EFRAG Unveils Simplified Sustainability Reporting Standards for EU

EFRAG has released a revised version of the European Sustainability Reporting Standards (ESRS), reducing reporting obligations for companies under the Corporate Sustainability Reporting Directive (CSRD). The update cuts mandatory datapoints by around 61%, eliminates all voluntary disclosures, and greatly simplifies processes - especially for assessments of material and supply-chain impacts.

The revised standards streamline the formerly complex “double materiality assessment,” giving companies more flexibility. Firms may now take a top-down approach when assessing what sustainability data to report, and are allowed to rely more on reasonable estimates rather than direct data collection from every link in the supply chain.

Additional changes include the introduction of proportionality mechanisms, protections against undue burden (for example when data collection would be excessively costly or complex), and a phased implementation schedule for more challenging disclosures. The goal is to make ESG reporting more practical, particularly for smaller and mid-sized companies preparing to comply under CSRD.

With these reforms, EFRAG aims to balance regulatory feasibility with the EU’s sustainability ambitions - helping businesses stay competitive while maintaining transparency and alignment with the continent’s green transition goals.

A 61 percent reduction in mandatory datapoints combined with elimination of all voluntary disclosures materially reduces the CSRD compliance burden that had drawn substantial industry pushback. Simplified double-materiality assessment (top-down approach, greater reliance on reasonable estimates) addresses one of the most technically challenging aspects of ESRS implementation.

The proportionality mechanisms and undue-burden protections respond to genuine SME-and-mid-cap concerns about data-collection cost and complexity. Phased implementation for challenging disclosures gives companies time to build capability rather than requiring immediate full compliance across all thematic areas.

For CSRD-preparing corporates, financial institutions serving European corporates, and their advisors, Cognitud's ESG strategy and transformation, sustainability due diligence and impact assessment teams help clients evaluate the revised ESRS framework implications for reporting preparation, restructure double-materiality assessments aligned with the simplified methodology, and prepare disclosures aligned with revised CSRD and ISSB expectations that increasingly determine access to European sustainable-finance while managing compliance cost effectively.