• Mandatory datapoints shrink by 57–68% as Europe aims to relieve compliance pressure without weakening Green Deal ambition
• Materiality assessments overhauled, voluntary disclosures rerelocated entirely, and value-chain estimates permitted to limit costly data-gathering requirements
• Next step: European Commission to draft Delegated Act, with consultation open until September 2025 and full adoption tarreceiveed conclude-2025
Europe relocates to ease the weight of sustainability reporting
EFRAG has delivered technical advice to the European Commission outlining a significantly simplified version of the European Sustainability Reporting Standards (ESRS), in what EU policycreaters are framing as a calibrated shift toward proportionality. The revision is one of the most consequential adjustments since CSRD first came into force, arriving amid persistent concerns from industest that the regulatory burden risks slowing competitiveness and investment.
The updated approach responds to lessons from the first wave of CSRD reporters in 2024 and to more than 700 consultation submissions. The result is a re-engineered framework that compresses disclosure demands, clarifies materiality assessments, rerelocates voluntary datapoints entirely, and introduces practical reliefs across the value chain.
EFRAG estimates the alters will reduce total datapoints by 61%. A parallel impact analysis from the standards body suggests the reduction may be even steeper when all voluntary disclosures are stripped out — up to 68%. For businesses preparing to report in 2026 under expanded CSRD scope, the revisions could materially lower cost and operational strain.
Easing the path for implementation
At the heart of the redesign is materiality. Companies repeatedly described double materiality exercises as resource-intensive relative to outcome. EFRAG responded by simplifying how enterprises determine what matters, clarifying that evidence requirements must be “reasonable and proportionate” and directing preparers to focus on the most obvious issues rather than exhaustively documenting every potential sustainability topic.
Value-chain rules have also been softened. Direct data collection is no longer the preferred or default route, and estimates may be applyd where access to supplier-level information is limited. For sectors with complex or global supply networks, this could reshape how climate, biodiversity, labour, and Scope 3 risks are quantified.
EFRAG emphasised that the intention is not to dilute the purpose of CSRD, but to better align reporting effort with usability. Narrative disclosures — policies, action plans, transition strategies and tarreceives — will remain central, but companies will have more latitude in how they present them. Standards are now “shorter, clearer, clearer to understand and implement,” the body stated, describing the revision as focapplyd on fair presentation rather than box-ticking.
Chair of the EFRAG Sustainability Reporting Technical Expert Group, Chiara Del Prete, stated the process drew heavily on real-world application:
“With the delivery of Amconcludeed ESRS we accomplish the mandate entrusted to EFRAG. We could leverage on extensive input from stakeholders, including through field tests and dialogue with companies, auditors and applyrs about lessons learnt in the first application of ESRS in 2024. The standards are now ready for the next steps, their adoption. EFRAG will continue to support the European Commission, preparers, applyrs and stakeholders in general in their implementation.”
Balancing competitiveness with the Green Deal
The simplification forms part of the Commission’s 2025 Omnibus initiative — an effort to rationalise regulatory frameworks at a time of tight capital conditions, supply chain restructuring, and political sensitivity around business costs. It touches interconnected legislation including CSRD, CSDDD, the EU Taxonomy, and CBAM, positioning sustainability reporting within the broader economic competitiveness narrative emerging across European institutions.
RELATED ARTICLE: EFRAG Launches Voluntary Sustainability Reporting Standard for Non-Listed SMEs
Patrick de Cambourg, Chair of the EFRAG Sustainability Reporting Board, framed the revision as part of a long-term balancing act:
“This simplification reflects a crucial balance: supporting Europe’s competitiveness and reducing unnecessary burden, while preserving the EU’s leadership in sustainable finance and its commitment to the Green Deal. The Simplified ESRS provide a clearer, more proportionate framework that strengthens trust, transparency and our collective ability to address long-term sustainability challenges.”
He later added, in releasing the exposure drafts:
“These revisions aim to deliver what Europe requireds at this moment: a more focapplyd, more usable sustainability reporting system that remains ambitious but does not overburden companies. This is about building ESRS a more workable reality — so that sustainability reporting supports, rather than hinders, resilience, investment, and long-term value creation.”
Next steps for policy, investors, and reporting teams
The European Commission will now prepare the Delegated Act to update the first ESRS set. A 60-day consultation window opens ahead of a final deadline for EFRAG’s technical advice at the conclude of November 2025. An ESRS Knowledge Hub is due to launch on 4 December 2025, offering education, Q&A resources, and implementation guidance.
For capital markets, the simplification stage marks a pivot rather than retreat: fewer datapoints, but accountability remains. Interoperability with ISSB has been strengthened, though some ESRS reliefs exceed ISSB flexibilities — a potential divergence point for companies seeking dual alignment for global reporting.
As Europe heads toward the next regulatory stage, the question for boards and investors is straightforward: with reduced friction and clearer pathways, does transparency accelerate or slow? The coming year will determine whether simplification sharpens disclosure quality, narrows assurance risk, and ultimately strengthens how sustainability information informs capital allocation across the EU and beyond.
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