On 31 July 2025, EFRAG released revised Exposure Drafts proposing major changes across the European Sustainability Reporting Standards (ESRS) framework.EFRAG (formerly known as the European Financial Reporting Advisory Group) acts as a technical advisor assisting the Commission in the development of the draft ESRS. View the Amended ESRS Exposure Drafts, supporting Log of Amendments for each Exposure Draft, and supporting guidance here.
The ESRS set out the specific requirements and datapoints that companies subject to the EU’s Corporate Sustainability Reporting Directive (CSRD) need to report, and therefore the amended ESRS may have a significant impact on companies subject to the CSRD.
In February 2025, the European Commission (Commission) adopted its first sustainability Omnibus package (Omnibus), which consisted of a set of legislative proposals designed to reduce administrative burdens for companies by amending a range of existing EU sustainability frameworks.For more information on the Omnibus package of proposals, refer to this Latham blog post. The Omnibus includes proposals to amend the CSRD, which involves potential changes in relation to the CSRD scope and timing, as well as a commitment to revise and simplify the ESRS.
Following the release of the Omnibus, on 27 March 2025, the Commission formally requested EFRAG to provide technical advice to the Commission by 31 October 2025 concerning simplification (this date has since been extended to 30 November 2025 to allow further time for the public consultation of the ESRS).EFRAG has acted as a technical advisor to the Commission and was initially responsible for preparing the initial set of ESRS, which were adopted by the Commission in 2023. The number of datapoints and the level of detail required by the initial set of ESRS have previously been cited as overly burdensome and complex for preparers of sustainability disclosures under CSRD. EFRAG was set a mandate to reduce the reporting burden without undermining the interoperability of CSRD reporting with other global sustainability disclosure frameworks.
EFRAG’s Sustainability Reporting Board approved a fast track work plan and timeline on 25 April 2025, outlining stakeholder engagement, evidence gathering, and drafting of revised ESRS to meet the mandated deadline, following which it released the Exposure Drafts on 31 July 2025 for public consultation.
The Exposure Drafts propose several changes, designed to improve the usability of the ESRS. These would result in significant updates to the number of mandatory datapoints by way of several “levers of simplification”.
These levers include simplification of the Double Materiality Assessment (DMA) process, edits to achieve better readability of the sustainability statements, and enhanced interoperability (in particular with the International Sustainability Standards Board (ISSB) standards), among others. More details on certain of these levers are discussed further below.
The result of the simplification levers is that the number of mandatory datapoints that entities could have been required to disclose against in the proposed amended ESRS is reduced by approximately 57% according to EFRAG. Total datapoints (including previously voluntary items, which have now been eliminated) are said to be decreased by around 68%. Several of the Application Requirements (ARs) are shifted to non binding implementation guidance, with this process aiming to improve the focus and comparability of CSRD reports, as well as reducing the burden of the preparing process.
Crucially, the concept of double materiality (considering both impact materiality and financial materiality), which is one of the defining features of EU sustainability reporting, remains key to the preparation of sustainability statements under the proposed amended ESRS. However, the DMA method was considered by EFRAG to be “a significant source of burden” in practice, with too much focus on process rather than the outcome and a company’s strategic context. EFRAG has therefore proposed significant changes.
EFRAG intends to simplify the DMA by highlighting an approach based on a company’s business model. The revised process emphasises identification of material topics qualitatively, supported by reasonable and proportionate evidence that is available without undue cost or effort, instead of detailed scoring or exhaustive sub-topic checklists. The AR in ESRS 1, which sets out practical considerations for the DMA, details that the undertaking may adopt a “top-down” or a “bottom-up” approach to the materiality assessment. The AR provides that adopting the “top-down” approach “may be more pragmatic and reduce the complexity of the process and is expected to lead to the same outcome of the materiality assessment as the bottom-up approach”.See AR 17 for para.48(a), p. 13 ESRS 1 Exposure Draft.
The revised approach also focuses on a principles-based “fair presentation” framework (a concept from the ISSB and other reporting frameworks), based on the key quality characteristics of relevance and faithful representation.
EFRAG intends for these modifications (along with further proposed changes) to simplify the DMA process and enhance the effectiveness of the materiality of information.
EFRAG also proposes measures to enhance the readability and conciseness of sustainability statements, seeking to address concerns that the information required in sustainability statements is too granular, with “excessively detailed datapoints”. For example, entities would now have the option include an executive summary, while detailed data — such as EU Taxonomy metrics — could be moved to appendices. Redundant or overlapping disclosures are discouraged, and the reporting order is more flexible.
The Exposure Drafts also propose enhancements in the structure and readability of the ESRS themselves to help address difficulties in identifying binding and non-binding content. EFRAG proposes separating the mandatory and non-mandatory content across all ESRS, with paragraphs on mandatory guidance (ARs) relocated under the respective disclosure requirements, and non-mandatory content removed from the Exposure Drafts and moved to non-mandatory implementation guidance.
Further, new relief mechanisms are introduced to reduce burden in practical scenarios. Examples include limited reporting requirements in the event of data gaps from mergers or acquisitions, exemptions for commercially sensitive data, and allowances for estimation or reduced scope in value chain metrics. Some sector specific relief is also included, notably for financial institutions on financed emissions reporting.
Finally, the revisions intend to improve alignment and inter-operability with international Sustainability or ESG reporting standards, particularly the ISSB standards IFRS S1 and IFRS S2. These steps aim to reduce duplication for multinational companies navigating multiple frameworks.
For more information on the additional levers of simplification and proposed changes, refer to EFRAG’s Basis of Conclusions document.
In the Basis of Conclusions document, EFRAG also sets out several suggested changes that were raised during the Call for Evidence and have not been proposed in the Exposure Drafts, as they are either subject to the ongoing legislative process as part of the Omnibus that will amend the CSRD, or were ultimately rejected by EFRAG at this stage.
Notably, this includes the definition of the value chain for financial institutions and clarification of the meaning of “compatibility with 1.5 degrees” for transition plan disclosures. Both are elements of CSRD reporting that have prompted significant debate regarding their interpretation, and that remain unresolved at this stage. We expect this will form part of the focus of respondents to the consultation.
EFRAG launched the public consultation period commencing with the publication of the Exposure Drafts on 31 July 2025, running for 60 days and due to close on 29 September 2025. Feedback can be submitted to the online consultation survey. Following the public consultation, EFRAG will review feedback and finalise its technical advice for submission to the Commission by 30 November 2025.
The Commission is expected to adopt the revised ESRS via a delegated act in mid 2026, enabling companies to apply the new standards for fiscal year 2027 (with reporting in 2028).
Latham & Watkins will continue to review developments in relation to the ESRS and corporate sustainability reporting in the EU and globally.
This article was prepared with the assistance of Samantha Banfield in the London office of Latham & Watkins.