Simplified ESRS: A New Start for Corporate Sustainability Reporting in Europe

EXECUTIVE SUMMARY

On 3 December 2025, EFRAG submitted its technical advice on the draft simplified European Sustainability Reporting Standards (ESRS) to the European Commission, marking the most significant reset of EU sustainability reporting rules since CSRD was adopted.

The new package cuts datapoints, streamlines double materiality and eases value chain data requirements, while keeping Green Deal ambition and investor expectations intact.

For corporates operating in Europe, this means:

• Less volume, but higher expectations on quality, coherence and financial relevance

• A narrower legal CSRD scope after Parliament’s 13 November 2025 vote to raise thresholds, but continued market pressure through banks, investors and value chains

• A short implementation window to redesign materiality, data and governance ahead of revised standards that the Commission intends to make mandatory for 2027 reporting periods, with possible early adoption in 2026

Companies that move now to align with the simplified ESRS will reduce reporting burden, improve decision making and strengthen their credibility with regulators and capital markets.

1. What has changed and why it matters

In early 2025, the European Commission asked EFRAG to deliver technical advice on how to simplify the ESRS Delegated Act by November 2025. EFRAG issued exposure drafts in July 2025 and, after a 60 day public consultation, completed the simplification exercise at the end of November. The amended ESRS and technical advice were then published and submitted on 3 December 2025.

Key outcomes include:

• Roughly 60 percent reduction in mandatory datapoints and removal of voluntary datapoints, resulting in more than 70 percent fewer datapoints overall

• Shorter, clearer standards that are easier for boards, finance and sustainability teams to work with

• A more practical double materiality process and a more flexible approach to value chain data

• Greater interoperability with ISSB and other global frameworks

In parallel, on 13 November 2025 the European Parliament adopted its position under the Omnibus process to narrow CSRD scope to very large companies, with thresholds of around 1 750 employees and 450 million euros in net turnover. Many firms will fall outside the legal CSRD perimeter, but most will still face ESRS style expectations from lenders, investors and major clients.

This confirms that the real question is no longer whether sustainability information is needed, but how to use this reset, as of late 2025, to build a reporting system that supports business decisions instead of simply ticking regulatory boxes.

2. The main technical shifts you need to know

Fewer datapoints, sharper focus

The simplified ESRS remove a large number of detailed datapoints and all voluntary datapoints. The expectation now is that you'll focus on:

• The sustainability topics that are genuinely material

• The indicators that drive management attention and capital allocation

• A clearer narrative that connects risks, opportunities and performance

More usable double materiality

Double materiality remains the foundation, but the process is simplified:

• Possibility to use a top down approach instead of exhaustive bottom up checklists

• More concise topic lists and the option to report at sub topic level

• Clarification that a full reassessment is only needed when there are significant changes, not automatically every year

In practice, this is a chance to turn your materiality assessment into the entry point for risk, opportunity and strategy discussions.

Value chain data with realistic expectations

The simplified ESRS keep the focus on upstream and downstream impacts, but with more flexibility:

• Wider use of estimates where direct data is not available without undue cost or effort

• Clear proportionality mechanisms and phased implementation for difficult disclosures

Companies with complex supply chains can now design a value chain data strategy that is both credible and achievable.

Stronger link to financial effects

The revised standards clarify how anticipated financial effects of sustainability risks and opportunities should be disclosed, with a trajectory toward more complete information by 2030. This will draw sustainability more deeply into:

• Business planning

• Resilience analysis

• Capital allocation and valuation discussions

CFOs and sustainability teams will need to work more closely together on scenarios, assumptions and financial translation.

3. What this means for your business

Regulation will hit fewer companies, expectations will hit many more

Even if the new CSRD thresholds remove your company from the legal scope, you may still need to provide ESRS aligned information because:

• Banks and investors increasingly request comparable sustainability data

• Large customers use ESRS as the default framework for supplier expectations

• International peers are moving to similar levels of transparency

Voluntary or semi voluntary ESRS reporting will become a competitive hygiene factor in many sectors.

Quality of information matters more than quantity

The first wave of ESRS reporting in 2024 showed long reports with weak links to strategy and financials. The simplified standards push companies to:

• Focus on a smaller set of material topics

• Deepen analysis of impacts, risks and opportunities

• Provide clearer, decision useful metrics and explanations

Internal conversations will shift from “have we disclosed this datapoint” to “does this disclosure really help us and our stakeholders understand the business”.

The timeline is short

According to EFRAG and recent market analysis, the Commission intends the revised standards to be mandatory for 2027 reporting periods, with optional early adoption for 2026 by companies already applying ESRS.

That leaves:

• One cycle to redesign your approach

• One cycle to test and refine before mandatory application

Companies that treat 2026 as a pilot year will be ahead on assurance, controls and investor confidence when the revised standards kick in.

4. How to prepare in a concrete way

Below is a practical roadmap that we use with clients.

Step 1: Clarify scope and adoption strategy

• Confirm your CSRD status under the revised thresholds emerging from the November 2025 Omnibus negotiations

• Decide whether to:

• Maintain current ESRS until 2027, then switch once

• Early adopt simplified ESRS in 2026 to avoid dual design work

In many cases, early adoption combined with alignment to ISSB and existing frameworks is the most efficient choice.

Step 2: Redesign double materiality as a strategic tool

• Build a top down view of your main sustainability impacts, risks and opportunities

• Integrate perspectives from finance, risk, operations and key markets

• Engage internal and external stakeholders in a focused way

• Define clear criteria for what is material and document decisions

The output should look like a strategic risk and opportunity map that your board uses, not just a compliance annex.

Step 3: Rationalise KPIs and data architecture

• Map existing KPIs against simplified ESRS requirements and global standards

• Remove low value indicators and duplications

• Design a single data model that feeds:

• ESRS and CSRD reporting

• ISSB or other global disclosures

• SFDR responses, bank questionnaires and internal dashboards

• Define where you will use estimates or apply the undue cost or effort relief, and set improvement targets

This is where many companies unlock real cost savings and reduce internal fatigue.

Step 4: Strengthen governance and the narrative

• Clarify roles of the board, audit committee and executive management on sustainability topics

• Align climate, workforce, supply chain and governance topics under a coherent oversight framework

• Connect transition plans and targets directly to capex, opex and risk management

• Train key functions on the new requirements using internal guides and short playbooks

Aim for a sustainability section in the annual report that your CFO and CEO are fully comfortable presenting to investors.

Step 5: Build a time bound implementation plan

A realistic plan might look like:

• Next 3 to 6 months: gap analysis, new materiality design, initial data and IT mapping

• 2026 cycle: pilot the simplified ESRS approach on selected entities and topics, strengthen controls, prepare for assurance

• 2027 onward: full alignment, digital tagging where required, and gradual move toward deeper assurance and integration of financial effects

5. Where to go from here

The simplified ESRS, finalised and submitted to the Commission in early December 2025, provide a rare opportunity to clean up and upgrade your sustainability reporting system. The burden can be lower and the value much higher, but only if you act deliberately.

At Futureproof Solutions, we support companies to:

• Translate the new ESRS into a clear impact assessment for their business

• Redesign double materiality, KPIs and data flows in a way that serves both compliance and strategy

• Build governance and narratives that stand up to investor, auditor and regulator scrutiny

If you want to understand what the simplified ESRS mean for your group, or explore an early adoption strategy that fits your reality, this is the right moment to start.