Introduction

On July 31, 2025, the European Financial Reporting Advisory Group (EFRAG) released a simplified version of the European Sustainability Reporting Standards (ESRS). The amendments introduce key changes to how sustainability information is defined, disclosed, and prioritized across all 12 standards.

Following its June 2025 review, the EFRAG has overhauled the ESRS to make reporting cleaner, leaner, and more decision‑useful while reducing the compliance burden on companies. The updated draft cuts 66% of datapoints, consolidating mandatory disclosures and removing many optional ones. Impact, risk, and opportunity (IRO) assessments no longer require separate inclusion in the business model. Each disclosure now comes with clearer methodologies, and double materiality remains central in both concept and practice.

In this article, we’ll walk you through what’s changed and what hasn’t, outlining how each simplified ESRS differs from its original standard - and what the changes mean to prepare for your next sustainability report.

What’s changing about the ESRS 

A key structural change in the July 2025 ESRS update is the addition of a “log of amendments” to each of the 12 standards. These logs place the original and updated text side‑by‑side, making it easy to see what has been removed, added, or revised. For companies, this offers a clear view of the changes that matter and a faster route to understanding their impact on reporting. 

Common changes across standards

The July 2025 ESRS update brings more than standard‑by‑standard changes. Several updates apply across all 12 standards, designed to remove duplication, sharpen the focus on material topics, and make requirements clearer. 

1.  Policies, actions, and targets (PATs) are streamlined into ESRS 2

Previously, climate-related, social-related, and governance-related PATs were reported twice, once in ESRS 2 (general disclosures) and again in each ESRS. The new exposure draft avoids duplication and helps companies prepare shorter and clearer reports by:

• Keeping detailed PAT disclosures in ESRS 2  only

• Using each topical ESRS to include only specific elements that are not already covered in ESRS 2

2. Companies have to report on sub-topics only if material 

Before, companies were required to report on unrelated sub-topics, making reporting redundant and less relevant. With the ESRS simplification, companies can instead centre on:

• Reporting on necessary disclosures only

• Focusing on material issues

• Avoiding unnecessary duplication

3. Mandatory vs. voluntary requirements are clearly distinguished

Before, mandatory requirements and optional guidance often appeared together, making it unclear what was required and what was voluntary. Now, they’re clearly separated by:

• Grouping all “shall” requirements under each disclosure

• Moving optional content into clearly labeled guidance sections

4. Application requirements are more detailed

Before, instructions and definitions were scattered, making them harder to follow. Now, they’re easier to use by:

• Consolidating application requirements in one place for each disclosure

• Providing clearer, step‑by‑step guidance for consistent reporting
  

5. Terminology has changed from “matters” to “topics” and “sub‑topics”

 Before, the term “matters” was used inconsistently, creating confusion. Now, the language is simpler by:

• Replacing “matters” with “topics” and “sub‑topics” throughout

• Using more intuitive wording that matches how companies structure sustainability issues
  

6. IROs are directly integrated in the business model and DMAs

Before, impacts, risks, and opportunities (IROs) were reported separately from the business model, making links harder to see. Now, they’re built in by:

• Embedding IROs into the Strategy, Business Model, and Double Materiality Assessment
  
  
• Automatically showing how key impacts, risks, and opportunities connect to the business model

Environmental standards

Changes to ESRS E1 - Climate Change 

New: Companies have to submit information about the transition plan, rather than submit the entire plan 

Previously, companies had to disclose the entire transition plan, making it a long and complex process. The latest ESRS changes mean that rules have been simplified so that companies can focus on more clear actions, such as:

• Describing key features, not submitting the whole document

• Focusing disclosure on the most important elements

• No longer needing to list every individual data point

New: GHG target disclosures are more explicit 

In the previous ESRS, companies had to report GHG targets with a base year, interim milestones, scope coverage, and 1.5°C alignment, following strict rules that set fixed timelines for updating the base year. The latest ESRS changes give companies more flexibility allowing them to focus on clearer actions, such as:

• Disclosing absolute GHG reduction targets for Scopes 1, 2, and 3 (or combined) with an explanation of coverage

• Ensuring targets are gross (no offsets counted) and explaining alignment with 1.5°C

• Providing scope coverage details and external validation if available

• Choosing when and how to update the base year based on relevance, instead of following a fixed update schedule

New: Energy reporting requires fewer granular metrics 

Prior to the updated ESRS draft, companies had to provide a detailed breakdown of renewable energy use into multiple subcategories and mandatory intensity metrics. The latest ESRS changes mean that rules have been simplified so that companies can concentrate on:

• Reporting only total energy consumption, without excessive subcategories

• Providing a basic breakdown for high climate impact sectors only

• Focusing on overall energy mix trends instead of granular line-by-line data

• Omitting the energy intensity metric, which had low comparability and disclosure rates

Changes to ESRS E2 - Pollution

New: Pollution topics have clearer definitions and boundaries 

Previously, terms like “pollution of air” and “pollution of water” were split into separate paragraphs, sometimes including hard-to-measure categories such as “indoor” pollution. 

The revised ESRS E2 now allows companies to focus reporting on:

• Combining air, water, and soil pollution into a single definition

• Conceptualizing water as including both freshwater and marine environments

• Removing “indoor” pollution to avoid confusion and measurement issues

• Distinguishing more clearly between what’s covered in ESRS E2 and other standards 

New: Pollution measurement methods are more flexible

Before, pollutant reporting referenced the EU Pollutant Release and Transfer Register (E-PRTR) thresholds and expected direct measurement where possible. This placed a heavy burden on companies. 

Now, the simplification allows companies to ease their reporting by:

• Removing E-PRTR referencing from ESRS mandatory requirements

• Choosing their own pollution measurements methodologies

• Disaggregating pollution data only when material to the company

Changes to ESRS E3 - Water

New: Water disclosures are simpler and more focused

Previously, companies had to report extensively on both water and marine resources, with detailed PTAs often duplicating information. These requirements covered everything from product design to ecological thresholds and included voluntary datapoints that weren’t always decision-useful. 

Now, the rules have been streamlined so that companies can focus on clearer actions, such as:

• Reporting only on material water-related sub-topics instead of the full water and marine scope

• Removing marine resources from E3 (now addressed under E1, E2, E4, and E5)

• Consolidating PTAs into simplified references to ESRS 2, avoiding duplication

• Keeping key location-specific datapoints i.e. high water-stress areas but dropping less decision-useful voluntary metrics i.e. intensity ratios

New: Water reporting focuses on completeness rather than total consumption metrics

Previously, water reporting focused heavily on total consumption and included optional metrics for withdrawals, discharges, and contextual information - often leading to inconsistent completeness across companies. The latest ESRS changes mean companies must now prioritize: 

• Disclosing total water consumption, withdrawals, discharges, recycled/reused water, and stored water
  

• Providing separate figures for total consumption in high water-risk areas
  

• Using cubic meters (m³) as a standard unit
  

• Focusing only on material locations, avoiding unnecessary site-by-site data

Changes to ESRS E4 - Biodiversity and Ecosystems

New: Companies have to disclose key features of their biodiversity transition plan, rather than the full strategic resilience narrative

Before the ESRS update, E4 required companies to disclose both the entire strategic resilience assessment and any biodiversity transition plan. This implied long, technical sections, often overlapping. The ESRS new exposure draft allow companies to simplify this by:

• Removing redundant disclosures

• Outlining only the key features of their biodiversity transition plan

• Avoiding duplication on the climate resilience analysis

• Aligning with the Kunming–Montreal Global Biodiversity Framework, global goals, EU strategies and planetary boundaries

Changes to ESRS E5 - Resource use and circular economy 

New: Companies have to report on resource use and circularity only if material

Previously, companies had to provide detailed policy descriptions on resource use and circular economy, including full breakdowns and separate objectives paragraphs, which lead to repetitive disclosures. The latest ESRS changes mean companies now can focus on a streamlined set of requirements by:

• Describing resource use and circular economy policies only once

• Explaining how circularity and eco‑design principles are integrated into key products and services only when applicable

• Dropping the need to list every single policy sub‑point in mandatory text to  prioritize material reporting

New:  Companies can trim down target disclosures 

Before the new ESRS version, companies had to break down targets into multiple thematic areas, specify waste hierarchy layers, and explain ecological thresholds. The latest ESRS changes mean that companies can focus on clearer, outcome‑oriented targets by:

• Disclosing targets in accordance with ESRS 2 requirements, avoiding repetition in E5

• Shifting qualitative details like circular product design or renewable sourcing from the body to the ‘guidance section’, so they remain optional context rather than mandatory datapoints

• Removing prescriptive elements such as fixed waste hierarchy alignment or mandatory ecological threshold descriptions, unless these are cross‑cutting requirements

New: Companies can exclude or combine the reporting on resource inflows 

Previously,  companies had to report inflows across products, materials, water, and equipment with detailed quantity and certification breakdowns. This often overlapped with topical standards, especially ESRS E3 (water). The latest ESRS changes mean that companies can focus on clearer disclosures by:

• Excluding water data (covered by E3) and avoiding over‑specification on methodology unless it adds value
  

• Reporting only on key materials (newly defined in Paragraph 15 (a) as “key materials used to manufacture products and provide services”) and their quantities, critical raw material percentages, recycled content, and sustainably sourced biological materials
  
  
• Combining “manufactured,” “placed on market,” and “delivered” products into one requirement, making the scope clearer for both manufacturers and retailers

New: Companies can integrate the reporting on resource outflows

Before the July 2025 ESRS changes, companies had to provide separate disclosures for products designed along circular principles, waste management strategy, durability, reparability, recycled content, and multiple waste breakdowns. The simplification aims at making this process more manageable and material by allowing companies to focus on:

• Disclosing durability, reparability, recyclable content, and recycled material use for key products together in one section.
  
  
• Reporting waste generation, diversion, disposal, and recovery types in percentages or weights, with hazardous/non‑hazardous splits - plus a new option to disclose when the final destination is unknown 

• Dropping redundant items such as mandatory hazardous waste totals or repetitive contextual paragraphs

Social standards

Changes to ESRS S1 - Own workforce

New: The definition of primary workers presents a clearer scope

Before the changes, S1 included definitions and examples which overlapped with value chain disclosures contained in S2. The updated version helps companies to avoid confusion by:

• Checking workforce mapping to ensure “own workforce” excludes value chain workers
  
  
• Reallocating supplier‑related data to S2 “Workers in the value chain”
  
  
• Using the updated S1 definitions to guide internal data collection
  
  
• Removing any duplicated workforce descriptions from S1 that belong in S2

New: Companies can streamline workforce engagement, channels for raising concerns, and remediation into one disclosure 

Previously, companies needed to report requirements on workforce engagement, channels for raising concerns, and remediation under separate disclosures, causing excessive granularity and low effectiveness in their implementation. To avoid overlapping, these requirements are now integrated into a single streamlined disclosure requirement that helps companies simplify their reporting by:

• Combining workforce engagement, grievance channels, and remedy process reporting into one section
  
  
• Highlighting how engagement feeds into remediation actions
  
  
• Referencing any grievance mechanisms in place (including whistleblowing) and how they meet effectiveness criteria
  
  
• Focusing on material engagement outcomes rather than exhaustive process details

New: Workflow metrics are more focused

Before, S1 workflow metrics contained highly granular, often voluntary datapoints, which led to reporting pressure and complexity. The updates have removed some of these datapoints, and made some others voluntary. The results allow companies focus on:

• Prioritizing the reduced set of mandatory metrics e.g., gender at top management, % collective bargaining coverage, adequate wages, core H&S indicators
  
  
• Treating moved datapoints as voluntary, use them only if they add material insight
  
  
• Streamlining HR data systems to collect only what is now required
  
  
• Aligning mandatory metrics with SFDR PAI indicators where applicable

New: ‘Significant employment’ thresholds are more inclusive and representative 

Previously, a country was considered “significant” if it had 50+ employees and those employees made up at least 10% of the total workforce. Now, a country is “significant” if it has 50+ employees and is in the top 10 countries by headcount. The updates make it easier for multinational companies with distributed workforces by:

• Updating internal thresholds to the “top 10 countries by headcount” rule
  
  
• Recalculating country‑level metrics using the new definition
  
  
• Adjusting HR data reporting templates accordingly
  
  
• Reviewing workforce segmentation to ensure compliance with the updated scope

Changes to ESRS S2 - Workforce in the value chain

New: Sub-topic definitions for value chain workers are no longer duplicated, they are instead streamlined into one

Before, ESRS S2 repeated many disclosure objectives that were already in ESRS 2. It also included sub-topics like “working conditions,” “equal treatment and opportunities,” and “other work-related rights” which were described in long, detailed lists that varied slightly from similar definitions in ESRS 1. This led to inconsistencies across the social standards. The new changes harmonize and consolidates the definitions allowing companies to bring clarity by:

• Removing duplicated disclosures on value chain workers

• Aligning terminology with ESRS S1 and ESRS 1 Appendix A, where the duplication lies before

• Reporting on value chain workers sub-topics only if material

Changes to ESRS S3 - Affected communities

New: Engagement, grievance channels, and remedy are now merged into one requirement

Previously, companies reported separately on engagement with affected communities, grievance mechanisms, and remediation processes. The July 2025 amendments consolidate these into a single disclosure, cutting repetition and aligning sequencing with the UN Guiding Principles (UNGP), simplifying compliance by:

• Combining topical disclosures with ESRS 2 general requirements to avoid duplication

• Disclosing engagement processes, grievance channels, and remedy actions together in one section

• Stating whether grievance mechanisms exist, how they are assessed for effectiveness, and whether they protect users from retaliation

Changes to ESRS S4 - Consumers and end-users

New: Engagement, grievance mechanisms, and remedy processes are merged into one disclosure

Previously, engagement with consumers (S4‑2) and grievance and remedy processes (S4‑3) were reported separately. Now, with the July 2025 update, there is a merge, disclosing only how the company engages, what channels exist for concerns, and how to remedy harms all in one streamlined section. This aligns with UNGP and OECD guidance, and allows companies to avoid repeating similar datapoints by: 

• Describing only once how you engage with consumers, representatives, or credible proxies, and how their perspectives shape your decisions

• Listing the channels for raising concerns e.g., grievance mechanisms, hotlines, third‑party processes, and confirming if a grievance mechanism exists

• Explaining how you assess the effectiveness of those channels

• Outlining your approach to remedy when you’ve caused or contributed to harm

• Reporting once where a process serves multiple functions

New: Clearer scope for some consumer unlawful use of products and services 

S4 clarifies that the unlawful use or misuse of a company’s products or services by consumers or end‑users is outside the scope of this standard. This prevents unnecessary reporting on impacts companies cannot control by focusing on clearer actions like:

• Relying only on the impacts linked to your operations, value chain, and relationships

• Excluding reporting on consumer actions that are illegal and beyond your influence
  

Governance standards

Changes to ESRS G1 - Business conduct 

New: G1 reporting requirements are cross-referenced and linked to ESRS 2

Previously, G1 repeated many governance, strategy, and risk/impact process requirements already set out in ESRS 2. The revised G1 deletes those duplications and now explicitly states that companies should follow ESRS 2 for general governance and management disclosures, applying G1 only for business conduct–specific elements. These changes helps companies prepare clearer reporting by:

• Avoiding duplication, disclosing solely in ESRS 2, not repeating in G1
  
  
• Directing G1 to ESRS 2, specifically Strategy, Business Model and Value Chain (SBM) and IRO sections for overarching requirements, following a cross-referencing process
  
  
• Focusing G1 content on the topical datapoints

New: Companies have to report on G1 sub‑topics only if material 

Before, if business conduct in general was material, companies often had to cover every sub‑topic in G1. Now, the amendment allows reporting only on the specific sub‑topics that are material rather than the entire list. This allows companies to better align with the new top‑down materiality approach by:

• Omitting sub‑topics that are not material

• Reducing the volume of narrative disclosures

New: Supplier management content is simplified and more focused

The old G1 required a granular narrative on supplier relationships and late payment policies. Now, the focus is on meaningful actions such as:

• Integrating social and environmental criteria into supplier selection and training procurement teams in sustainability, which is now a mandatory datapoint

New: Anti‑corruption and anti-bribery disclosures are consolidated and metrics are focused on essentials

Previously, detailed procedural datapoints were divided into many different requirements. Now, they are merged into one requirement covering the approach, actions taken, and training for at‑risk functions. The simplification helps companies improve their disclosures by:

• Reporting on fewer required datapoints

• Shifting to optional for disclosures related to dismissals or contract terminations

• Reducing mandatory metrics to: (1) convictions and fines, and (2) total confirmed incidents

• Disclosing functions/roles most at risk

• Including procurement team training

• Removing  future plan/timeline requirement

New: Corruption metrics are sharper and more concrete

Before, disclosures on corruption were not streamlined and, as a result, they were overloading the report. With the ESRS July 2025 update, some optional metrics are now mandatory i.e. total number and nature of confirmed incidents. This allows companies to simplify reporting by:

• Disclosing number of convictions and total fines for anti‑corruption/anti‑bribery violations

• Reporting total confirmed incidents, even if no convictions occurred

• Applying the new definitions in the ‘Application Requirements’ section to keep reporting consistent across companies

What does this mean for companies?

The July 2025 ESRS simplifications mark a decisive step toward the goal set by EFRAG in June: making sustainability reporting smarter. By removing around two‑thirds of datapoints and cutting duplication across the 12 standards, EFRAG has shifted the focus from ticking every disclosure box to concentrating on what’s truly material.

For companies still in scope under the Corporate Sustainability Reporting Directive (CSRD), the obligation to report on material impacts, risks, and opportunities remains unchanged,  but the path to compliance is now clearer and more efficient. Detailed policies, actions, and targets have been consolidated, sub-topic disclosures only required when material, and reporting burdens have been streamlined.

This shift doesn’t mean a step back in sustainability reporting. Double materiality remains central, and companies are still expected to provide transparent, high‑quality disclosures. What’s changed is the emphasis: relevance over volume, clarity over complexity. The outcome is a reporting process that serves stakeholders and strategy alike, ensuring sustainability reports become a tool for alignment and decision‑making. On November 30th 2025,  the EU Commission is set to deliver its final technical advice on the ESRS exposure draft, after the public consultation finalizes on September 29th.

If you’d like to explore your options in continuing your sustainability reporting, get in touch with our team.

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FAQs - Updated ESRS disclosure requirements and compliance 

1. Have the ESRS datapoints changed?

Yes. The July 2025 update cut around 66% of datapoints across all 12 ESRS standards. Many voluntary datapoints were removed, mandatory ones streamlined, and duplication eliminated. The focus is now on material disclosures, clearer definitions, and simpler methodologies, making reports shorter and more decisions‑useful without losing the core transparency required under ESRS.

2. What are the main simplifications under ESRS?

Key changes include consolidating policies, actions, and targets into ESRS 2, requiring sub‑topic reporting only when material, removing repetitive and low‑value datapoints, and streamlining complex metrics like GHG targets or energy use. This reduces compliance effort, aligns with global standards, and ensures disclosures are more relevant, clear, and easier for companies to prepare and stakeholders to understand.

3. Does my company still need to report under CSRD?

Yes, if your company is in scope of the CSRD, you must still report under it. The simplifications in ESRS don’t change CSRD’s legal requirements, they just make it easier to comply. The focus remains on reporting material impacts, risks, and opportunities in line with double materiality, using the updated ESRS framework.

4. Is double materiality still required under the simplified version of ESRS?

Yes. Double materiality, assessing both how sustainability issues impact the company and how the company impacts people and the environment remains a core ESRS principle. The simplifications don’t remove this requirement. Instead, they help companies identify and disclose only the most relevant material topics, making the assessment process more efficient without weakening its rigor.

5. Can I report on ESRS, without CSRD?

Yes. Companies not in scope for CSRD can still voluntarily use ESRS for sustainability reporting. This can help align with EU best practices, prepare for future regulatory requirements, and meet stakeholder expectations. However, without CSRD obligations, you’re free to tailor the level of detail and scope to your own strategy and audience needs.

6. Where can I find the ESRS updates?

The latest updates are in EFRAG’s July 2025 exposure drafts, each with a “log of amendments” showing changes side‑by‑side with the original text. These are available on EFRAG’s website and cover all 12 standards. They highlight what’s been removed, added, or revised, helping companies quickly see which changes affect their reporting.