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On 3 December, the European Financial Reporting Advisory Group (EFRAG) provided its technical advice to the European Commission on the draft simplified European Sustainability Reporting Standards (ESRS). This guidance aims to reduce the reporting burden for companies while maintaining the core objectives of transparency and comparability in sustainability disclosures.

The simplified standards are designed to make it easier for businesses to comply with the Corporate Sustainability Reporting Directive (CSRD), ensuring that essential ESG information remains accessible without excessive administrative complexity. The proposed changes introduce substantial flexibility, proportionality, and phasing-in mechanisms, reducing the number of mandatory data points by 61%. Key simplifications include a streamlined materiality assessment process, clearer guidance, and reduced documentation requirements, allowing companies to focus on disclosing information that is truly relevant to users. Additionally, the revised standards eliminate the preference for direct data in value chain reporting, enabling greater use of estimates and reducing the pressure on companies to collect extensive primary data. EFRAG has also enhanced interoperability with the International Sustainability Standards Board (ISSB) Standards, preserving common disclosures where possible and aligning on key areas such as greenhouse gas (GHG) boundaries and provisions for anticipated financial effects.

The Commission will now review EFRAG’s advice, which will be the basis for the amended Delegated Act revising the ESRS, expected to be adopted early next year.

Source: EFRAG