How the updated standards intend to ease your sustainability reporting journey
As part of efforts to reduce the reporting burden under the EU’s Corporate Sustainability Reporting Directive (CSRD), the European Financial Reporting Advisory Group (EFRAG) has published its plan to simplify the European Sustainability Reporting Standards (ESRS).
In its June 2025 update, EFRAG confirmed that work is progressing on schedule and that the expected changes could cut mandatory reporting requirements by more than half through the implementation of six (6) simplification levers:
What’s changing - and why it matters
Some of the most important takeaways for reporting entities include:
The DMA will follow a more top-down approach, starting from the business model to identify the most obvious material topics. The extent of unnecessary scoring will be reduced by clarifying that the expected level of evidence should be proportionate, especially when it is obvious that a given topic is material for the sector, peers and the business model.
EFRAG will clarify the treatment of mitigation, prevention and remediation actions when assessing an impact (thereby distinguishing between a gross or net approach). It will clarify how to define and report positive impacts and whether information on non-material matters can be included e.g. when requested by rating agencies.
In terms of report structure, an executive summary can be used to provide an overview of key sustainability matters, with detailed metrics and other granular information disclosed in appendices or dedicated sections.
EU Taxonomy disclosures can also be placed in separate annexes, along with additional information on non-material matters to improve focus. Fragmentation or repetition of the information on the same topic is discouraged.
Minimum Disclosure Requirements will be maintained within ESRS 2 but simplified and reduced to retain only essential ones. Those mandatory PAT datapoints within topical standards will also be drastically reduced to avoid unnecessary duplication and ambiguity.
The report can also centralise all material topics for which there are no PATs, without needing to disclose the reason.
The approach of “voluntary disclosures” is being changed to reduce these considerably to avoid being interpreted as checklists for entity-specific disclosures rather than as tools to encourage good practices among more advanced preparers.
A clear distinction between mandatory and non-mandatory requirements is being made, placing mandatory guidance directly under the relevant disclosure requirements.
Any remaining voluntary disclosures are to be clearly labelled as non-mandatory, to improve transparency for preparers and auditors.
To further ease implementation challenges, the revised standards introduce other practical measures, including:
Allowing for more pragmatism in the cases of acquisitions and disposals where information may not be readily available.
Introducing the “undue cost and effort” principle to allow flexibility in disclosing value chain metrics and other sensitive information, like IFRS S1 and S2.
Allowing the exclusion of non-material activities from metric calculations.
Proposing less prescriptive requirements for the collection of direct information from the value chain, emphasising the need to concentrate the reporting efforts where severe impacts and risks are more likely to arise.
What’s next?
EFRAG is aiming to finalise and deliver its technical advice on the revised ESRS by 31 October 2025. A revised draft will be discussed in the EFRAG SRB meeting on 2 July 2025 and approval of the Exposure Draft is planned for mid-July 2025. A public consultation will follow from late July to early September 2025.
How can we help?
Beyond supporting your existing or planned sustainability initiatives, our teams can assist your organisation in meeting reporting and strategic requirements. This could include support with identifying material sustainability issues, conducting carbon footprint assessments, reviewing ESG data and systems, obtaining ESG certification, delivering targeted ESG training and the assurance of such information.
In addition, we can help organisations align sustainability goals with business strategy, leverage data analytics to monitor progress, and develop effective ESG approaches. Let’s explore how to make sustainability reporting work smarter for your business—so you can focus on delivering real-world impact.
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