In a major development for sustainability reporting in the European Union, the European Financial Reporting Advisory Group (EFRAG) has released a progress report outlining proposed revisions to the European Sustainability Reporting Standards (ESRS). The revisions aim to significantly reduce the administrative burden on companies while ensuring alignment with the EU’s climate and transparency objectives under the Corporate Sustainability Reporting Directive (CSRD).

The update comes in response to a request by Commissioner Albuquerque, following concerns from businesses over the complexity and volume of disclosures required under the first set of ESRS. EFRAG's Sustainability Reporting Board (SRB) has been actively working since early 2025 to revise the standards, with the goal of delivering formal technical advice to the European Commission by 31 October 2025.

Five Key Areas of Simplification

EFRAG has activated five major levers for simplification:

• Refining the Double Materiality Assessment (DMA): Recognising that DMA has become a costly and compliance-heavy process, revisions will focus on streamlining the methodology. A top-down, business-model-driven approach will be encouraged, with greater emphasis on relevance and decision-usefulness.
• Enhancing Report Readability: Companies will have the option to include executive summaries and append appendices for detailed metrics, avoiding redundancy. The aim is to allow undertakings to "tell their sustainability story" more effectively rather than adhering to a rigid template.
• Reducing Duplication in Disclosure Requirements: Significant simplifications are being introduced in the relationship between cross-cutting minimum disclosure requirements (ESRS 2) and topical standards. Many narrative disclosures are being reclassified as non-binding guidance.
• Clarifying Mandatory vs. Voluntary Content: To improve clarity for both preparers and auditors, all mandatory requirements will be clearly separated from non-mandatory or voluntary guidance within the standards.
• Introducing Practical Reliefs: EFRAG is proposing reliefs for reporting in areas such as value chain metrics, financial effects, and commercial sensitivity. This includes aligning with the IFRS S1/S2 ‘undue cost and effort’ principle and clarifying reporting boundaries for GHG emissions.

What This Means for Companies

The proposed revisions are expected to cut mandatory datapoints by over 50%, with a shift toward a more principles-based and sector-adaptable reporting framework. Companies across the EU, especially SMEs and multinational entities operating in Europe, may see significant reductions in compliance costs and reporting complexity.

Public consultation on the Exposure Draft will open in late July, with an online survey to collect feedback. A cost-benefit analysis will be conducted in parallel, with interim findings expected by October.

Looking Ahead

At Blue Star Tech, we are closely monitoring these developments and advising clients on how the evolving ESRS landscape may impact their reporting obligations. We support moves that enhance efficiency, clarity, and global alignment—all of which contribute to smarter, more strategic sustainability reporting.

For tailored advice or updates, feel free to contact our ESG reporting team.