The European Sustainability Reporting Standards (ESRS) have just undergone their first major overhaul. In July 2025, EFRAG released the amended exposure drafts, signaling a clear shift: less burden, more clarity, and better alignment with global frameworks.
If you’re trying to understand what this means—whether you’re reporting for the first time under CSRD or reassessing existing disclosures—this breakdown is for you.
Let’s unpack the biggest changes.
One of the most consequential updates in the 2025 ESRS Exposure Drafts is the reform of the Double Materiality Assessment (DMA) process. It’s where everything begins—materiality determines what gets disclosed, and the updated standards aim to reduce ambiguity while staying faithful to the CSRD’s intent.
Materiality assessments help determine the relevant “Impacts, Risks, and Opportunities” (IROs) that form the core of what gets reported in sustainability disclosures.
Bottom line: The DMA process is no longer a burdensome scoring exercise. It’s a structured way to focus reporting on what genuinely matters.
These changes are aimed at making the DMA exercise proportionate, relevant, and truly aligned with how companies manage sustainability—not a checklist-driven task.
The structure of ESRS has changed dramatically. EFRAG didn’t just tweak individual datapoints: they rethought how the entire system is built.
All mandatory disclosures are now clearly listed in the main body of the standards. If something says “shall disclose,” it’s legally binding.
Meanwhile, optional content like “may disclose” is gone from the standards entirely. Instead, that kind of supportive material now lives in a separate document: the Non-Mandatory Illustrative Guidance (NMIG). NMIG is a reference document that offers optional examples and guidance to help companies implement ESRS, without creating additional compliance requirements.
For topical standards:
| Datapoint Type | 2023 Count | 2025 Count | Change |
| Mandatory (“shall”) | 803 | 347 | -56.80% |
| Voluntary (“may”) | 270 | 0 | -100% |
| Total | 1,073 | 347 | -67.70% |
Narrative and semi-narrative datapoints were especially trimmed:
| Datapoint Type | 2023 Count | 2025 Count | Change |
| “Shall” Narrative | 572 | 185 | -67.70% |
| “May” Narrative | 220 | 0 | -100% |
| Total Narrative | 792 | 185 | -76.60% |
This alone will drastically improve readability, reduce repetition, and encourage more targeted reporting.
Beyond structural changes, to reduce reporting complexities for global companies, EFRAG aligned key terms and definitions with the IFRS S1/S2 standards. This isn’t just semantics, it helps companies avoid duplicative efforts across CSRD and ISSB disclosures.
One of the boldest moves in the July 2025 Amended ESRS Exposure Drafts is the massive reduction in mandatory and voluntary datapoints. This isn’t just about trimming fat—it’s about shifting the focus to what actually matters for decision-useful, high-integrity sustainability reporting.
What Changed? A Look at the Numbers
| Standard | Datapoint Reduction | Word Count Reduction |
| ESRS 2 (General) | 49% | 34% |
| ESRS E1 (Climate) | 53% | 65% |
| ESRS E3 (Water) | 70% | 82% |
| ESRS E4 (Biodiversity) | 78% | Not Specified |
| ESRS E5 (Circular Economy) | 60% | 72% |
| Social Standards (S1–S4) | 53%–64% | 67%–79% |
| G1 (Business Conduct) | 50% | 51% |
Despite the general freeze on increasing obligations, six former “may disclose” datapoints were promoted to mandatory status. Each one had strong justification:
| New Mandatory Datapoint | Why It Was Upgraded |
| Water withdrawals (E3) | Essential to complete water balance, already informally required |
| Water discharges (E3) | Complements withdrawals, improves clarity |
| Biodiversity transition plans (E4) | Decision-useful, applies only if such plans exist |
| Procurement training (G1) | Consolidates deleted training datapoints, improves supplier management transparency |
| Corruption incidents – nature and number (G1) | Provides basic integrity metric, replaces weak narrative |
| Fossil fuel energy use disaggregation (E1) | Extended to all sectors due to definitional issues with “high climate impact sectors” |
Similarly, EFRAG introduced four entirely new “shall disclose” datapoints, not as new burdens, but to make reporting clearer and more actionable.
| New Datapoint | Why It Matters |
| BP-1: Confirm ESRS 1 principles used (ESRS 2) | Consolidates prior disclosures into a single, clear statement |
| Secondary microplastics disclosure (E2) | Previously buried in a general paragraph; this clarifies intent |
| % of critical/strategic raw materials (E5) | Aligns with EU regulations like the Critical Raw Materials Act |
| %/weight of waste with unknown destination (E5) | Helps assess circularity and waste traceability accurately |
Struggling to get reliable data? New guidance allows companies to disclose limitations openly and describe improvement plans. This comes as a relief to many organizations that had to rely on estimations where primary data was hard to collect or even unavailable.
EFRAG reviewed datapoints tied to the Sustainable Finance Disclosure Regulation (SFDR), particularly the Principal Adverse Impact (PAI) indicators.
Some redundant or derivable datapoints were removed, such as:
But the substance remains. EFRAG confirmed that SFDR alignment is still strong—and more relevant.
EFRAG also removed datapoints that didn’t add value for benchmarks aligned with the EU’s Paris goals.
| Original Disclosure | Change | Why |
| Exclusion from Paris-Aligned Benchmarks (E1-1) | Deleted | Low relevance, high burden |
| Total GHG Emissions (E1-6) | Removed | Easily derivable |
| GHG Intensity (E1-6) | Removed | Easily derivable |
What’s left is either retained or aligned better with IFRS S2.
No, you don’t need to chase small suppliers for data they’re not required to provide. EFRAG has aligned the cap with the Voluntary SME Standard (VSME), replacing the earlier LSME threshold.
What this means:
EFRAG cleaned up one of the messiest parts of the original ESRS: what’s in scope when reporting on emissions and operational control.
| Issue | Clarified Rule |
| GHG boundary | Aligned with GHG Protocol (financial control) |
| Operational control | Still required if more representative |
| Own operations | Defined as what’s typically in the consolidated financial perimeter |
| Leasing | Responsibility lies with the lessee (user), not owner |
| Employee pension plans | Explicitly part of the value chain |
| Investment properties | Count as downstream impacts if leased |
This closes the “who owns vs. who uses” confusion.
EFRAG’s July 2025 revisions mark a major inflection point in global sustainability reporting. As the Omnibus package finds its way through the legislatory maze, companies expected to be in-scope can perceive immediate value in the simplified ESRS, while also preparing for some challenges.
The most immediate impact for businesses is the potential reduction in compliance costs. By slashing mandatory datapoints by 57%, EFRAG aims to lessen the resource-intensive data collection and reporting processes. This is especially beneficial for companies with complex value chains, which previously faced challenges with the ESRS’ granularity.
The shift toward principles-based reporting encourages companies to prioritize strategically important information over exhaustive disclosures. For businesses, this flexibility is an opportunity to gain a competitive advantage by presenting clear, impactful sustainability narratives that resonate with investors and customers.
Large companies with complex value chain struggled to collect granular sustainability data from upstream and downstream actors. EFRAG’s work on voluntary sustainability reporting standards for SMEs (VSMEs) provides an alternative for smaller companies not covered by the CSRD. These standards, while non-binding, align with ESRS principles but are tailored for proportionality and simplicity.
The emphasis on interoperability with IFRS S1/S2 and GRI standards reduces the risk of duplicative reporting for multinational companies operating in multiple jurisdictions. For instance, aligning GHG emissions boundaries with consolidated financial statements (as proposed for ESRS E1) simplifies calculations for companies already complying with IFRS standards.
The short consultation period (originally 30-45 days, extended to 60 days) has raised concerns among stakeholders about whether sufficient time exists to fully assess the revisions. Inadequate consultation could lead to unforeseen compliance challenges if the final standards are not well-aligned with business realities.
Companies preparing for 2025 reporting cycles may face uncertainty as exposure drafts are finalized and adopted as a delegated act within six months of the Omnibus package’s entry into force. With CSRD applicability criteria still undecided, companies may have little time to digest the revisions and recalibrate their reporting strategy.
ESRS simplification may ease reporting for sectors struggling with complex disclosures but could also reduce the depth of sector-specific insights if critical datapoints are cut. Businesses in high-impact sectors (e.g., energy, manufacturing) may need to carefully assess whether simplified standards still meet stakeholder demands for transparency.
Ready to simplify your CSRD reporting and stay ahead of regulatory changes? Get a free consultation with our sustainability experts—we’ll help you assess your current state, map out what’s changing, and build a smart, efficient path to compliance.
