• Mandatory datapoints shrink by 57–68% as Europe aims to relieve compliance pressure without weakening Green Deal ambition
• Materiality assessments overhauled, voluntary disclosures removed 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 targeted end-2025

Europe moves 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 policymakers 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 industry 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, removes voluntary datapoints entirely, and introduces practical reliefs across the value chain.

EFRAG estimates the changes 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 used 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 targets — will remain central, but companies will have more latitude in how they present them. Standards are now “shorter, clearer, easier to understand and implement,” the body said, describing the revision as focused on fair presentation rather than box-ticking.

Chair of the EFRAG Sustainability Reporting Technical Expert Group, Chiara Del Prete, said the process drew heavily on real-world application:
“With the delivery of Amended 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 users 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, users 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 needs at this moment: a more focused, more usable sustainability reporting system that remains ambitious but does not overburden companies. This is about making 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 end 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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