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.

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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) have been streamlined

Previously, climate-, social-, and governance-related PATs were disclosed in topical standards, with ESRS 2 providing minimal guidance on how to report them. The new exposure draft simplifies this by removing duplications between IROs and PATs. Companies can now focus on: excluding PATs reporting from Disclosure Requirements, focusing on disclosing just once when PATs repeat across more than one material IRO, and avoiding disclosures on PATs timing for adoption and decisions on both adoption and elimination.

2. Companies can report on material topics in different ways

Before, companies reported on a topic only when it related to one or more material impacts, risks, or opportunities identified through the DMA. The ESRS simplification shifts the focus toward more concise, less granular reporting. Companies can now: report information either at the topical level or the IRO level, assess which level provides the most relevant information, limit IRO-level disclosures to when they are strictly necessary, and apply this approach consistently across ESRS 2.

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, and 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 spreading out instructions and definitions across disclosure requirements and 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 no longer require additional sustainability assessments

Impacts, risks, and opportunities (IROs) remain fully integrated into the business model and DMAs. What's changed with the ESRS updates is the removal of the additional sustainability assessments that previously added complexity.

ESRS 1 makes clear that the core of the double materiality assessment is unchanged: companies must still assess impacts, risks, and opportunities, using similar methods to determine materiality. However, paragraph 48 introduces an important simplification: when an IRO is already part of the business model, no further investigation is required to include or exclude it from the sustainability statement.

Environmental standards

Changes to ESRS E1 - Climate Change

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. Now companies can focus on describing key features, not submitting the whole document, and focusing disclosure on the most important elements.

GHG target disclosures are more explicit. The latest ESRS changes give companies more flexibility allowing them to disclose absolute GHG reduction targets for Scopes 1, 2, and 3 with an explanation of coverage, ensuring targets are gross and explaining alignment with 1.5°C, providing scope coverage details and external validation if available, and choosing when and how to update the base year based on relevance.

Changes to ESRS E2 - Pollution

Pollution topics have clearer definitions and boundaries. 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, and removing "indoor" pollution to avoid confusion and measurement issues.

Changes to ESRS E3 - Water

Water disclosures are simpler and more focused. Companies can now report 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), and consolidating PTAs into simplified references to ESRS 2.

Changes to ESRS E4 - Biodiversity and Ecosystems

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. Now companies can simplify by removing redundant disclosures and outlining only the key features of their biodiversity transition plan.

Changes to ESRS E5 - Resource use and circular economy

Companies have to report on resource use and circularity only if material. The latest ESRS changes mean companies now can focus on a streamlined set of requirements: describing resource use and circular economy policies only once, and explaining how circularity and eco-design principles are integrated into key products and services only when applicable.

Social standards

Changes to ESRS S1 - Own workforce

The definition of primary workers presents a clearer scope. The updated version helps companies to avoid confusion by checking workforce mapping to ensure "own workforce" excludes value chain workers, and reallocating supplier-related data to S2.

Changes to ESRS S2 - Workforce in the value chain

Sub-topic definitions for value chain workers are no longer duplicated, they are instead streamlined into one. The new changes harmonize and consolidate the definitions allowing companies to remove duplicated disclosures on value chain workers, align terminology with ESRS S1 and ESRS 1 Appendix A, and report on value chain workers sub-topics only if material.

Changes to ESRS S3 - Affected communities

Engagement, grievance channels, and remedy are now merged into one requirement. The July 2025 amendments consolidate these into a single disclosure, cutting repetition and aligning sequencing with the UN Guiding Principles (UNGP).

Changes to ESRS S4 - Consumers and end-users

Engagement, grievance mechanisms, and remedy processes are merged into one disclosure. With the July 2025 update, companies can describe only once how they engage with consumers, list the channels for raising concerns, explain how they assess the effectiveness of those channels, and outline their approach to remedy when they've caused or contributed to harm.

Governance standards

Changes to ESRS G1 - Business conduct

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.

Companies have to report on G1 sub-topics only if material. The amendment allows reporting only on the specific sub-topics that are material rather than the entire list.

Anti-corruption and anti-bribery disclosures are consolidated and metrics are focused on essentials. Now they are merged into one requirement covering the approach, actions taken, and training for at-risk functions.

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.

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

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.

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.

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.

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

Yes. Double materiality 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.

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.