European Commission agency issues new sustainability reporting standards

The independent EU agency EFRAG has published simplified drafts of the European Sustainability Reporting Standards (ESRS). Under the standards, larger medium-sized and all large companies in Europe will be required to report on sustainability.

Significant reduction

As reported by ESGNews, the new draft standards, which will be mandatory for companies, respond to the need to simplify the existing reporting requirements under the Corporate Sustainability Reporting Directive (CSRD). The amount of mandatory information companies will have to disclose will be reduced by 68%.

The updated EFRAG draft responds to a request from the European Commission in March 2025 as part of its Omnibus initiative. The agency has revised the standards to streamline the double materiality assessment, clarify the language and meaning of certain provisions, remove provisions on voluntary disclosures, and introduce new exemptions for cases where reporting would require a company to incur disproportionate costs or effort.

The standard has been shortened by 55% overall. The changes reflect feedback from companies already reporting on sustainability under the CSRD, as well as those still preparing to do so. According to EFRAG, the revision aims to balance ambition with practicality: the standards should support sustainability reporting, not hinder investment and the creation of long-term value.

Next steps

EFRAG has launched a 60-day public consultation, which will run until 29 September 2025, and is inviting companies, auditors, investors, civil society and public authorities to participate. A series of information events and practical tests is planned for September and October to gather feedback on how workable the standards are and further refine the draft.

Content and applicability of the standards

The European Sustainability Reporting Standards (ESRS) are a set of mandatory rules under the Corporate Sustainability Reporting Directive (CSRD), which requires companies to disclose information on environmental, social and governance (so-called ESG) issues. The standards apply the principle of double materiality, meaning companies must report both on how sustainability issues affect them and on how their activities affect society and the environment.

Large companies (meeting two of the following criteria: 250+ employees, turnover of EUR 40+ million, assets of EUR 20+ million) must fully apply the standards from this year. Medium-sized companies (as defined by the CSRD) will have to comply with simplified ESRS from 2026. Unlisted small and micro-enterprises have no obligations under the CSRD.