Simplified ESRS: EFRAG issues technical opinion with 61% fewer mandatory data points (news)

With this "Set 2", the objective stated by Chiara Del Prete, Chair of EFRAG's Sustainability Reporting Technical Expert Group (SR TEG), is to enable companies to communicate how they manage their sustainability rather than simply complying with regulations. This change of direction aims to make CSRD reporting more flexible, shorter and more strategic. EFRAG has taken note of the feedback from companies that published their first sustainability reports in 2025 (wave 1) and the numerous opinions received following the public consultation on its draft revision of the ESRS standards, which was open during the summer.

A drastic reduction in disclosure requirements

The simplification announced by EFRAG translates into a 61% reduction in the number of mandatory data points in ESRS Set 1. As for voluntary data points ("may disclose"), they will disappear from ESRS "Set 2" and will now be grouped together in a non-mandatory guidance document (NMIG - Non-Mandatory Illustrative Guidance).

The advisory group has implemented this two-tiered structure to enable companies to focus on the essentials while offering those who wish to do so the opportunity to access illustrations grouped together in the NMIG document.

Four major developments

1. Flexibility in presentation: executive summary and appendices

Companies can now structure their sustainability reports as follows:

• provide a concise, strategic executive summary to convey key messages,

• and detail all sustainability information (granular data points) in appendices.

This option addresses criticism of the excessive length and difficulty of reading the first CSRD reports.

2. Simplified double materiality

EFRAG is lowering the level of analysis required for double materiality assessment. This is the central principle that should guide the drafting of sustainability reports.

• Materiality can be determined at the level of a sustainability topic (or sub-topic), without necessarily analysing its individual impact, risk or opportunity (IRO). It should be noted that the long list of sub-sub-topics, particularly on social issues, would disappear.

• A top-down approach is preferable: the dual materiality analysis can start with the company's strategy and business model to identify material topics or IROs. It can be carried out quickly, internally, and does not require further steps in the process. If there is any doubt about certain sustainability topics, the bottom-up approach, carried out with stakeholders, can help refine the analysis and better document it for the audit.

• The principle of materiality of information is highlighted in the new version: for a material topic or IRO, only material sustainability information – i.e. data points – should be presented in the report. This again allows choices to be made.

3. Value chain: direct data and estimates on an equal footing

One of the major changes in the EFRAG draft concerns the data to be reported on the company's value chain. Estimated data can be presented on the same basis as data collected directly from value chain stakeholders. This methodological flexibility addresses the practical difficulties encountered by companies, particularly regarding Scope 3 GHG emissions or social data on value chain workers.

4. Fair presentation: a principle of balance

The principle of "fair presentation" becomes the guiding principle for drafting the report. Companies must strike the right balance between comprehensiveness and readability in their reports. This approach, inspired by IFRS financial reporting, introduces an additional degree of flexibility for reporting companies, which can choose not to disclose everything. "Excessive granularity detracts from the fair presentation of the report," explains Patrick de Cambourg, Chair of the EFRAG Sustainability Reporting Board (SRB).

New architecture: ESRS 2 is reinforced as the central foundation

The structure of the standards has been thoroughly overhauled:

• ESRS 2 now focuses all disclosure requirements on governance, strategy and material IRO issues.

• What needs to be disclosed regarding the policies, actions and targets (PAT) implemented within the company is mainly described through the general disclosure requirements (GDR) of ESRS 2, rather than repeated in each thematic standard. The GDRs are less granular and therefore require less reporting by companies. It is no longer necessary to give reasons for the absence of a policy or a timeframe for its implementation within the company.

• Anti-duplication principle: each piece of information should be presented only once in the report, and it is possible to refer to other parts of the statement.

• Thematic ESRS (E1-E5, S1-S4, G1) focus more on indicators specific to their respective areas to be produced in the sustainability report.

• The presentation requirements or ARs (for "Application Requirements") are now presented directly after each disclosure requirement or DR (for "Disclosure Requirements") that they specify, improving the readability and understanding of the methodologies to be applied.

Anticipated financial effects: moratorium until at least 2030

Important point: data on anticipated financial effects will not need to be presented until 2030 at the earliest. This moratorium recognises the lack of methodological maturity and the sensitivity issues associated with this forward-looking information. However, it should be noted that if the financial effects materialise before 2030, they will need to be mentioned in the report.

Future work by the European Commission

EFRAG has sent its technical opinion to the European Commission ("Set 2"). The European executive will now consult with Member States and several technical committees (comitology procedure) to draft its delegated act. The Commission may therefore decide to amend certain elements of the simplified standards proposed by EFRAG. It aims to present the delegated act officially revising the ESRS ("Set 1") by the end of June 2026, following the adoption of the omnibus text.

Implementation timetable: 2028 in sight

ESRS Set 2 will apply to 2028 sustainability reports (financial year 2027), with voluntary application open from 2027 reports (financial year 2026).

Note: EFRAG plans to publish a revised version of its Excel file listing all Set 2 data points in the first quarter of 2026, providing companies with an updated management tool.