A quick download on the latest ESRS draft

EFRAG, the European Financial Reporting Advisory Group that serves as the EU’s technical advisor on corporate reporting standards, has just released a draft version of the simplified European Sustainability Reporting Standards (ESRS) as part of the Corporate Sustainability Reporting Directive (CSRD) Omnibus simplification process. Senior Strategist Elana Goldstein shares a summary of the draft and some initial thoughts on the path forward.

The simplification has been dramatic:

• Mandatory datapoints cut by 61%.
• Reductions in the overall length of the standards by 55%.
• Draft standards that are shorter, clearer, and designed to be applied more straightforward.

Key changes streamline the double materiality assessment (DMA), including focusing on introducing the concept of “fair presentation” of material information, which emphasizes faithful and balanced communication over checklist compliance, alongside updated definitions and clarification of the relationship between impacts, risks, and opportunities (IROs) and reportable topics. The new process no longer requires companies to assess the full topic list when conducting a DMA, and full DMAs are no longer required annually unless significant changes have occurred.

EFRAG has also reduced the data collection burden by eliminating all voluntary datapoints, expanding “undue cost or effort” relief provisions, and permitting estimates where precise data collection would be prohibitively expensive. The intention is to help companies effectively communicate their sustainability story rather than merely complete a compliance exercise.

The revised ESRS have not yet been formally adopted, though adoption by the European Commission is expected soon. While the simplified standards offer implementation breathing room, they also require judgment calls about when to apply reliefs versus maintaining robust disclosure to meet stakeholder expectations and ensure credible risk management.

As the European Commission moves toward formal adoption, we’re already helping clients evaluate how these changes align with current reporting strategy and how it might shape that strategy going forward. Is this voluntary reporting with some compliance guardrails or is this compliance reporting with some room for storytelling? There’s a lot to sort out in the coming months and we’re happy to start having that conversation.