EFRAG has confirmed that a simplified ESRS Exposure Draft (ED) will be published by end of July 2025. This update aims to reduce mandatory datapoints by at least 50%, while maintaining the principles of double materiality, EU policy alignment, and interoperability with global standards (ISSB, GRI) and EU rules (SFDR, CSDDD).
Why This Matters
The simplification is a strategic recalibration, not a rollback. It reduces administrative burden but keeps transparency and comparability intact, making reporting more practical for businesses—especially SMEs and first-time reporters.
Timeline
- 2 July 2025: EFRAG SRB reviews Version 2
- Mid-July: Approval expected (backup 25 July)
- End of July: Publication of ED with Basis for Conclusions
- 31 October: Final technical advice to European Commission
Key Simplification Measures & Insights
- 50% Fewer Mandatory Data Points
Major reduction in disclosure requirements without losing materiality. Focus shifts to decision-useful information for investors and regulators.
- Double Materiality Made Practical
Clearer thresholds for impact and financial materiality. This means fewer edge-case disclosures and a sharper scoping process, reducing over-reporting.
- Streamlined MDRs
Minimum Disclosure Requirements now aligned with topical standards to eliminate duplication and make reports more coherent.
- Narrative Overload Removed
Low-value text-heavy disclosures will be cut. Expect shorter, sharper reporting focused on measurable impacts, not lengthy descriptions.
- SME-Friendly Flexibility
More clarity in structure and reporting options for smaller businesses and newcomers, reducing the barrier to entry for CSRD compliance.
- Enhanced Interoperability
Harmonized approach with ISSB, GRI, SFDR, and CSDDD to reduce duplicate reporting obligations and support multinational companies in integrated reporting.
Supporting Evidence
This reform is data-driven:
- 820 stakeholder responses & 16,000 comments
- BCG analysis of 700 FY2024 reports (results expected July)
- Contributions from national standard setters (ANC, DRSC, ICAC, OIC) and major industry associations (Insurance Europe, EBF, EFAMA, Business Europe).
Business Impact: What You Should Do Now
- Reassess Materiality: Apply new thresholds for a leaner, more targeted DMA.
- Update ESG Systems: Align data collection with reduced datapoints and MDRs.
- Plan for Interoperability: Leverage simplified ESRS for multi-framework compliance with ISSB and GRI.
- Communicate the Change: Use the reduced burden as an efficiency gain in ESG strategy and investor communications.
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