ESRS simplification of 31 July 2025: What the EFRAG proposals mean for companies

What you can expect from this article

On 31 July 2024, the European Financial Reporting Advisory Group (EFRAG) Twelve revised standards of the European Sustainability Reporting Standards (ESRS) published as a draft. The aim of this revision is to simplify the ESRS for companies, in particular by significantly reducing the number of mandatory data points. But what specific changes does the new proposal entail? Who is affected, and what happens next? Dr Steve Waitschat, an expert and consultant on sustainability reporting at the law firm Clostermann & Jasper, discussed these issues on „hsp live um 11“. In this article, we summarise the key points from this fascinating discussion and explain the implications for companies.

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Paul Liese
Paul Liese
hsp Software

Background and current status of the ESRS revision

The ESRS provide the framework for sustainability reporting under the EU’s Corporate Sustainability Reporting Directive (CSRD). Since the so-called Omnibus Package came into force in January 2024, the standards have been the focus of numerous discussions. As the original ESRS were considered by many companies to be too complex and extensive, EFRAG is now aiming, through this revision, to simplify the reporting requirements and make them more practical.

The draft of the revised ESRS was published at the end of July and is open for public consultation until 29 September 2025. Once the feedback has been analysed, the final standards are expected to be submitted to the European Commission by the end of November. Until then, companies should familiarise themselves with the changes and adapt their sustainability strategies accordingly.

An overview of the key changes

1. Significant reduction in the number of mandatory data points

One of the most significant changes is the reduction in the number of mandatory data points by around 57 per cent. Whilst the original plan was for a total of around 1,000 to 1,300 data points, the figure is now set to be just around 500. In theory, this reduction makes implementation considerably easier for companies, as fewer details are required. The length of the standards themselves has also been reduced by more than 50 per cent by moving accompanying graphics and explanatory documents to separate documents.

2. Introduction of the Non-Mandatory Illustrative Guidance (NMIG)

Voluntary disclosures, known as ‘optional’ data points, have been removed from the main standard and moved to a separate guidance document. This Non-Mandatory Illustrative Guidance (NMIG) is intended to serve as supplementary guidance, but is not mandatory. In practice, many companies are therefore likely to omit these voluntary disclosures, which further simplifies reporting requirements.

3. Focus on materiality and a top-down approach

The concept of materiality remains central, but is given greater emphasis and linked to a top-down approach. Companies are expected to explicitly analyse their business model in order to determine precisely which sustainability issues are relevant to them. This is intended to focus reporting on truly material aspects and reduce the risk of information overload. The dual materiality principle remains in place, distinguishing between impacts on the company and the company’s impacts on the environment and society.

4. Option to include an executive summary

A new feature is the optional inclusion of an executive summary in continuous text format, which can be placed before the actual data points. This makes it easier for readers to get to grips with the report and provides a clear summary of key topics such as climate targets or top risks. Previously, whilst such a summary was possible, it was not explicitly provided for in the standard.

5. Harmonisation and renaming of the minimum requirements

The former Minimum Disclosure Requirements (MDR) have been renamed General Disclosure Requirements (GDR) and limited to essential mandatory information. Overlaps with subject-specific standards have been reduced, making the structure of the reports clearer and more straightforward.

6. Extended transition periods for smaller businesses

For companies with fewer than 750 employees, extended transition periods have been introduced, for example regarding the reporting of certain data points such as Scope 3 emissions. However, there is a slight inconsistency here compared with the Omnibus Package, which in some cases specifies a threshold of 1,000 employees. This is an issue that is likely to be discussed further.

A closer look at the EFRAG proposals: Dr Steve Waitschat on the revised ESRS

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Practical implications and recommendations for businesses

The simplification of the ESRS is intended to ease the burden on companies whilst improving the quality of sustainability reporting. Nevertheless, this is no time to wait and see: the reporting requirements are already enshrined in EU law and are due to be transposed into national law by the end of 2025. This is a timeframe that expert Dr Steve Waitschat considers realistic. Companies that have so far hesitated should urgently familiarise themselves with the new requirements.

Key recommendations include:

  • Addressing the changes to the standards at an early stage: The consultation period, which runs until the end of September, provides an opportunity to give active feedback and familiarise yourself with the changes.

  • Materiality analysis as a basis: Companies should review their materiality analysis and consistently apply a top-down approach in order to focus on relevant sustainability issues.

  • Preparing for the Executive Summary: The optional summary can make the reports easier to understand, but it requires adjustments to the reporting process and possibly to the software.

  • Compliance with the transition periods: Small and medium-sized enterprises benefit from longer deadlines, but should ensure they adhere to them strictly. The expert recommends not waiting until the deadlines are due, but instead taking a proactive approach to ESRS reporting.

Debate on cost and examination concessions

One interesting point for discussion is how costs for companies can be further reduced without compromising the quality of reporting. A recent study by a German professor suggests retaining reporting requirements but waiving the obligation for statutory audits by auditors for companies with fewer than 500 employees. According to the study, this could yield greater savings than a general simplification of the standards, whilst at the same time supporting progress under the Green Deal.

This idea has met with a mixed reception, particularly amongst the auditing profession, but it provides an important impetus for the ongoing debate on practical and cost-effective sustainability reporting.

Conclusion: Simplifying the ESRS presents a major opportunity for businesses

The simplification of the ESRS proposed by EFRAG brings significant relief for companies, in particular through the reduction in the number of mandatory data points and the focus on material content. The introduction of guidance documents for voluntary disclosures and the option to provide an executive summary make the standards more practical.

At the same time, sustainability reporting remains a complex challenge that requires early and strategic engagement. Companies should seize the opportunity to adapt their processes and use the new requirements to their competitive advantage. The coming months will be crucial for preparing for implementation and actively shaping the dialogue with the regulatory authorities.

We will be providing further updates over the coming weeks with more detailed information and an in-depth analysis of individual standards. The implementation of the ESRS remains a topic that we will continue to monitor on your behalf with our expert, Dr Steve Waitschat.

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