Tag Archive for: EFRAG

Latest Developments on ESRS Regulations (July 2025)

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The European Sustainability Reporting Standards (ESRS) are undergoing a major revision aimed at simplifying requirements and making reporting more practical for companies. On July 31, 2025, EFRAG published the new exposure drafts, which reflect the EU’s shift toward easing the administrative burden under the Corporate Sustainability Reporting Directive (CSRD). A key highlight of the revisions is the sharp reduction in reporting complexity—total datapoints have been cut by 68%, and mandatory datapoints alone by 57%. This simplification is designed to make sustainability disclosures more achievable for businesses while retaining their core objectives of transparency and accountability.

The list of changes in detail can be found at EFRAG’s site at https://www.efrag.org/en/amended-esrs-0 .

The revised exposure drafts also introduced a clearer separation between mandatory disclosure requirements (“shall disclose”) and non-mandatory illustrative guidance (NMIG). By removing prescriptive details from the standards themselves and placing them into guidance, the EU hopes to create a more flexible and company-centered reporting framework. This change aims to empower companies to focus on material issues, reduce compliance fatigue, and enhance alignment with other international frameworks like the ISSB, GRI, and SASB.

 

AreaBefore RevisionAfter Revision (July 2025 Drafts)Change (%)
Total datapoints~1,200~380-68%
Mandatory datapoints~400~170-57%
Length of standards~1,200 pages~530 pages-55%
Guidance integrationMixed with mandatory textShifted into Non-Mandatory Illustrative Guidance (NMIG)Structural
Clarity of disclosuresLess distinction between mandatory/optionalExplicit labeling: “shall disclose” vs. guidanceConceptual

 

Alongside the release of the drafts, EFRAG launched a 60-day public consultation process, open until September 29, 2025. Companies, investors, regulators, and civil society stakeholders are invited to provide input via a structured online survey. Their feedback will be instrumental in shaping the final technical advice that EFRAG is scheduled to deliver to the European Commission by November 30, 2025. This consultation reflects the EU’s commitment to participatory policymaking, ensuring that the resulting standards balance investor needs, business realities, and sustainability objectives.

Finally, the revisions must be understood within the broader regulatory timeline of EU sustainability reporting. With the “stop-the-clock” directive deferring reporting obligations for second- and third-wave companies, and the Omnibus simplification package narrowing CSRD’s scope to mainly large entities, the revised ESRS come at a pivotal time. They are intended not just as a simplification but as a recalibration—ensuring reporting remains credible while being manageable.

Legislative adoption is expected to follow in 2026 through delegated acts, which will finalize the revised framework for implementation.

Unlocking the CSRD Essentials: Your Ultimate Guide to ESG Reporting

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In the recent weeks, the European Financial Reporting Advisory Group (EFRAG) published the “CSRD Essentials,” a comprehensive guide aimed at helping companies navigate the new European Corporate Sustainability Reporting Directive (CSRD). This document serves as an essential tool for organizations beginning their journey in environmental, social, and governance (ESG) reporting, providing clarity on the regulatory framework and practical advice on compliance. Download CSRD Essentials or from the EFRAG website.

Here’s a breakdown of the main sections covered in the book:CSRD essentials manual by EFRAG

  1. NFRD vs CSRD: What’s New? – This section highlights the differences between the Non-Financial Reporting Directive (NFRD) and the new CSRD, focusing on the expanded scope, more stringent requirements, and the introduction of mandatory reporting standards for a broader range of companies. The CSRD extends the reach from 11,000 to over 42,500 companies, including non-EU companies operating in the EU.
  2. Scope and Timing – The guide provides a detailed timeline for the phased implementation of the CSRD, explaining which companies are affected and when. It includes large companies, listed small and medium-sized enterprises (SMEs), and non-EU companies that meet specific thresholds, outlining the critical deadlines for compliance.
  3. European Sustainability Reporting Standards (ESRS) – This section introduces the new reporting standards, developed by EFRAG, which companies must adhere to under the CSRD. The standards cover general, environmental, social, and governance aspects, providing a unified framework to ensure consistency and comparability across reports.
  4. Audit & Assurance – The document details the new requirements for the assurance of sustainability information, including mandatory limited assurance initially, with a gradual move toward reasonable assurance. It highlights the role of statutory auditors and independent assurance service providers in validating the accuracy of reported data.
  5. Materiality and Internal Supervision – Focused on the concept of “double materiality,” this part of the book explains how companies need to assess and disclose both financial materiality (the impact of sustainability risks on the company) and impact materiality (the company’s impact on society and the environment).
  6. SMEs and the Value Chain– Recognizing the challenges faced by SMEs, the book discusses simplified reporting standards for these entities while maintaining alignment with the overall goals of the CSRD. It also touches on the broader implications for supply chains and how smaller companies can align their practices with larger counterparts.

The “CSRD Essentials” by EFRAG is a vital reference for any organization starting its ESG journey. It breaks down complex regulatory requirements into manageable steps, ensuring businesses are well-equipped to meet their sustainability reporting obligations under the CSRD. For those looking to deepen their understanding of ESG compliance, this book is an invaluable resource.