EU Simplifies Sustainability Reporting: What Businesses Need to Know

LSEG Refinitiv Data: Sovereign Sustainability Risk Monitor

Responding to industry desires to simplify reporting, the European Financial Reporting Advisory Group (EFRAG) revised the European Sustainability Reporting Standards (ESRS) to reduce sustainability reporting requirements under the EUs Corporate Sustainability Reporting Directive (CRSD).

Why This Matters

• Policy Changes: The simplification of the Double Materiality Assessment (DMA) gives companies' flexibility, resulting in productive reporting with necessary findings through a lens of multiple perspectives. This has the ability to push companies to encourage responsible behavior in society, looking beyond only their corporation.

• Streamlining: By reducing red tape and burdens, the amended ESRS will take a clearer form and will stimulate increased interoperability within EU companies.

• Company Consideration: Small and medium sized companies contribute substantially to the economy; this shift will encourage smaller companies to engage in sustainable practice without worrying about complex procedures.

• Global Application: The new simplified set of standards ultimately result in company-wide transparency on sustainability goals and commitments, pushing other countries around the world to adopt this method.

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What is the European Financial Reporting Advisory Group?

Created in 2001 with help from the European Commission, EFRAG operates as a private organization dedicated to serving the public. EFRAG engages in two pillars of activities: 

• Financial reporting.

• Sustainability reporting.

The two pillars promote market efficiency and prioritize corporate sustainability reporting. In 2022, EFRAG new mission was established to give advice to the EU by drafting a new ESRS or creating changes to the standards. EFRAG prioritizes the views of Europeans and acts as a sustainable finance liaison to Europeans and the European Commission.

The EFRAG Strategy 2024-2027

The Changes to the ESRS  

The revision of the ESRS was shown in the exposure drafts released in July 2025. More changes have been made to since, including:

• Going from 57% to 61% reduction of the datapoints.   

• ERFRAG has simplified terminology and reduced mandatory tasks, while also clearly stating the topical standards and ESRS 2 relationship.

• Standards based on principles regarding flexibility on how to present information.

• Allowing entities to “tell their story” through using appendices and including references for connected information.

• Major changes to Double Materiality Assessment (DMA) through the reinforcement of materiality, clarifying the IRO and reportable topics relationships, while also introducing guidance to promote productivity.

  
  

ESRS Knowledge Hub

Refinitiv data displays ESRAG’s new interactive platform known as the ESRS Knowledge Hub, created specifically for sustainability reporting for companies. This easily accessible platform was created to expand European companies and stakeholders’ knowledge on the ESRS. The Knowledge Hub provides a variety of up-to-date materials such as the 2023 ESRS, the new and simplified ESRS, and supporting materials. Interactive access for the new ESRS is soon to arrive with European Commission approval. The creation of the knowledge hub demonstrates a clear example of how breaking tasks down and being flexible is extremely important to policy change.

Take Action

• Global Sustainability Experts: Encourage multilateral organizations, large corporations, and governments to engage in the creation of creative and effective plans to tackle sustainability reporting issues.

• Non-EU Policymakers: Use this information to apply active European sustainability and ESG policies to other companies around the globe.

• Businesses : Utilize the resources from companies that engage in effective sustainability reporting, and create a framework on ways you can apply these efforts to your business model.