ESRS: Providing feedback on simplification

A rigid structure in reporting standards can enhance comparability and reliability in reporting. However, our experience shows that the prescriptive nature of ESRS and the granularity of datapoints have pushed many companies to treat sustainability reporting as a compliance exercise. Many sustainability statements published in 2025 were long, complex and often hard to read. We highlight the need for more principles-based standards and flexibility in reporting to enable companies to tell their story.

We also recommend that the standards and the overarching principles be written in language that clearly marks ESRS as a ‘fair presentation framework’. This would allow companies to rebalance their reporting so that it supports their overall strategy.

Our main suggestions include the following.

• Introduce an information hierarchy allowing companies to sort information by relevance.
• Revisit the mandatory nature of minimum disclosure requirements – many could be made ‘factors to consider’ instead.
• Move requirements arising from ESRS 2 General Disclosures that are currently included in the topic-specific standards to ESRS 2 itself.
• Clarify the relationship between voluntary datapoints and mandatory company-specific information.

We welcome EFRAG’s intention to provide clarity over the materiality assessment. We have highlighted the following key areas where we recommend revisions and clarifications to simplify the requirements and the reporting process.

• Mitigation activities: Expand guidance on their role in the materiality assessment.
• Materiality of information: Strengthen this concept and make it available for all datapoints, including those in ESRS 2. Clarify how to determine reportable information relating to material impacts, risks and opportunities (IROs). At present, this is particularly difficult where impacts are material to affected stakeholders that are not users.
• Positive impacts: Provide a clear definition and additional guidance to help companies identify them and distinguish them from mitigation actions (e.g. in the form of ‘factors to consider’).

There are multiple references in ESRS to how companies consider their reporting boundaries. This is largely due to inconsistent definitions in different parts of ESRS. We have made the following practical suggestions.

• Include an overall definition of own operations.
• Simplify and clarify the concept of operational control across the environmental standards, and use consistent terminology.
• By way of exception to the above, allow companies to measure their greenhouse gas (GHG) emissions in accordance with the GHG Protocol.

Regulatory fragmentation is a concern for preparers that have reporting obligations across the world. As the number of datapoints with slightly different measurement bases increases, the costs of preparing that data multiply. Global collaboration would reduce the reporting burden and costs and increase benefits for users. We therefore continue to emphasise the need for collaboration with the International Sustainability Standards Board in the medium term to align requirements where possible, for example regarding disclosures on transition planning.

We appreciate that EFRAG needs to finalise its recommendations to the Commission by 31 October. Although we acknowledge that this naturally constrains the due process that EFRAG is able to put in place, we emphasise that further time would achieve a better-quality outcome, given the extent of changes that may follow feedback from stakeholders.