As the European Commission evaluates potential changes to the ESRS, one of the key debates is how to simplify reporting requirements without reducing the value of sustainability information available to businesses, investors, regulators, and other stakeholders. GRI has welcomed the decision to retain double materiality within the revised framework. The concept requires companies to assess both how sustainability issues affect business performance and how their operations impact people, society, and the environment. According to GRI, maintaining this dual perspective is essential for understanding sustainability-related risks and opportunities, strengthening corporate strategy, and supporting informed decision-making. The organization argues that simplification should focus on improving reporting efficiency rather than limiting access to information that markets increasingly rely on.
In its submission, GRI outlined several areas it believes are critical to ensuring the revised standards remain effective while reducing unnecessary reporting burdens.
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One of GRI's primary recommendations is greater interoperability between ESRS and internationally recognised sustainability reporting frameworks, including the GRI Standards. Many multinational organisations already report under multiple frameworks. Improved alignment would allow companies to leverage existing reporting processes, reduce duplication, and improve reporting efficiency. It could also enhance the comparability of sustainability disclosures, making it easier for investors and other stakeholders to assess performance across different markets. As sustainability reporting requirements continue to expand globally, stronger interoperability could help organisations manage compliance more effectively while supporting a more consistent reporting landscape.
GRI has also raised concerns about proposals that could reduce sustainability reporting requirements for asset managers. GRI believes that investors depend on sustainability disclosures to understand how environmental, social, and governance considerations influence investment decisions and portfolio management. Maintaining robust reporting requirements can help ensure continued transparency around sustainability-related risks and opportunities within financial markets.
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Another area of concern relates to proposals that may limit the sustainability information companies can obtain from suppliers and other business partners. According to GRI, value chain data plays an important role in identifying environmental and social risks across business operations and supply chains. Access to this information supports due diligence processes, risk management efforts, and broader sustainability objectives. For companies operating across complex global supply chains, restrictions on sustainability data sharing could make it more difficult to understand and address impacts beyond their direct operations.
In addition to the ESRS review, GRI has also provided recommendations on the European Commission's proposed voluntary reporting standard for organisations that may no longer be covered by mandatory sustainability reporting requirements. The organisation believes the framework should continue to provide meaningful sustainability information and retain key concepts such as double materiality. A stronger voluntary framework could help organisations communicate sustainability performance effectively while supporting the information needs of investors, customers, lenders, and other stakeholders.
For businesses, the ESRS review is about more than compliance. The changes could influence how sustainability data is collected, managed, and reported across operations, supply chains, and different reporting frameworks. Greater alignment between ESRS and globally recognised standards such as GRI and ISSB could help companies streamline reporting processes, improve data consistency, and reduce duplication. This would be particularly beneficial for multinational companies that are already navigating multiple reporting requirements across jurisdictions. Beyond reducing reporting burden, better alignment can allow businesses to spend less time managing overlapping disclosures and more time using sustainability data to support strategic decision-making, risk management, and long-term value creation. At the same time, expectations for transparency continue to rise. Investors, customers, regulators, and financial institutions increasingly rely on sustainability information to assess risks, opportunities, and business performance. As a result, companies are expected to provide disclosures that are both reliable and useful for decision-making. For policymakers, the challenge will be finding the right balance between simplifying reporting requirements and preserving the quality of sustainability information. The success of the revised ESRS will depend on whether it can reduce administrative burden while maintaining the transparency and comparability that stakeholders depend on.
As companies navigate reporting requirements across ESRS, GRI, ISSB, and BRSR, maintaining consistency, transparency, and data quality is becoming increasingly important. Cognitud helps businesses strengthen sustainability reporting through double materiality assessments, ESG data management, reporting strategy development, framework mapping, and disclosure support. By creating integrated reporting processes, companies can improve reporting efficiency, strengthen data quality, and build a stronger foundation for compliance across multiple frameworks. As sustainability reporting requirements become increasingly interconnected, a structured and interoperable approach can help companies improve decision-making, meet stakeholder expectations, and strengthen compliance readiness across multiple frameworks.
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Abhigyan Gupta
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Double materiality is a reporting approach that assesses both how sustainability issues affect a company's financial performance and how the company's activities impact people, society, and the environment. It is a core requirement of the ESRS under the CSRD.
The European Sustainability Reporting Standards (ESRS) are mandatory sustainability reporting standards that help companies disclose consistent, transparent, and comparable ESG information to comply with the CSRD.
The CSRD applies to large EU companies, listed companies (with some exemptions), and certain non-EU companies with significant operations or revenue in the EU. Compliance is being introduced in phases.
Value chain analysis is the process of evaluating each stage of a company's operations to identify opportunities, risks, and sustainability impacts across its supply chain and business activities.
Value chain mapping is the process of identifying and visualizing suppliers, business partners, and operational activities across a company's value chain. It helps improve transparency, risk management, and sustainability reporting.
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