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If you're preparing for EU sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD), there’s good news. The European Sustainability Reporting Standards (ESRS) are being streamlined – significantly. In a June 2025 progress report, EFRAG outlined five key simplification levers designed to cut mandatory datapoints by more than half. The goal: make sustainability disclosures more focused, less repetitive, and easier to manage without compromising quality.

Here’s what businesses need to know – and how to prepare.

Why an ESRS overhaul now?

In early 2025, the European Commission introduced the Omnibus proposal – an initiative to simplify the Corporate Sustainability Reporting Directive (CSRD). The aim: reduce reporting complexity without watering down the EU’s core sustainability goals.

The proposal included three major changes: a narrower reporting scope, a cap on how much value chain data companies must collect from smaller suppliers, and a pause on new sector-specific standards. In short, regulators acknowledged that the original CSRD and European Sustainability Reporting Standards (ESRS) were putting too much pressure on businesses too quickly.

To make these changes actionable, the Commission turned to EFRAG – the body responsible for drafting the ESRS. On June 19th 2025, EFRAG’s Sustainability Reporting Board published a detailed progress report outlining how it will simplify the standards to ease the burden on companies while keeping them aligned with the European Green Deal.

EFRAG is expected to finalize its technical advice by 31 October 2025. The Commission aims to adopt the revised ESRS through a Delegated Act within six months of the Omnibus law coming into effect. That means the new standards could become law by mid-2026.

Big picture: fewer data points, sharper focus

One of the most significant goals of the ESRS revision is a sharp cut in required disclosures. EFRAG is targeting a 50% or more reduction in mandatory datapoints, with some areas – like the EU Taxonomy templates – slated for reductions as high as 70%.

The European Commission has been clear: reporting should focus on what’s meaningful, not on ticking boxes. That means cutting datapoints deemed low-impact, duplicative, or too granular. The aim is to spotlight core, decision-useful information while easing the compliance burden.

For companies, this could lead to shorter, clearer sustainability reports that reflect strategy and risk – not just compliance. EFRAG is reviewing every requirement in the current ESRS to determine what truly matters. Many narrative disclosures may be rewritten or dropped, and some metrics moved to voluntary guidance or removed altogether.

A key point: double materiality is here to stay. Companies will still need to report both how sustainability issues impact their business and how their activities impact people and planet. What’s changing is the process – companies will apply clearer criteria to identify what’s material, so reporting is more focused and less mechanical.

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The 5 simplification levers: how EFRAG is making ESRS easier

EFRAG’s June 2025 progress report outlines five key levers for simplifying the European Sustainability Reporting Standards (ESRS). These changes aim to reduce the burden on companies while keeping reports meaningful and aligned with the Corporate Sustainability Reporting Directive (CSRD). Here's what each lever means in practice:

Lever 1: Simplifying the double materiality assessment (DMA)

Companies will only need to report what’s truly material – nothing more.

EFRAG is replacing the current bottom-up scoring exercise with a top-down approach based on a company’s business model. This shifts the focus to what matters most, instead of turning the ESRS topic list into a mandatory checklist.

A new “information materiality” filter will apply to each datapoint – helping companies skip immaterial details across all standards, including ESRS 2. For example, if only a sub-topic is material, companies can now report just on that sub-topic without triggering all related disclosures.

EFRAG also plans to publish non-binding examples to show how disclosures tie to specific sub-topics. The goal is to avoid over-reporting and make the DMA a pragmatic, decision-useful process, not a paperwork exercise.

Lever 2: Clearer, cleaner sustainability reports

EFRAG is introducing flexibility to help companies structure sustainability statements that are easier to read and more aligned with their business.

Instead of following the ESRS like a rigid checklist, companies will be allowed to start their report with an executive summary – highlighting material topics, key metrics, strategy, and future outlook in one concise section. This makes it easier for stakeholders to understand the big picture without digging through 100+ pages.

Detailed content – like EU Taxonomy data or granular metrics – can be moved to appendices. This reduces clutter in the main narrative and helps companies prioritize what matters.

EFRAG is also clarifying that duplication is not required. Companies can avoid repeating the same content across sections and structure their reports in a way that fits how they operate – as long as required disclosures are still covered.

The goal is a shorter, clearer report that tells the company’s sustainability story effectively while staying compliant.

Lever 3: Streamlining policies, actions, and targets (PATs)

Redundant disclosures are being cut – starting with policies, actions, and targets.

Under the current structure, companies must disclose PATs in both the general ESRS 2 section and in each topical standard. EFRAG is now keeping a slimmed-down version of ESRS 2, while significantly reducing the number of required PAT datapoints in topical standards.

The new approach is also more practical: if a company doesn’t have a policy or target in place, it doesn’t need to report one. And if a single policy covers multiple topics, it only needs to be described once – not repeated in every section.

This lever alone is expected to account for a major share of the 50%+ datapoint reduction across the revised ESRS.

Lever 4: Clearer distinction between mandatory and optional content

Companies need to know what’s required – and what’s not.

EFRAG is cleaning up the structure of the standards by clearly separating mandatory requirements from non-binding guidance. All “shall” provisions will be grouped under their relevant disclosure requirement, while supporting guidance will be labeled or placed in a separate section.

The concept of “voluntary disclosures” is also being scaled back. What was intended as an encouragement for best practice often created confusion or pressure to over-report. Going forward, companies can focus on required disclosures without second-guessing whether optional suggestions are actually expected.

Lever 5: Targeted reliefs for specific reporting burdens

EFRAG is addressing common pain points with targeted fixes and international alignment.

• Acquisitions and disposals: New reliefs will clarify how to report sustainability data when a company has recently acquired or sold a business.
  
  
• Value chain reporting: Companies won’t be expected to chase ESG data from small suppliers – especially those under 1,000 employees. Instead, estimates and secondary data will be acceptable under a “reasonable effort” rule.
  
  
• Non-material activities: Businesses can exclude small, immaterial operations from certain metrics – no need to report emissions from a back-office with minimal footprint.
  
  
• Commercial sensitivity: For forward-looking targets or financial estimates that could reveal strategic information, EFRAG is exploring ways to offer flexibility.
  
  
• SFDR datapoints: Many indicators linked to the Sustainable Finance Disclosure Regulation (SFDR) were baked into ESRS. EFRAG is reviewing these and may adjust or remove those that aren’t useful for general-purpose sustainability reporting.
  
  

This lever also strengthens interoperability with ISSB’s IFRS S1 and S2 standards, helping global companies align reporting across frameworks.
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How these changes align with the CSRD Omnibus reforms

EFRAG’s ESRS simplification effort is tightly linked to the broader CSRD overhaul proposed in the EU’s Omnibus package. The two are moving in sync to reduce compliance pressure while keeping core sustainability goals intact.

Narrower scope, fewer reporters

The Omnibus proposal limits CSRD reporting to companies with over 1,000 employees and €50M turnover or €25M in assets. That shift could exclude around 80% of previously in-scope firms, including many mid-sized and listed SMEs.

For smaller companies that still want to disclose ESG data, the Commission will offer a Voluntary Sustainability Reporting Standard for SMEs (VSME). The ESRS revisions reflect this narrowed focus – streamlining requirements for the large companies that remain in scope, while aligning the value chain threshold with the 1,000-employee VSME limit.

Value chain cap and data relief

Under the Omnibus, large companies can no longer request detailed ESG data from small suppliers unless legally required. EFRAG supports this through a simpler ESRS approach: companies can use estimates or industry data where direct data is too costly or unavailable.

The old two-step model – first attempt direct data, then fall back on estimates – is being replaced. Now, if it’s not feasible to gather primary data, estimates are acceptable from the start. This helps focus reporting where impacts are most material, without burdening every tier of the supply chain.

Sector standards paused, assurance delayed

The Omnibus cancels the rollout of sector-specific ESRS, and EFRAG has dropped them from its roadmap. Instead, the core standards will be made flexible enough to apply across industries.

The EU has also hit pause on the move to reasonable assurance for sustainability data. Limited assurance remains the standard for now, with guidance on future assurance frameworks expected in 2026. While EFRAG doesn’t handle assurance directly, a clearer, leaner ESRS will naturally support more efficient audit processes.

Cutting burden, not ambition

None of these changes dilute the EU’s core climate and social goals. The aim is to make reporting simpler and more focused, especially for the largest companies with the biggest impacts. The revised ESRS will still serve key regulations like the Sustainable Finance Disclosure Regulation (SFDR) and the European Green Deal, but with less noise – and more clarity.

Timeline: when do the changes take effect?

EFRAG is moving quickly. The exposure draft of the revised ESRS is expected by the end of July 2025, followed by a public consultation through August and September. By 31 October 2025, EFRAG will finalize its technical advice and submit it to the European Commission.

What happens next depends on the EU’s legislative clock. Under the Omnibus proposal, the Commission must adopt the final ESRS via a Delegated Act within six months of the Omnibus law entering into force. If the timeline holds, the new ESRS could be in place by early or mid-2026.

What this means for companies

• Large companies originally set to report in 2025 will now start in 2027 (for FY2026). That gives them time to prepare using the simplified ESRS.
  
  
• First-wave reporters (FY2024) may transition to the revised standards for their 2025 or 2026 reporting cycles.
  
  
• Public consultation in Q3 2025 will offer a chance to give feedback and flag remaining challenges.
  
  

EFRAG has signaled it will stay responsive during this period – expect additional guidance, FAQs, and updates as the new standards take shape. For now, companies should track the draft in July and be ready to adjust plans once the final version lands.

What should companies do now?

If your company is already in scope of the Corporate Sustainability Reporting Directive (CSRD), now’s the time to stay on track – but prepare to pivot. The ESRS simplifications are designed to reduce effort, not delay action. Here’s how to get ready:

• Revisit your materiality assessment. A top-down approach will soon replace the current scoring-heavy process. Focus on identifying key impacts and skip the overengineering.
  
  
• Streamline your report structure. The revised ESRS will allow for an executive summary and appendices for technical data. Start shaping your report to highlight strategy up front, and move detailed metrics to the back.
  
  
• Look for overlaps. If you’ve been repeating the same policy information across sections, take note. The new framework will let you consolidate disclosures and focus on what’s core.
  
  
• Plan to participate in the consultation. EFRAG’s public comment window runs August–September 2025. This is your opportunity to influence the final standards and raise any blockers early.
  
  
• Track the VSME standard. If you're a smaller business – or rely on SME suppliers – the Voluntary Sustainability Reporting Standard for SMEs (VSME) could become your go-to framework. EU guidance is expected by the end of 2025.

• Monitor Omnibus progress. The reforms are still in the legislative pipeline. While major reversals are unlikely, details like scope thresholds or timing could shift. Stay updated to adjust your reporting plan accordingly.
  
  

Bottom line: the path forward is clearer, but not optional. Use this window to align early with the upcoming changes – less reporting, better focus, and fewer surprises down the line.

Bottom line

The June 2025 ESRS revisions mark a clear shift toward smarter, more focused sustainability reporting. For companies still in scope under the Corporate Sustainability Reporting Directive (CSRD), the message is simple: reporting is still mandatory – but now more manageable.

EFRAG’s proposals aim to reduce the noise, not the rigor. You’ll still be expected to report transparently on material issues – but without the excessive detail that’s bogged down early CSRD adopters. The goal is better data, not more data.

For companies outside the mandatory scope, the new VSME standard offers a lighter, voluntary way to stay engaged on ESG. It's a strategic move toward accessibility without abandoning ambition.

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

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