EU Commission Asks EFRAG to Fast-track Development of Simplified CSRD Sustainability Reporting Standards
The European Commission has tasked the European Financial Reporting Advisory Group (EFRAG) with supporting its plan to significantly simplify the reporting requirements under the Corporate Sustainability Reporting Directive (CSRD), with a request to develop technical advice underlying the CSRD’s European Sustainability Reporting Standards (ESRS), and setting a timeline of only seven months, with a deadline for the new advice of October 31, 2025.
The request comes in the wake of the release in late February of the Commission’s Omnibus I package, aimed at significantly reducing the sustainability reporting and regulatory burden on companies, with proposals for major changes to a series of regulations including the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD), the Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM).
EFRAG was mandated by the European Commission in June 2020 to prepare the initial ESRS, which were adopted by the Commission in 2023.
As part of the Omnibus package, the Commission proposed plans to revise the ESRS, with the aim of substantially reducing the number of data points required by the sustainability reporting standards.
In a letter from European Commissioner for Financial Services and the Savings and Investment Union Maria Luis Albuquerque to EFRAG, the Commissioner wrote:
“We aim to alleviate unnecessary administrative burdens while still meeting the core policy objectives of the European Green Deal. Simplification and burden reduction will be at the centre of the work of the Commission in this mandate.”
The letter asks EFRAG to initiate the process to develop technical advice for the modification of the ESRS, and sets out a series of requirements for the updated standards, primarily looking to “substantially reduce the number of mandatory ESRS datapoints.” Datapoint reduction initiatives outlined in the letter include removing the least important datapoints for general purpose sustainability reporting, and prioritizing quantitative datapoints over qualitative “narrative text,” while avoiding “undermining interoperability with global reporting standards and without prejudice to the materiality assessment of each undertaking.”
The letter also requests that the revised standards clarify provisions in the current ESRS that are deemed unclear, improve consistency with requirements in other EU legislation, provide clearer instructions around the application of the materiality principle to ensure that only material information is reported and required by assurance service providers, and that the structure and presentation of the standards are simplified.
Additionally, the letter requests that the new standards further enhance interoperability with other global sustainability reporting standards.
In the letter, Albuquerque stresses the tight timeline proposed by the Commission’s initiative, with plans to have the new legislation in place in time to have companies applying the new standards for sustainability reporting covering financial year 2027, and potentially to give companies an option to apply the standards for F2026 if they wish to.
In order to meet this timeline, the Commission outlines a request for EFRAG “to think innovatively and to design specific steps for the development of this advice that take account of the above timeline while ensuring the expected level of evidence-based quality,” setting a tentative target date for the submission of the technical advice of October 31, 2025, and asking EFRAG to inform the Commission of its internal timeline and work plan by April 15.
In a statement released following the request, Patrick de Cambourg, Chair of the EFRAG SRB, said:
“EFRAG is fully aligned with the objective of simplifying and enhancing the first set of ESRS to ensure they remain practical, effective, and proportionate. By building on the experience of first wave companies, we will simplify the standards to support companies in delivering meaningful and decision-useful sustainability information while maintaining the ambition of the CSRD.”
April 1, 2025 at 01:09PM
Mark Segal