Client Alert: EFRAG Proposes Major Streamlining of ESRS to Reduce Reporting Burden

/ KERAMIDA Inc./

EFRAG has released a Progress Report outlining proposed revisions to the European Sustainability Reporting Standards (ESRS) that aim to reduce the reporting burden on companies while preserving the integrity of disclosures.

The goal is to achieve a 50% reduction in the number of mandatory datapoints through six strategic levers:

LEVER 1: Simplification of the Double Materiality Assessment (DMA)

EFRAG is revising the DMA process to make it less resource-intensive and easier to apply. The new approach will provide clearer guidance and simplify the process of identifying what is financially and impact material.

LEVER 2: Better readability/conciseness of the sustainability statements and better inclusion in corporate reporting as a whole

The structure and presentation of the sustainability statements are being streamlined to enhance clarity and usability. The goal is to align the sustainability section more closely with the broader corporate reporting framework, making it easier for stakeholders to understand.

LEVER 3: Critical modification of the relationship between Minimum Disclosure Requirements (MDR) and topical specifications

EFRAG proposes reclassifying MDRs to no longer act as standalone mandatory disclosures. Instead, MDRs will provide a framework that supports topic-specific disclosures, applicable only when the related topic is deemed material.

LEVER 4: Improved understandability, clarity and accessibility of the standards

Numerous changes are being proposed to improve drafting quality and internal consistency, clarify definitions and terms, and restructure content for better flow and usability. This lever aims to make the standards more practical and accessible for preparers.

LEVER 5: Introduction of other suggested burden-reduction reliefs

EFRAG is introducing a suite of targeted relief mechanisms to ease compliance, particularly for smaller and less-resourced companies. These include extended phase-in periods for certain requirements, simplifications in value chain reporting, streamlined disclosures for joint ventures and associates, and reduced requirements for voluntary disclosures and estimation uncertainty. These measures aim to balance reporting ambition with proportionality.

Key proposals under this lever include:

  • Acquisitions and divestitures: Clearer guidance on sustainability reporting during organizational changes.

  • IFRS reliefs: Broader adoption of compatible IFRS S1 and S2 reliefs, including the “undue cost and effort” exemption.

  • Commercially sensitive information: Exemptions for disclosing opportunity-related information if it compromises business strategy.

  • EU Regulation datapoints: Review and possible removal of less relevant datapoints, including some tied to SFDR indicators.

  • Relief for missing input data: Allowance for partial reporting with transparent assumptions and improvement plans.

  • Exclusion of non-material activities: Relief to avoid full data collection on activities unlikely to impact metrics.

  • Boundaries of reporting and value chain: Emphasis on using financial consolidation boundaries, with operational control disclosures allowed when appropriate.

  • Relief for anticipated financial effects: Option to report qualitative info when long-term projections are uncertain.

  • Financial institutions: Limited upcoming guidance on value chain reporting; full sector guidance not expected in the current timeline.

LEVER 6: Enhanced interoperability

EFRAG continues to align ESRS with global frameworks such as the ISSB and GRI. Ongoing efforts aim to increase cross-standard compatibility, reduce duplication, and support companies reporting under multiple frameworks.

These proposed revisions reflect EFRAG’s commitment to improving the practicality and relevance of sustainability reporting. Exposure drafts revising the ESRS are currently being finalized and are expected to be published for public consultation in August–September.

Read the full Progress Report
View EFRAG’s Announcement

Contact

Anastasia Kyrmanidou, Ph.D.
Senior Manager, Sustainability
KERAMIDA Inc.

Contact Anastasia at akyrmanidou@keramida.com