus. But interoperability is improving.

What happens next

The exposure drafts are open for public comment until September 30, 2025. EFRAG has asked for feedback on all proposed changes, including specific questions around the DMA, narrative disclosures, and ISSB alignment.

After the consultation:

EFRAG will revise and finalise the standards in October–November 2025.
The final technical advice will be submitted to the European Commission by November 30, 2025.
The Commission is expected to adopt the revised standards in H1 2026, via a Delegated Act. The Commission does have the ability to make further changes as part of that process (EFRAG is only sending advice).

This timeline means that companies could have final confirmation of reporting requirements in the first half of 2026. However, the precise timing is also bound up in the outcomes of the wider revision of the CSRD under the Omnibus process. It’s possible that further changes to the CSRD might require further tweaks to the ESRS.

What sustainability leaders should do now

While the exposure drafts aren’t final, they are the clearest signal yet of what future ESRS reporting will look like. For most companies, the key practical takeaways are:

Expect fewer, but clearer, disclosures: Especially in narrative areas. Climate, workforce, and governance topics will remain central.
Don’t delay data work: Quantitative disclosures are more likely to remain in the final standards—and they are often the hardest to measure and verify. Start or continue building out GHG emissions data (scopes 1, 2, and 3), energy use, water use, and financial effects of climate risks.
Coordinate with finance teams: Improvements to ESRS 2 and E1 will make it easier to connect sustainability and financial reporting—but also require greater internal alignment.

As we wrote in our post-Omnibus pivot blog, clarity is coming—and uncertainty is not a reason to stand still. Focus on the datapoints most likely to remain mandatory, and build a reporting system that can flex with future changes. Integrate sustainability reporting into your executive reporting sessions, define data standards, set targets and develop strategic plans for making progress against them.

We'll continue to track developments closely and update customers as EFRAG finalizes the standards and the Commission moves toward adoption.

If you have questions or want to dig into the exposure drafts in more detail, the full set of consultation documents is available here.