What do the revised ESRS standards look like? EFRAG has published an overview of the proposals

The revised ESRS standards for ESG reporting have been published and are open for public consultation until the end of September. Their development was preceded by a months-long preparation process, carried out based on a mandate from Maria Luís Albuquerque, Commissioner for Financial Services, Savings, and Investment.

Experts from the business sector, investment and auditing fields, national standardization bodies, and representatives of civil society involved in the activities of EFRAG (European Financial Reporting Advisory Group) contributed to the process, including Filip Gregor, the leading ESG expert at Frank Bold.

The standards underwent revisions that resulted in a reduction of the number of required data points and the elimination of repetitive or ambiguous requirements. At the same time, the key obligations stemming from the CSRD directive were preserved.

According to EFRAG, the standards should continue to serve as a fundamental framework for reporting material information in the areas of environment, social issues, and governance (ESG).

Key elements of the revised ESRS standards:

• They include information on climate transition plans in accordance with EU legislation.

• They contain environmental indicators, partially derived from global frameworks (e.g., TNFD), but in a more general form.

• They include selected indicators related to the workforce, supported by European and international law.

• They maintain due diligence requirements in line with UN and OECD frameworks.

Simplification and structural changes:

• Reduction in the number of required data points, particularly where there were duplications or an excessive level of detail.

• The information requirements regarding strategy, policies, actions, and targets have been consolidated into a single cross-cutting standard (ESRS 2).

• The thematic standards have been stripped of any supplementary or supporting requirements aimed at linking the content.

• The use of the materiality principle was clarified to prevent formalistic or excessive reporting.

• The simplification has led to the removal of most explanatory guidance, which reduces the volume of text but increases the requirements for independent interpretation of the standards by reporting entities.

Removed or narrowed areas:

• Some disclosures related to biodiversity, marine resources, local impacts associated with water or pollution, or indicators such as the use of parental leave or invoice payment terms were not maintained.

• The option has been introduced to omit certain key performance indicators (KPIs) if data collection is considered disproportionately burdensome.

• The mandatory disclosures of expected financial impacts, which are common under IFRS standards, have been limited.

Context of European legislation and international coordination:

In the debate on the further development of the ESRS standards, there are proposals to further reduce the number of data points, particularly from certain Members of the European Parliament and interest groups. The ESRS uses a detailed method of counting data points – for example, a single requirement may be broken down into several elements, such as the content, objective, and scope of a policy.

There is broad agreement within the political groups of the European Parliament and among Member States on the need to align the ESRS with global frameworks, particularly the IFRS Sustainability Standards. These global standards include over 200 data points, focusing mainly on climate and financially material topics. The revised ESRS includes approximately 350 data points, covering a wider range of topics and combining both impact and financial materiality perspectives.

The obligations related to ESG reporting under the ESRS and the CSRD Directive may apply to your company — perhaps already, or in the near future. There is no reason to delay preparation, even though the final shape of the changes under the Omnibus proposal is not yet clear. We can help you navigate the requirements and get everything ready on time and efficiently. Start today.